Chehade v Commissioner for Consumer Affairs

[2016] SASC 105

SUPREME COURT OF SOUTH AUSTRALIA

(Magistrates Appeals: Criminal)

CHEHADE v COMMISSIONER FOR CONSUMER AFFAIRS

[2016] SASC 105

Judgment of The Honourable Justice Hinton

11 July 2016

PROFESSIONS AND TRADES - AUCTIONEERS AND AGENTS - OFFENCES AND CONTRAVENTIONS - PARTICULAR CASES - HAVING INTEREST IN SALE

CRIMINAL LAW - APPEAL AND NEW TRIAL - APPEAL AGAINST SENTENCE - GROUNDS FOR INTERFERENCE  - GENERALLY

CRIMINAL LAW - SENTENCE - SENTENCING ORDERS - DISCRETION TO RECORD CONVICTION - RELEVANT CONSIDERATIONS

CRIMINAL LAW - SENTENCE - RELEVANT FACTORS  - NATURE AND CIRCUMSTANCES OF OFFENCE - CIRCUMSTANCES OF OFFENCE

Appeal against sentence imposed by Magistrate.

The appellant was retained to market and sell a residential property. Between the execution of the contract for the sale of the property and the date of settlement, it was discovered that a member of the appellant’s family, his sister, was to obtain an interest in the property. The sale proceeded. The appellant was charged with an offence contrary to s 24G(2) of the Land and Business (Sale and Conveyancing) Act 1994 as he had obtained a beneficial interest in the property by virtue of the fact that an associate of his, defined by that Act as including relatives, had attained such an interest. The respondent pleaded guilty, was convicted and fined $3600.

Whether the Magistrate erred in refusing to exercise his discretion pursuant s 16 of the Criminal Law (Sentencing) Act 1988 (SA) to impose a penalty without conviction. The appellant submitted that the Magistrate failed to appreciate the atypical and unusual nature of the offending and, therefore, erred in failing to form the opinion that good reason existed for not recording a conviction.

Held:

1. The appellant’s offending cannot be considered an atypical or unusual example of the conduct caught by s 24G(2).

2.       The Magistrate’s conclusion that he was not of the opinion that good reason existed for not recording a conviction was open on the evidence and could not be said to be plainly wrong.

3.       The appeal is dismissed.

Land and Business (Sale and Conveyancing) Act 1994 (SA) s 24G; s 37B; Criminal Law (Sentencing) Act 1988 (SA) s 16; Land Agents Act 1994 (SA) s 6A(3), referred to.
Ashton v Police [2005] SASC 460; Police v Kostoff (2014) 244 A Crim R 327, not followed.
Application by the Attorney General under section 37 The Crimes (Sentencing Procedure) Act (2004) 61 NSWLR 305; Brookes v Police (2014) 66 MVR 163; Buck v Bavone (1976) 135 CLR 110; Cameron v Holt (1980) 142 CLR 342; City of Salisbury v Ahrens Group (2010) 108 SASR 54; Cobiac v Liddy (1969) 119 CLR 257; Commissioner for Consumer Affairs v Taza [2011] SADC 192; Forgione v Police [2008] SASC 54; Goldsworthy v Police [2016] SASC 85; He Kaw Teh v The Queen (1985) 157 CLR 523; Hemming v Lukin (1996) 67 SASR 248; Hemming v Mundy (2001) 122 A Crim R 329; Hemming v Neave (1998) 51 SASR 427; House v The King (1936) 55 CLR 499; H Stanke & Son v Parkes (2010) 108 SASR 296; Liddy v Cobiac [1969] SASR 6; Lim Chin Aik v The Queen [1963] AC 160; Ly v Glover (1989) 150 LSJS 449; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; Myerson v Collard (1918) 25 CLR 154; Piva v Brinkworth (1992) 59 SASR 92; Plaintiff M70/2011 v Minister for Immigration and Citizenship (“Malaysian Declaration Case”) (2011) 244 CLR 144; Roder v Police [2000] SASC 432; R v Briese; Ex parte Attorney-General (Qld) (1997) 92 A Crim R 75; R v Clarke (2008) 100 SASR 363; R v Lambert [2009] SASC 307; R v Stubberfield (2010) 106 SASR 91; R v Yousef (2005) 155 A Crim R 134; Schmidt v Police (SA) [2005] SASC 482; Sherras v De Rutzen [1895] 1 QB 918; Sims v Police (SA) (2000) 30 MVR 524; Singh v Police [2013] SASC 155; Sodeman v The King (1936) 55 CLR 192; The King v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407; The Queen v McInerney (1986) 42 SASR 111; The Queen v Milnes and Green (1983) 33 SASR 211; The Queen v Reynhoudt (1962) 107 CLR 381; Turner v Police [2016] SASC 91; Vitlov v Lewis [2004] SASC 83, considered.

CHEHADE v COMMISSIONER FOR CONSUMER AFFAIRS
[2016] SASC 105

Magistrates Appeal

HINTON J.

Introduction

1. Nabil Chehade is a director of NRC Property Group Pty Ltd, a corporation which trades as Chehade Real Estate Group. In that connection, and in his capacity as a sales representative of Chehade Real Estate Group, Mr Chehade was retained to market and sell the residential property of Mrs Kathleen King. He did so successfully in that a purchaser for the property was found, a contract for sale executed, and settlement effected. However, between the execution of the contract for the sale of the property and the date of settlement, it was discovered that a member of Mr Chehade’s family, his sister, who was also an employee of Chehade Real Estate Group, was to obtain an interest in the property. The sale proceeded. The consequence was that Mr Chehade obtained a beneficial interest in the property within the meaning of s 24G of the Land and Business (Sale and Conveyancing) Act 1994 (the LB(SC)A) by virtue of the fact that an associate of his, defined by that Act as including relatives, had attained such an interest. That meant Mr Chehade had committed an offence contrary to s 24G(2) LB(SC)A. He was charged, pleaded guilty, was convicted and fined $3600. Mr Chehade now appeals against the sentence he received. More particularly, he appeals against the decision of the sentencing Magistrate to refuse to proceed under s 16 of the Criminal Law (Sentencing) Act 1988 (CL(S)A) by imposing a penalty without conviction. In my view, this appeal should be dismissed. My reasons follow.

   The circumstances of the offending

2. In January 2013, David and Graham King approached Mr Chehade to sell their mother’s property at Para Hills in order to fund her residence in a nursing home. There was some urgency in selling the property as Mrs King was very ill and required care. To this end, on 8 January 2013, David King signed a sales agency agreement with Chehade Real Estate Group. Pursuant to that agreement, Mr Chehade undertook the role of sales representative for Mrs King’s property. In this regard, Mr Chehade took his instructions from David King, who acted pursuant to a power of attorney granted to him by his mother.

3. Mr King instructed Mr Chehade that it was not expected that his mother would live for much longer, and that, in the hope of promoting a quick sale, the Kings were prepared to accept a sale price less than the market value. It was not disputed that Mr Chehade valued the property at $290,000 for the purposes of the sales agency agreement and that Mr King was prepared to accept $280,000. An independent valuer valued the property at $265,000.

4. Open inspections were conducted in January 2013, following which Mr Chehade advised Mr King that, of the offers received, the highest offer and easiest to settle on was that from a Mr Yahya El Haj for $275,000. Mr King instructed Mr Chehade to accept that offer.

5. On 1 February 2013, a sales contract was executed by Mr King and Mr El Haj. The contract was subject to finance being approved by 15 February 2013 and contained an agreed settlement date of 15 March 2013.[1] Mr King was assured that there would be no problem with Mr El Haj obtaining finance.

   [1]    This is the date referred to by the Magistrate and the respondent. The appellant submitted that the original settlement date was 18 March 2013.

6. On 5 February 2013, Mrs King passed away. Mr King informed Mr Chehade of this. Mr King then engaged a solicitor to obtain a grant of probate in relation to his mother’s estate. This had the consequence that Mr King and his solicitor each dealt directly with Mr Chehade on a number of occasions, particularly with respect to settlement of the sale of Mrs King’s property. Both Mr King and his solicitor were led to believe that settlement would go ahead as planned.

7. On the day prior to settlement, Mr King telephoned Mr Chehade to arrange for the handover of the keys to the property. It was during that conversation that Mr Chehade informed Mr King that the purchaser’s application for finance had been rejected some weeks earlier and that the purchaser was exploring alternate avenues of obtaining finance. That afternoon, Mr King repeatedly telephoned Mr Chehade to find out what was going to happen with the property. Mr Chehade did not answer his calls. Mr King became concerned that Mr Chehade was avoiding speaking to him and so decided to contact Mr Chehade on his home number. When checking the White Pages for this purpose, Mr King discovered an address for a Mr K Chehade that was the same as the address provided on the sales contract for the purchaser, Mr El Haj. Over the following weekend, Mr King searched the internet in an endeavour to discover if there was a connection between Mr Chehade and the purchaser. He found a photo of Mr El Haj with Safa Chehade, Mr Chehade’s sister and an employee of Chehade Real Estate Group. Mr King then instructed his solicitor to contact Mr Chehade to make enquiries of the relationship between Mr Chehade and Mr El Haj. That was done. Mr Chehade admitted that Mr El Haj was married to his sister and that he had not disclosed this fact to Mr King. In the light of this, Mr King discussed with his family what should be done and whether the contract for the sale of Mrs King’s property should be terminated. The Kings felt they had no real choice but to wait for Mr El Haj to obtain finance, rather than suffer the delay and costs associated with terminating the contract and starting the process afresh with a new agent. Furthermore, by this time, Mrs King’s house was unoccupied and all utilities had been switched off, making it more difficult to sell.

8. It transpired that Mr El Haj was unable to obtain finance in his own name. His wife, Safa El Haj (nee Chehade), then joined him in seeking finance for the purchase of Mrs King’s property. They were successful, but, the lender required Mrs El Haj’s name to appear on the title. Consequently, the Memorandum of Transfer was amended to include Mrs El Haj’s name. In the Court below, the Commissioner for Consumer Affairs (the Commissioner) accepted that Mr Chehade did not become aware of this until he was copied into an email on 25 March 2013 from Mr El Haj’s conveyancer to which was attached a copy of the Memorandum of Transfer. 

9. Section 24G(2) LB(SC)A makes it an offence for a sales representative employed by an agent to obtain, or be in any way concerned in obtaining, a beneficial interest in land or a business that the agent is authorised to sell. Section 24G(6) LB(SC)A extends the sales representative’s liability by deeming him or her to have obtained a beneficial interest in land or a business if an associate of the sales representative obtains such an interest. Liability to prosecution can be avoided, however, if, before the interest is obtained, the Commissioner’s approval for the sales representative to obtain an interest in the relevant sense is obtained.

10. On 26 March 2013, Mr Chehade completed the prescribed form for permission to obtain a beneficial interest in a property under s 24G(5) LB(SC)A. That form required, amongst other things, that the agent obtain the consent of the vendor. Mr Chehade approached Mr King for this purpose. Mr King refused to consent. The form was not forwarded to the Commissioner until June 2013.

11. Despite refusing to consent to Mr Chehade’s application under s 24G(5) LB(SC)A, the Kings nonetheless determined to proceed with the sale of Mrs King’s property to Mr El Haj. It is not suggested that the Kings suffered any financial detriment in doing so. That is not to overlook the anxiety generated by the discovery of Mr Chehade’s lack of candour nor his shortcomings in discharging his fiduciary obligations more generally.

12. Settlement occurred on 5 April 2013,[2] whereupon the property was transferred to Mr and Mrs El Haj. The Commissioner did not contend that either Mr Chehade or any member of his family profited from the transaction.

    [2]    In his reasons, the Magistrate refers to a settlement date of 25 April 2013.  However, the material provided by the appellant and respondent indicates that settlement occurred on this date.

13. At the time of presenting the contract for sale to Mr King, it was Mr Chehade’s understanding that the intended purchaser of the property was to be Mr El Haj solely. The parties agreed that, had that in fact occurred, Mr Chehade would not have committed any offence. This is because the definition of an associate contained in s 24G(11) LB(SC)A, whilst including a relative, confines relatives to a spouse, domestic partner, parent or remoter linear ancestor, son, daughter or remoter issue or brother or sister of the person.

14. In the Court below, it was agreed by Mr Chehade and the Commissioner that Mr Chehade be sentenced on the basis that his failure to advise Mr King of his relationship with Mr El Haj as at the date the contract was signed, namely, 1 February 2013, in circumstances where there was a real risk that his relative may obtain a beneficial interest in Mrs King’s property, constituted a failure on Mr Chehade’s part to take reasonable care to avoid the commission of the offence.

15. On 27 March 2015, Mr Chehade was charged on complaint with one count of obtaining, as a sales representative of Chehade Real Estate Group, a beneficial interest in land that the Group had been authorised by the vendor to sell, contrary to s 24G(2) LB(SC)A. On the same complaint, NRC Property Group Pty Ltd was charged with two offences, the first, count 1, contrary to s 24G(1) LB(SC)A, and the second, count 2, contrary to s 6A(3) of the Land Agents Act 1994 (SA). Nothing more need be said concerning the charges laid against the corporate defendant and to which it pleaded guilty, save that the Commissioner submitted on this appeal that the circumstances of the second offence charged, that contrary to s 6A(3) of the Land Agents Act, were indicative of the attitude Mr Chehade brought to his practice as a real estate agent. I will return to this submission below.

    Mr Chehade’s personal circumstances

16. Mr Chehade was born in Adelaide, but spent his formative years up to the age of 11 in Lebanon. He then returned to Australia and completed his schooling. Thereafter he undertook a real estate agency course and became a registered land agent. He then gained experience in various agencies, including Ray White and Century 21, before opening Chehade Real Estate Group, the trading arm of NRC Property Group Pty Ltd, in 2004. Chehade Real Estate Group was a prosperous business, employing up to 25 staff.

17. Mr Chehade was 39 years of age at the time of being sentenced. He is married with three young children. He is an active member of the Para Hills community within which he lives and works, coaching one of his son’s soccer teams at the Para Hills Soccer Club.

18. As mentioned above, Mr Chehade was charged with the offence to which he pleaded guilty in March 2015. Thereafter he was subject to considerable adverse media scrutiny surrounding the proceedings. That publicity had a resounding impact upon his business in that it suffered a significant downturn in sales, ceased trading, was compelled to make employees redundant and, ultimately, was placed into voluntary administration.

19. The adverse publicity has also had the consequence that Mr Chehade’s ability to obtain finance for future property development and business projects has been negatively impacted. The Magistrate received affidavit material in support of the submission that the adverse publicity had had the consequence that an indicative offer of finance made to Mr Chehade’s wife had subsequently been withdrawn. In particular, one lender referred to an article that appeared in The Advertiser in the course of explaining why it had determined not to advance finance for the purposes of the purchase of a property management business by a corporate body that had multiple directors, one of whom was Mr Chehade’s wife. The lender explained that the revelation in the article that Mr Chehade had been charged with the offence to which he subsequently pleaded guilty, formed the primary reason for declining finance in that, although Mr Chehade was not a director of the purchaser, a relevant consideration for the lender was that he was likely to be a key person in the business, or any business, of his wife. That lender also indicated that it would not further consider the application for finance until the proceedings instituted against Mr Chehade were finalised.

20. Further evidence received by the Magistrate from a finance broker suggested that the banking industry, when assessing loan applications, has regard to the character of the borrower, the capacity of the borrower to repay, whether the borrower has sufficient equity in relation to the borrowings, and the collateral available to the lender in the event that the borrower defaults. It was said that the character of the borrower was one of the most important parts of the credit assessment and is analysed closely. Lenders, it was contended, are often very nervous and cautious with any potential borrower that has any blemish on their credit report or otherwise. Thus, a criminal conviction would be detrimental to any application by a borrower for finance.

21. The Magistrate found:

    [20] Since these proceedings Mr Chehade has received abusive mail and been the subject of a concerted information campaign designed to destroy his reputation and business. The emotional toll on him and his family has been high along with the financial consequences. His business is ruined. He has ceased trading and staff have lost their jobs. He is said to be at a crossroads not knowing whether to try to pick up the pieces and seek to renew his agency registration once this matter is resolved or to try property development. If he attempts the latter then he has been informed that any conviction will make it difficult to obtain finance. …

    The Magistrate’s reasons for refusing to proceed without conviction

22. Mr Chehade and NRC Property Group Pty Ltd were represented by the same counsel in the Court below. That is understandable in view of the fact that Mr Chehade was the sole director and company secretary of NRC Property Group Pty Ltd, and was, as conceded on the hearing of this appeal, the controlling mind of the company.

23. Before the Magistrate, counsel contended on behalf of each defendant that their respective matters be disposed of under s 16 CL(S)A by the imposition of a penalty without the recording of a conviction. The Magistrate recorded the reasons which, in combination, counsel submitted supported proceeding in the manner urged.  The Magistrate said:

    [21] I am asked by defence to deal with the matter under s.16 by finding good reason not to record convictions essentially for the following reasons

    ·   the offending is at the lower end of the scale

    ·   the lack of mala fides in the commission of the offences

    ·   no one profited from or lost from the transactions

    ·   no offence would have been committed if the sale of the property proceeded with Mr El Haj alone

    ·   the steps Mr Chehade immediately took to try to rectify the situation

    ·   that Scuteri was supervised but simply not registered as a trainee salesman

    ·   no relevant antecedents

    ·   defendants otherwise of good character

    ·   the impact the offences have already had on him, his family and his business

    ·   the impact of a conviction on the ability of he or his family to obtain finance

    ·   the disproportionate impact a conviction would have on Mr Chehade’s ability to effectively conduct a business

    ·   the atypical or unusual nature of the offences

    ·   the unlikelihood that this offending would be repeated

    [Footnote omitted.]

1. The Commissioner opposed the Court proceeding without imposing a conviction. The Commissioner conceded that the offending was at the lower end of the scale, but contended that it was nonetheless serious offending which would have the impact of eroding public confidence in the real estate industry, an industry asserted to be vulnerable to corruption and sharp practice. The Commissioner further relied upon the observations of His Honour Judge Brebner in Commissioner for Consumer Affairs v Taza, where His Honour remarked that the “community is entitled to expect that registered land agents and their principals and employees will act with complete integrity and in the best interests of those who have retained them and to the complete exclusion of the interests of any other people who might have some kind of interest in the particular transaction”.[3] Lastly, the Commissioner submitted that the offences in question were in the nature of regulatory offences and, as such, it was unusual for convictions not to be recorded.

   [3][2011] SADC 192 at [29].

2. In his sentencing remarks, the Magistrate referred to a number of authorities on the application of s 16 before concluding:

   [29] I have had regard to the authorities and to the facts of this case. I have given careful consideration to the impact that this offending has had on the defendants to date and the likely impact of recording of convictions. Whilst sympathetic to each defendant noting that there are factors favourable to them, in the end I am of the view that good reason does not exist for not recording convictions and that it is in the public interest that convictions in each case be recorded.

   [30] The conduct in question displays at a minimum poor insight, management and oversight in circumstances where supervision in each case was an essential part of ensuring fidelity and confidence.

   [31] In relation to the sale of the property Mr King was in my opinion right to feel uneasy having to discover for himself that the initial sale was to Mr Chehade’s brother-in-law and he was understandably unwilling to sign the Notice to the Commissioner when Mr Chehade’s sister became part of the transaction. By then in his personal circumstances then prevailing it is equally understandable that he just wanted his mother’s house sold even if this meant to Mr Chehade’s relatives.

   [32] The public has a right to expect that land agents and sales representatives act with complete integrity. Anything short of that – including the conduct to which you have admitted – however explained – only seeks to undermine the level of confidence in an industry where trust is fundamental. It also acts as fuel to perceptions about the lack of oversight of the real estate industry and the prevalence of sharp practice amongst agents and sales representatives.

3. The Magistrate then recorded that he accepted counsel’s submission that the offending, whilst serious, did not merit imprisonment.

4. Later in these reasons I analyse the operation of s 16 CL(S)A. At this juncture I note that in the paragraphs from the Magistrate’s reasons reproduced above, he explains why he has not arrived at the requisite s 16(b) CL(S)A opinion.

   The ground of appeal and submissions made

5. The notice of appeal contains one ground, namely, that the Magistrate erred in exercising his discretion to record a conviction with respect to count 3. Perhaps more correctly, and consistent with the arguments advanced, the complaint is that the Magistrate erred in failing to form the opinion that good reason existed for not recording a conviction.

6. Counsel for Mr Chehade proceeded on the basis that the powers available to this Court on the hearing of this appeal[4] could not be exercised in the absence of some factual, legal or discretionary error being demonstrated. I too proceed on that basis.

   [4]Magistrates Court Act 1991 (SA) s 42(5).

7. The first argument advanced in support of the ground of appeal starts with a complaint that the Magistrate erred by failing to address the question of whether the appellant was unlikely to commit such an offence again, as required by s 16(a) CL(S)A. Counsel for Mr Chehade contended that the s 16 criteria had to be addressed by a sentencing court in lexical order. Counsel relied upon Police v Kostoff[5] and Ashton v Police[6] as authorities for that proposition. The next step in the argument, however, is that had the Magistrate so proceeded, he would have concluded that the unlikelihood of Mr Chehade committing a second time the offence to which he pleaded guilty was of a high order because his offending in this instance was an atypical and unusual example of its kind. Such conclusion, in turn, would necessarily figure prominently in determining whether good reason existed under s 16(b), in particular, subparagraphs (i) and (iii). However, as there is no express finding with respect to s 16(a), so the argument proceeded, it should be assumed that the Magistrate did not turn his mind to this matter, and, if that is right, it may then be concluded that he failed to take into account that the likelihood of Mr Chehade not committing such offence again was of a high order in the course of determining whether he was of the opinion that good reason existed for the purposes of s 16(b). Counsel further contended that the effect of the failure to make a finding with respect to s 16(a) was compounded by the fact that the Magistrate did not give separate consideration to the question of whether good reason to proceed without recording a conviction existed in relation to each defendant.

   [5](2014) 244 A Crim R 327 at [15].

   [6][2005] SASC 460 at [9].

8. In short, the argument is that by not proceeding in lexical order, the Magistrate must have failed to truly appreciate the atypical and unusual nature of Mr Chehade’s offending and how unlikely it was that Mr Chehade would commit the same offence in the future, and, therefore, must have failed to give such factor the weight it truly deserved in determining whether he was of the opinion that good reason existed for the purposes of s 16(b).

9. All this is, of course, predicate upon an acceptance that Mr Chehade’s offending can properly be characterised as atypical, unusual and very much at the lower end of the scale of seriousness for offending of this type.

10. The starting point for the second argument is the Magistrate’s observation that:

    On 25 March 2013 Mr King signed a contract in the same amount with both Mr and Mrs El Haj as purchasers.

11. Counsel submitted that this is incorrect. The contract was signed on 1 February 2013. On 25 March 2013, the Memorandum of Transfer was executed. Of itself this error may be considered of little significance, however, counsel emphasised that, at the time that the contract for sale was executed, the purchaser was to be Mr Chehade’s brother-in-law, Mr El Haj and or his nominees. At that time, it was submitted, no offence could have been or was committed. Further, Mr King did not terminate the contract either upon discovering that the purchaser was Mr Chehade’s brother-in-law on 14 March 2013, or upon discovering on 25 March 2013 that Ms El Haj was a co-purchaser, but agreed to allow further time for finance to be obtained and agreed to a revised settlement date of 5 April 2013. Counsel then attempted to link the factual error with the Commissioner’s submission, reproduced below, and contended that in combination they caused the Magistrate to incorrectly characterise the offending as more grave than it truly was. The Commissioner is recorded by the Magistrate as submitting:

    In the case of the sale there was a clear conflict that could have easily have been overcome. Mr Chehade chose to go down the perilous path of selling to a relative without divulging this information to the vendor’s son Mr King who discovered the connection himself at the very last minute when Mr King was vulnerable and felt under pressure to proceed with the sale.

12. That submission, it was submitted, was erroneous. It was accepted by the Commissioner that Mr Chehade was not aware that his sister was to be joint-purchaser until 25 March 2013. In those circumstances, Mr Chehade did not ‘choose’ to go down “the perilous path” of selling to a relative without informing the vendor, but rather failed to take reasonable care to avoid the commission of the offence by selling to his brother-in-law in circumstances where he was aware that there was a risk of his sister obtaining a beneficial interest in the property.

13. The factual error and the implicit acceptance of the Commissioner’s erroneous submission, Mr Chehade contends, has materially infected the Magistrate’s exercise of the discretion contained in s 16.

14. The third argument contended that the conclusion arrived at for the purposes of s 16(b) was plainly wrong.

15. The starting point for this argument was that, at the time that Mr Chehade became aware that his sister was to be a joint purchaser of the property, he was unable to prevent the sale of the property from going ahead. Further, it was also not disputed that Mr Chehade had immediately commenced taking action to obtain the Commissioner’s approval for the obtaining of a beneficial interest pursuant to s 24G(5) LB(SC)A. In these circumstances, not only was the offending at the lower end of the scale, but it was atypical and attended by a number of factors which, together with Mr Chehade’s character, antecedents and the effect of a conviction upon him, militated in favour of a finding of good reason. Significantly, the offending being atypical, the force of the submission that as a regulatory offence the imposition of a conviction was important to securing general deterrence was much reduced.

16. It was submitted that, as the Commissioner accepted that the offending was at the lower end of the scale, the question of whether the effect of the recording of a conviction was disproportionate to the gravity of the offending required careful consideration. Considerable weight ought to have been attached, it was contended, to the likely adverse impact that a conviction would have upon Mr Chehade’s employment prospects and, in particular, his inability to obtain finance. Mr Chehade had no prior convictions and, although not a victimless crime, the Kings had not suffered any monetary loss as a result of the offending. Whilst the Magistrate found that a conviction would make it difficult for Mr Chehade to obtain finance, he referred to the likely impact of recording convictions in a global way in respect of both defendants and did not specifically differentiate between the defendants in respect of the consequence of imposing a conviction for each and whether doing so resulted in a proportionate penalty being imposed. The Magistrate should have concluded, it was contended, that the likely impact of recording a conviction was disproportionate to the gravity of the offending and, together with the Mr Chehade’s antecedents and good character, provided good reason to not record a conviction.

17. In reply the Commissioner submitted that the Magistrate did not err. He cautioned that the failure on the part of the Magistrate to refer expressly to a factor or submission should not lead this Court to jump immediately to the conclusion that it was not taken into consideration. Further he contended that:

    i.The Magistrate did not err when making findings regarding the signing of documentation on 25 March 2013. Even if there was an error made as to the exact nature of the document, it was not of such significance as to warrant interfering with the order made. 

    ii.The Magistrate did not err by placing insufficient weight upon the conduct of Mr Chehade and did not place undue weight on factors personal to the vendor, but gave appropriate consideration and weight to all factors and submissions made.

    iii.The Magistrate gave appropriate consideration to Mr Chehade’s ability to obtain finance and the effect of the conviction upon his livelihood.

    iv.The Magistrate considered the question as to whether Mr Chehade was unlikely to commit such an offence again.

    v.That the offending subject of count 2 was indicative of an attitude on the part of Mr Chehade in the conduct of his business that supports the imposition of a conviction.

    vi.That even though Mr Chehade completed the s 24G(5) form on 26 March 2013, he did not file that request with the Commissioner until June 2013.

    vii.That the offence being a regulatory offence, general deterrence is a factor which weighs heavily against not recording a conviction.

18. The Commissioner further submitted that the Magistrate’s reason for recording a conviction – that it was in the public interest that the convictions in each case be recorded – was appropriate. In arriving at this conclusion, the Magistrate considered all relevant factors relevant to the recording of a conviction against Mr Chehade. The Commissioner added that the Magistrate specifically considered whether Mr Chehade was likely to commit such an offence again. In this regard, he referred me to paragraph [21] of the Magistrate’s remarks, reproduced at paragraph [23] above, and the last dot point therein.

19. The Commissioner contended that the conviction recorded against Mr Chehade and the consequent impact on his employment prospects and ability to obtain finance was a direct result of his offending. As the sales representative in relation to the King property and the sole director of the company, personal deterrence, it was said, was of significant importance.

20. Taking into account all of the circumstances, including the nature of the offending, the effect on Mr Chehade’s future prospects and on his dependants, and the Legislature’s intention that sentences for regulatory offending should reflect the need for general deterrence, the Commissioner submitted that the Magistrate did not err in recording a conviction. There is nothing exceptional, he said, about the personal circumstances of Mr Chehade nor any factor put in mitigation which warranted the unusual step of declining to impose a conviction.  

    The significance of a conviction.

21. In The Queen v McInerney, Cox J observed:[7]

    … A conviction is a formal and solemn act marking the court’s, and society’s, disapproval of a defendant’s wrongdoing, so that a prior offence may not assume quite the same significance as a prior offence coupled (by the time the instance offence is committed) with a prior conviction. …

    [7] (1986) 42 SASR 111 at 124.

22. Similarly, in R v Lambert, Sulan J, with whom Duggan and Kourakis JJ agreed, observed that the “recording of a conviction has a punitive aspect”.[8] His Honour then quoted from the joint judgment in R v Yousef.[9] In that case, Sulan and Layton JJ wrote:[10]

    … A conviction does not merely record a finding that the person committed the crime charged: it condemns him for the crime; it is a communicative act, communicating censure to the convicted person. The recording of a conviction acts as a general deterrent to others who may be inclined to offend in a similar way.

    There is an important public interest in convictions being recorded to express community disapproval of a defendant’s conduct. …

    [Footnote omitted.]

    [8][2009] SASC 307 at [19].

    [9](2005) 155 A Crim R 134.

    [10]R v Yousef (2005) 155 A Crim R 134 at [60]-[61].

23. In this context, the recording of a conviction is the formal record of the resolution of the controversy by the exercise of the judicial power of the State. The recording of a conviction is condemnatory in that, through the exercise of the judicial power of the State, on behalf of the community, the Court records in the public records of the State that the convicted person did commit a crime against the laws of the State for which a conviction has been imposed. Such act is punitive in that it attaches to the identity of the individual for so long as the conviction exists or unless otherwise relieved.[11] In the words of Sulan J, “[t]he offender will carry the conviction with them into many walks of life. It acts as a continual punishment”.[12]

    [11]   By, for example, the grant of a pardon in the exercise of the prerogative of mercy, see The Queen v Milnes and Green (1983) 33 SASR 211, or by statute such as under the Spent Convictions Act 2009 (SA).

    [12]   R v Lambert [2009] SASC 307 at [22].

24. Clearly then a conviction will affect a person’s standing in the community - it may affect his or her future employment prospects, their ability to travel and their acceptance into professional or trade associations linked with a profession or trade. On the other hand, there is an important public function that a conviction plays. In this regard, in R v Briese, the Queensland Court of Appeal observed that:[13]

    … the effect of such an order is capable of considerable effect in the community. Persons who may have an interest in knowing the truth in such matters include potential employers, insurers, and various government departments including the Immigration Department. … For present purposes it is enough to note that the making of an order [to proceed without conviction] has considerable ramifications of a public nature, and the courts need to be aware of this potential effect. …

    [13]   R v Briese; Ex parte Attorney-General (Qld) (1997) 92 A Crim R 75 at 79 (Thomas and White JJ). See also R v Stubberfield (2010) 106 SASR 91 at [44] (The Court) and the authorities referred to therein.

25. Nonetheless it is implicit in the conferral of a power such as s 16 on sentencing courts that the Legislature acknowledges that there will arise circumstances where the ongoing adverse effects of a conviction for the offender will result in the imposition of a penalty disproportionate to his or her offending. Here it is well to bear in mind the observations of Windeyer J in Cobiac v Liddy:[14]

    … The whole history of criminal justice has shewn that severity of punishment begets the need of a capacity for mercy. The more strict a rule is made, the more serious become the consequences of breaking it, the less likely it may be that Parliament would intend to close all avenues of exception. Especially when penalties are made rigid, not to be reduced or mitigated, it might seem improbable that Parliament would not retain a means of escaping the imposition of a penalty which must follow upon conviction, that it would abolish it, not directly but by a side wind. This is not because mercy, in Portia’s sense, should season justice. It is that a capacity in special circumstances to avoid the rigidity of inexorable law is of the very essence of justice. …

    [14] (1969) 119 CLR 257 at 269.

    The power to decline to impose a conviction

26. Section 16 CL(S)A provides:

    16—Imposition of penalty without conviction

    Where a court finds a person guilty of an offence for which it proposes to impose a fine, a sentence of community service, or both and the court is of the opinion—

    (a)that the defendant is unlikely to commit such an offence again; and

    (b)     that, having regard to—

    (i)    the character, antecedents, age or physical or mental condition of the defendant; or

    (ii)    the fact that the offence was trifling; or

    (iii)   any other extenuating circumstances,

    good reason exists for not recording a conviction,

    the court may impose the penalty without recording a conviction.

27. Before considering the text of s 16, it is instructive to consider the function it performs within Division 2 CL(S)A more broadly. In this regard I am indebted to Martin J for his analysis of this issue in Hemming v Mundy.[15]  Martin J said:[16]

    It is necessary to have regard to the scheme of the relevant provisions of the Sentencing Act and the particular purpose of s 16. Division 2 of the Sentencing Act is concerned with general sentencing powers. Sections 15-18 are ameliorating provisions which enable the court in identified circumstances to extend leniency. The power to extend leniency is circumscribed by s 20 which provides that nothing in Div 2 derogates from a provision of a special Act that expressly prohibits the reduction, mitigation or substitution of penalties or sentences. There is no provision in the Fisheries Act that contains such an express prohibition.

    Section 15 enables a court to dismiss a charge without recording a conviction if the court is of the view that the offence is so trifling that it is inappropriate to impose any penalty. Section 17 empowers a court to reduce a penalty below the minimum prescribed for an offence if the court, having regard to matters identical to those specified in s 16(b), is of the opinion that good reason exists for reducing the penalty below the minimum. Section 18 is a general power that enables the court to depart from a penalty provided by a special Act if the court thinks that good reason exists for such a departure. The extent of the departure is identified, but no other criteria need to be satisfied before the power is enlivened.

    A further power to decline to record a conviction and to sentence without imposing a penalty is found in s 39. The court may, if it thinks that good reason exists for doing so, discharge an offender with or without recording a conviction and without imposing a penalty upon condition that the offender enter into a bond. This power is circumscribed by s 37 which provides that the power in s 39 is not exercisable in relation to an offence in respect of which a special Act expressly prohibits the reduction, mitigation or substitution of penalties or sentences: Janz v Woolven (1990) 55 SASR 329; 49 A Crim R 284.

    Leaving aside murder and treason, the powers in ss 15-18 and s 39 are capable of being enlivened for any offence, regardless of the maximum penalty. However, when the provisions of the Sentencing Act are viewed in their entirety, Parliament appears to have had the gravity of the criminal conduct in mind when providing courts with the power not to record a conviction. If the offence is so trifling that the court considers it inappropriate to impose any penalty, the court may dismiss the charge without recording a conviction (s 15). The power in s 39 is enlivened if the court thinks that good reason exists for discharging an offender without imposing a penalty upon condition that the offender enter into a bond. Thus it is only in respect of matters in which the gravity of the criminal conduct permits a discharge without imposing a penalty that the court could exercise the power in s 39 not to record a conviction.

    Section 16 permits the court to exercise the power not to record a conviction in circumstances where the court proposes to impose a fine or community service or both for the particular offence. This allows for the exercise of the power where the gravity of the offending is more serious than the offending which would permit the use of the power in either of s 15 or s 39. Viewed in this way, the operation of s 16 is circumscribed by the gravity of the offending as reflected in the penalty of a fine or community service or both.

    Although Martin J made the above observations in 2001, and despite amendment to the CL(S)A, they largely remain apposite.

    [15](2001) 122 A Crim R 329.

    [16]   Hemming v Mundy (2001) 122 A Crim R 329 at [24]-[28].

1. I turn to the text of s 16. The first point to make regarding s 16 is that it is predicate on an assumption, namely, that the imposition of a conviction is the norm.[17] Departure from the norm is permitted provided that the criteria prescribed are satisfied. To observe that s 16 operates in this was is not to impermissibly fetter the discretion conferred, rather it is to do no more than note the starting point for the inquiry that an application under s 16 initiates.[18] Second, this Court has routinely treated s 16 as conferring a power coupled with a discretion and not merely a power to be exercised upon the criteria enlivening the power being satisfied.[19] Third, importantly, the power and discretion contained in the foot of s 16 is not enlivened unless each and every one of the stated criteria are satisfied, namely, that the court:

   [17]   Sims v Police (SA) (2000) 30 MVR 524 at [7] (Bleby J); Roder v Police [2000] SASC 432 at [15] (Duggan J); Schmidt v Police (SA) [2005] SASC 482 at [16] (Doyle CJ); Goldsworthy v Police [2016] SASC 85 at [27] (Stanley J).

   [18]   Cf. Ashton v Police [2005] SASC 460 at [11] (Debelle J).

   [19]   See, for example, R v Stubberfield (2010) 106 SASR 91 at [41] (The Court).

   i.finds the person guilty of an offence, and

   ii.determines that the appropriate penalty is a fine, a sentence of community service or both, and

   iii.forms the opinion that the defendant is unlikely to commit such an offence again, and

   iv.forms the opinion that, having regard to—

   (i)    the character, antecedents, age or physical or mental condition of the defendant; or

   (ii)    the fact that the offence was trifling; or

   (iii)   any other extenuating circumstances,

   good reason exists for not recording a conviction.

   Each of these criterion is therefore in the nature of a jurisdictional fact.[20]

   [20]   Plaintiff M70/2011 v Minister for Immigration and Citizenship (“Malaysian Declaration Case”) (2011) 244 CLR 144 at [57] (French CJ).

2. I do not pause to say anything concerning the first two criteria. The third and fourth criteria require the formation of an opinion by the sentencing court. Error in the formation of an opinion will occur in the following circumstances:[21]

   It is … well settled that if a statute provides that a power may be exercised if a person is of a particular opinion, such a provision does not mean that the person may act upon such an opinion if it is shown that he has misunderstood the nature of the opinion which he is to form. Unless such a rule were applied legislation of this character would mean that the person concerned had an absolutely uncontrolled and unlimited discretion with respect to the extent of his jurisdiction and could make orders which had no relation to the matters with which he was authorized to deal. It should be emphasized that the application of the principle now under discussion does not mean that the court substitutes its own opinion for the opinion of the person or authority in question. What the court does do is to inquire whether the opinion required by the relevant legislative provision has really been formed. If the opinion which was in fact formed was reached by taking into account irrelevant considerations or by otherwise misconstruing the terms of the relevant legislation, then it must be held that the opinion required has not been formed. In that event the basis for the exercise of the power is absent, just as if it were shown that the opinion was arbitrary, capricious, irrational, or not bona fide.

   [21]   The King v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 432 (Latham CJ). See also Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 at [23]-[24] (Gummow A-CJ and Kiefel J), [122] (Crennan and Bell JJ).

3. To similar effect Gibbs J in Buck v Bavone said:[22]

   …the authority must act in good faith; it cannot act merely arbitrarily or capriciously. Moreover, a person affected will obtain relief from the courts if he can show that the authority has misdirected itself in law or that it has failed to consider or has taken irrelevant matters into account. Even if none of these things can be established, the courts will interfere if the decision reached by the authority appears so unreasonable that no reasonable authority could properly have arrived at it. …

   [22] (1976) 135 CLR 110 at 118 (Gibbs J). See also Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 274-6 (Brennan CJ, Toohey, McHugh and Gummow JJ); Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [133]-[138] (Gummow J); Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 at [23]-[24] (Gummow A-CJ and Kiefel J), [122] (Crennan and Bell JJ). Cf.Brookes v Police (2014) 66 MVR 163 at [9]; Turner v Police [2016] SASC 91 at [21].

4. I bear in mind that an opinion formed that has no basis in the evidence adduced, or which is contrary to the overwhelming weight of the evidence, or is based upon the drawing of inferences not open on the evidence, constitutes a failure to exercise the power conferred in that the exercise of the power is based on jurisdictional facts that are, in fact, absent.[23] Accordingly, in such circumstances the exercise of the power will have miscarried. In practice, “where the matter of which the authority is required to be satisfied is a matter of opinion or policy or taste it may be very difficult to show that it has erred in one of these ways, or that its decision could not reasonably have been reached.”[24] Such difficulties in demonstrating error are likely to apply on appellate review of the fourth criterion. This is because “good reason” is qualitative in nature with the consequence that there will always exist room for reasonable minds to reasonably differ.

   [23]    Minister for Immigration v SZMDS (2010) 240 CLR 611 at [23]-[24] (Gummow A-CJ and Kiefel J).

   [24]   Buck v Bavone (1976) 135 CLR 110 at 118-9 (Gibbs J).

5. As to the third criteria specifically, I bear in mind the observation made by Nicholson J in Brookes v Police – “the opinion to be reached is only that the defendant is “unlikely” to commit such an offence again. It is not necessary for the judicial officer in question to arrive at a state of mind approaching sureness or certainty in this respect.”[25] One further observation; the requisite opinion is of the likelihood of the defendant committing an offence in the nature of that which he has been found guilty again, not that it is unlikely that he will offend again more generally. The latter will, however, be relevant to whether the requisite opinion is formed for the purposes of s 16(b), particularly if s 16(b)(i) is engaged.

   [25](2014) 66 MVR 163 at [18].

6. As to the fourth criteria, I agree with Peek J in Police v Kostoff,[26] where he notes that the disjunctive “or” appearing at the end of each of sub-paragraphs (i), (ii) and (iii) makes plain that the requisite opinion may be supported by a favourable consideration of the factors relevant to just one of those subparagraphs, and that, within subparagraph (i), the requisite opinion may be supported by a favourable consideration of just one of the subjects there identified. Further, that factors falling within one subparagraph may be combined together with matters falling under a different subparagraph to support the formation of an opinion that “good reason” for not recording a conviction exists.[27]

   [26] (2014) 244 A Crim R 327.

   [27]Police v Kostoff (2014) 244 A Crim R 327 at [27].

7. If each of the four criteria are satisfied the discretion contained in the foot of s 16 is enlivened. In this regard, in R v Stubberfield, a unanimous Full Court held:[28]

   If those preconditions are satisfied, the discretion is enlivened; however, that discretion is not necessarily required to be exercised. The court must consider whether, notwithstanding the satisfaction of those preconditions, it is, in all the circumstances, appropriate to exercise the discretion.      

   [28] (2010) 106 SASR 91 at [41] (The Court).

8. If error in the exercise of the discretion contained in the foot of s 16 is asserted, the principles identified in House v The King will be engaged.[29]

   [29]   House v The King (1936) 55 CLR 499 at 504-505 (Dixon, Evatt and McTiernan JJ).

   The recording of a conviction and regulatory offences

9. Counsel for the Commissioner contended that s 16 was of limited application where an accused is found guilty of a regulatory offence. The minor premise underpinning that submission is that the offence created by s 24G(2) LB(SC)A is a regulatory offence. Support for the submission can be found in the authorities.[30] The submission requires some unpacking; otherwise applied indiscriminately it would operate as a fetter on the exercise of the power contained in s 16 CL(S)A contrary to the terms of the section.

   [30]   For example, Ly v Glover (1989) 150 LSJS 449 at 453-4 (O’Loughlin J); Hemming v Neave (1998) 51 SASR 427 at 428 (Bollen J); Piva v Brinkworth (1992) 59 SASR 92 at 95-6 (Duggan J); Hemming v Lukin (1996) 67 SASR 248 at 251 (Doyle CJ); Hemming v Mundy (2001) 122 A Crim R 329 at [33] (Martin J); Vitlov v Lewis [2004] SASC 83 at [9] (Vanstone J); Forgione v Police [2008] SASC 54 at [15] (Kelly J); H Stanke & Son v Parkes (2010) 108 SASR 296 at [33] (White J); Singh v Police [2013] SASC 155 at [39] (Kourakis CJ); Goldsworthy v Police [2016] SASC 85 at [27] (Stanley J).

10. In Liddy v Cobiac, Bray CJ said of s 4 of the Offenders Probation Act 1913-1953 (SA), a predecessor to s 16:[31]

    … Section 4 of the Offenders Probation Act is a merciful provision which, in my view, has prominently in view among its objects, though not of course exclusively, the reformation of the offender. Its application, it seems to me, generally speaking, should be less ready when the charge relates to a breach of social legislation, where the preventive and deterrent aspects of punishment assume greater prominence, though I am far from denying that there are cases of this kind to which the section can properly be applied. …

    [31] [1969] SASR 6 at 10.

11. Regulatory offences, generally speaking, take on the form of absolute or strict liability offences. Such offences call the general public to the strict observance of the norm of conduct prescribed because the Legislature has determined that such a high duty of observance should be imposed with respect to the subject matter of the offence in the public interest.[32] Roscoe Pound has said: [33]

    … The good sense of courts has introduced a doctrine of acting at one’s peril with respect to statutory crimes which expresses the needs of society. Such statutes are not meant to punish the vicious will but to put pressure upon the thoughtless and inefficient to do their whole duty in the interest of public health or safety or morals. …

    [32]   H Stanke & Son v Parkes (2010) 108 SASR 296 at [34] (White J).

    [33]   R Pound, The Spirit of the Common Law (Faculty Publications, University of Nebraska College of Law, 1921) at 52.

12. It was these sorts of sentiment that underpinned the comments of Doyle CJ in Hemming v Lukin, where the Chief Justice said in relation to s 16 and its application to regulatory offences:[34]

    I am cautious about applying such statements literally, but I think, in the present case, the thrust of them is that in the case of an offence under s 69 [of the Fisheries Act 1982 (SA)] where the offence is committed regardless of any question of fault and intent, one would look, in the case of such an offence, as a basis for leniency, for positive efforts directed at preventing or avoiding the commission of the offence.

    [34] (1996) 67 SASR 248 at 251. See also City of Salisbury v AhrensGroup (2010) 108 SASR 54 at [26]-[27] (Bleby J).

13. In other words, leniency extended under s 16 in relation to a regulatory offence, bearing in mind the social reasons justifying the creation of the offence as one of strict or absolute liability, will likely turn on there being efforts made to avoid committing the offence for which the accused is to be sentenced and the nature of such efforts. To so hold is to recognise little more than that s 16 operates in the context of sentencing courts being required to impose penalties that reflect the seriousness of the offending.[35] Hence Kourakis CJ’s observation in Singh v Police that the force of the submission that the preventative and deterrent aspects of recording a conviction assume greater importance in respect of regulatory offences is much reduced when that regulatory offence is expiable.[36]

    [35]    Application by the Attorney General under section 37 The Crimes (Sentencing Procedure) Act (2004) 61 NSWLR 305 at [132] (Howie J).

    [36]    Singh v Police [2013] SASC 155 at [39].

    Is the offence created by s 24G(2) LB(SC)A a strict or absolute liability offence?

14. In the light of the above, it becomes necessary to determine whether the offence created by s 24G(2) LB(SC)A is an offence of strict or absolute liability. The approach to be adopted by a court in considering whether or not a statutory offence is one of strict or absolute liability can be now considered settled. Dixon CJ has said: [37]   

    The question in a sense is one of interpreting a statutory provision; in another sense one of applying common law doctrine to a statute dealing with crime, the common law doctrine contained in Lord Kenyon’s brief statement of the cardinal rule that “the intent and the act must both concur to constitute the crime”.

    [37]    The Queen v Reynhoudt (1962) 107 CLR 381 at 386. See also R v Clarke (2008) 100 SASR 363 at [12]-[13] (Doyle CJ).

15. To similar effect, in He Kaw Teh v The Queen, Gibbs CJ stated:[38]

    However the provision has to be read in the light of the general principles of the common law which govern criminal responsibility. The relevant principle is stated in Sherras v De Rutzen, as follows:

    “There is a presumption that mens rea, an evil intention, or a knowledge of the wrongfulness of the act, is an essential ingredient in every offence; but that presumption is liable to be displaced either by the words of the statute creating the offence or by the subject-matter with which it deals, and both must be considered.”

    [Footnote omitted.]

    [38] (1985) 157 CLR 523 at 528 (Gibbs J). See also at 566 (Brennan J); Cameron v Holt (1980) 142 CLR 342 at 346 (Barwick CJ), 348 (Mason J).

16. The presumption may be considered in the nature of an accepted understanding between the legislative and judicial branches. Consequently, absent any express statement to the effect that an offence is one of strict or absolute liability, the courts will search the relevant statute for indications of a legislative intent that the offence was nonetheless intended to be so. That search requires that consideration be given to matters of text, context and purpose, including a consideration of the penalty imposed, and whether strict liability will assist in enforcement of the law.[39]

    [39]    He Kaw Teh v The Queen (1985) 157 CLR 523 at 529-30 (Gibbs CJ), 556-7 (Wilson J), 566-7 (Brennan J), 594-5 (Dawson J). See also Cameron v Holt (1980) 142 CLR 342 at 346 (Barwick CJ); R v Clarke (2008) 100 SASR 363 at [17] (Doyle CJ).

17. It must be born in mind that the function is to interpret a statute and “not to improve upon the actions of the sovereign legislature by inserting into penal statutes words which would improve them in point of justice”.[40]

    [40]   Colin Howard, Strict Responsibility (Sweet & Maxwell, 1963) at 9. See also Myerson v Collard (1918) 25 CLR 154 at 168 (Higgins J).

18. Section 24G(2) LB(SC)A provides:

    (2)A sales representative employed by an agent must not obtain, or be in any way concerned in obtaining, a beneficial interest in land or a business that the agent is authorised to sell for a person (the vendor).

    Maximum penalty: $20 000 or imprisonment for 1 year.

19. Section 24G(6) LB(SC)A expands the liability of sales representatives by deeming a beneficial interest obtained in land or a business that the agent is authorised to sell by an associate of the sales representative to be a beneficial interest obtained by the sales representative. An associate of the sales representative is defined in s 24G(11) LB(SC)A as –

    (a)     a relative of the person or of the person’s spouse or domestic partner; or

    (b)a body corporate where the person or a relative of the person or of the person’s spouse or domestic partner has, or 2 or more such persons together have, a relevant interest or relevant interests in shares in the body corporate the nominal value of which is not less than 10 per cent of the nominal value of the issued share capital of the body corporate; or

    (c)a trustee of a trust of which the person, a relative of the person or of the person’s spouse or domestic partner or a body corporate referred to in paragraph (b) is a beneficiary; or

    (d)     an employee, employer or partner of the person; or

    (e)a person who has a relationship with the person (whether or not similar to the relationships referred to in the preceding paragraphs) of a kind prescribed by the regulations for the purposes of this section;

20. What constitutes a beneficial interest is the subject of s 24G(7) LB(SC)A. It provides, without limiting the breadth of the ordinary meaning of the expression “beneficial interest”, that a beneficial interest will be obtained upon purchasing land or a business, obtaining an option to purchase land or a business, or being granted a general power of appointment in respect of land or a business.

21. I turn to the text of s 24G(2). The first observation to make is the obvious one – the provision does not specify any mental state that must accompany the act of obtaining or of being concerned in any way in obtaining. Second, I note that a sales representative need not be concerned in any way with the sale of the land or business and yet may still commit the offence the subject of s 24G(2). That is, the sales representative will commit the offence if a sale is effected by another sales representative working for the same agent and an associate of the first sales representative obtains a beneficial interest in the land or business sold. That tends to suggest that there is no need for the prosecution to prove intent or knowledge. However, the most significant indicator that the offence created by s 24G(2) does not require proof by the prosecution of a mental element attaching to the physical element of obtaining or being in some way concerned in obtaining is to be found in s 37B LB(SC)A. That section provides:[41]

    It is a defence to a charge of an offence against this Act, other than an offence against Part 2, if the defendant proves that the offence was not committed intentionally and did not result from any failure on the part of the defendant to take reasonable care to avoid the commission of the offence.

    [41] Section 24G(2) LB(SC)A is contained in Part 4.

22. Section 37B burdens the defence with proving the absence of intent and the presence of measures amounting to reasonable care to avoid the commission of the offence on the balance of probabilities.[42] Failure to discharge the burden to the requisite standard will result in conviction if it is proven beyond reasonable doubt that a sales representative employed by an agent retained to sell property or a business obtained a beneficial interest or was concerned in the obtaining of a beneficial interest in the property or business upon it being sold despite the sales representative not intending to do so or knowing that he or she did so.

    [42]    Generally where a statute requires that an accused prove a fact, the standard imposed is that of the balance of probabilities; see Sodeman v The King (1936) 55 CLR 192 at 216 (Dixon J).

23. In my view, s 37B makes plain that the prosecution is relieved of the obligation of proving the presence of intent and absence of reasonable care in order to succeed. The existence of the defence in s 37B denies the offence contained in s 24G(2) LB(SC)A the character of an absolute liability offence. The offence is one of strict liability. This being so, agents and their sales representatives are burdened with the duty to implement practices and procedures that amount to the taking of reasonable care to avoid the commission of an offence. In this regard, the offence is rightly described as regulatory in character.

1. Having arrived at this conclusion, it is unnecessary to consider the subject matter with which the statute deals, the penalty imposed, and whether construing the offence as one of strict liability will assist in enforcement of the law, as steps in determining if the offence is one of strict or absolute liability because, whatever those factors may suggest, such suggestion could not overcome the clear implication to be drawn from s 37B. To suggest that the prosecution could be burdened with having to prove intent or knowledge or an absence of reasonable care beyond reasonable doubt before a sales representative may be convicted, but a sales representative cannot avoid conviction unless he or she establishes on the balance an absence of intention and the presence of measures amounting to reasonable care, is nonsensical. Normally if the prosecution does not discharge such burden to the requisite standard that is the end of it. Here, however, the defence provided imposes a persuasive burden on the accused. In my view, the only reason for the Legislature to do so is if the prosecution is not required to prove intent or knowledge or an absence of reasonable care to the criminal standard in order to make out the offence. That said, consideration of such matters does assist in determining the Legislature’s attitude toward conduct falling within the offence which, in turn, informs the task of determining the appropriate penalty, including whether it is appropriate to impose a conviction.

2. As to the subject matter of the offence, the long title to the LB(SC)A announces that it is an Act “to regulate the sale of land and businesses and the preparation of conveyancing instruments; and for other purposes”. Part 4 of the Act is entitled, “Special requirements relating to agents and sales representatives.” It was inserted into the Act by the Statutes Amendment (Real Estate Industry Reform) Act 2007. That Act was the product of recommendations made after a review of the regulation of the real estate industry commissioned by the Minister for Consumer Affairs in 2003. In her speech on the motion that the related Bill be read a second time, the Minister for Consumer Affairs remarked:[43]

   The Bill addresses concerns in the community about practices including dummy bidding at auctions, over-quoting by agents to secure property listings and bait advertising of properties for prices well below the actual estimated selling price. Undisclosed conflicts of interest and other misleading or deceptive conduct by agents are also addressed by this Bill.

   During the course of the review of regulation of the real estate industry agents asked for legislation to provide a clear set of guidelines as to agents’ obligations. The reforms will establish clear standards for land agents as to what is lawful and ethical behaviour in the selling of real estate. However, this Bill is not intended to derogate from or limit the fiduciary obligations owed by land agents under the general law, including to avoid conflicts of interest and account for benefits gained.

   The measures are designed to be practical and enforceable solutions to the concerns of consumers about the lack of transparency of the real estate sale process, both from the vendors’ and from the purchasers’ points of view.

   [43]   South Australia, Parliamentary Debates, House of Assembly, 26 October 2006 at 1146-7.

3. I do not stay to analyse in any detail the provisions contained within Part 4 LB(SC)A. Suffice it to say that, consistent with the concerns expressed by the Minister in her speech quoted above, they address in significant detail the duties of agents and sales representatives involved in the sale and purchase of land or of businesses. One objective of these provisions is transparency in the relationship between agent or sales representative on the one hand and purchaser or vendor on the other. Another is empowerment by the provision of information in a timely manner. A third, confidence in the fiduciary relationship and, a fourth, the securing and maintenance of the integrity of the real estate industry. In short, the fiduciary relationship enjoyed by agent or sales representative and vendor is closely and comprehensively regulated. Most duties imposed by the statute with a view to the achievement of these objectives are enforced by a raft of offences, all punishable by fine with the exception, notably, of ss 24G (1), (2) and (3). Thus the purpose of Part 4 is the enforcement of norms of conduct that could not be considered “criminal in any real sense, but are acts which in the public interest are prohibited under a penalty.”[44]

   [44]   Sherras v De Rutzen [1895] 1 QB 918 at 922 (Wright J).

4. I turn to consider the maximum penalty - $20,000 or imprisonment for 1 year. It is generally considered that the Legislature would not expose a person to imprisonment who did not intend to engage in criminal conduct or did not know that they were committing a crime. Here, however, the possibility of imprisonment reflects, in my view, the Legislature’s commitment to supressing the obtaining, or being concerned in any way in the obtaining, of a beneficial interest by a sales representative.

5. As to whether a construction imposing strict liability would promote observance of the requirements of the LB(SC)A, I bear in mind the following observations made by Brennan J in He Kaw Teh:[45]

   … The penalties of criminal law cannot provide a deterrent against prohibited conduct to a person who is unable to choose whether to engage in that conduct or not, or who does not know the nature of the conduct which he may choose to engage in or who cannot foresee the results which may follow from that conduct (where those results are at least part of the mischief at which the statute is aimed). It requires clear language before it can be said that a statute provides for a person to do or to abstain from doing something at his peril and to make him criminally liable if his conduct turns out to be prohibited because of circumstances that that person did not know or because of results that he could not foresee … A statute is not so construed unless effective precautions can be taken to avoid the possibility of the occurrence of the external elements of the offence. …

   [45] (1985) 157 CLR 523 at 567. See also at 530 (Gibbs CJ); Lim Chin Aik v The Queen [1963] AC 160 at 174 (Lord Evershed for the Privy Council).

6. It cannot be said that construing s 24G(2) LB(SC)A as creating an offence of strict liability would mean that a sales representative could do nothing to avoid committing the offence with the consequence that it had no real deterrent capacity. Section 37B makes plain what the sales representative may do and what the Legislature truly expects – the taking of steps that may be described as amounting to reasonable care to avoid committing the offence.

7. For the reasons advanced above, I conclude that s 24G(2) LB(SC)A creates an offence of strict liability that may properly be described as a regulatory offence. Further, in my view, because the offence captures the sales representative who did not intend to obtain a beneficial interest in the property or business, but who failed to take reasonable care to avoid doing so, and yet is liable to a penalty including the possibility of imprisonment, the Legislature’s primary intent is to deter the obtaining of beneficial interests by sales representatives and to do so rigorously. So much so that the statute contemplates punishment of the careless. It follows that any penalty imposed for the breach of s 24G(2) LB(SC)A must reflect that intent.

   Consideration

8. I turn to analyse the arguments made in support of the ground of appeal.

9. I commence my analysis of the first argument by dealing with the underlying submission, namely, that Mr Chehade’s offending may be characterised as an atypical and unusual example of offending of the type caught by s 24G(2) LB(SC)A. That characterisation is drawn from the following facts:

   i.that no offence was committed as at the time the contract for sale was executed;

   ii.that Mr Chehade did not know of his sister’s involvement in the sale and that he stood to obtain a beneficial interest in the property within the meaning of the LB(SC)A until 25 March 2013;

   iii.that Mr Chehade commenced the process for obtaining the approval of the Commissioner in relation to obtaining a beneficial interest in Mrs King’s property on 26 March 2013;

   iv.that Mr King refused to consent to Mr Chehade being granted an approval; and

   v.that despite refusing to consent to Mr Chehade being granted an approval, Mr King nonetheless proceeded to sell his mother’s property to Mr and Mrs El Haj.

10. Counsel also contrasted the circumstances of Mr Chehade’s offending with those arising in Commissioner for Consumer Affairs v Taza (Taza).[46] Her contention was that that was a case involving what may be thought a more typical example of offending of the type with which s 24G(2) is concerned. Taza was a case where a registered land agent sold a residential property to an entity controlled by his brother. The vendor knew the agent was selling the property to the agent’s brother. The sale price as paid was agreed by the vendor. There was no suggestion that it was not a fair market price. The day after settlement, the agent advertised the property for sale at a considerably greater price than that for which it was bought. Shortly thereafter, after undertaking some cleaning and repair work, the property was sold for almost $50,000 more than it was purchased. The Commissioner instituted disciplinary proceedings under s 47 of the Land Agents Act. The agent conceded that there was proper cause for taking disciplinary action against him in that he should not have acted for the vendor when the purchaser was an entity controlled by his brother. That was accepted by the Commissioner. That is, the basis for taking disciplinary action involved nothing in the way of sharp practice or the taking advantage of a vulnerable person. The agent also explained that he did not seek an exemption from the Commissioner because he did not regard himself as having an interest in the purchase. His Honour Judge Brebner reprimanded the agent and fined him $8,000.

    [46][2011] SADC 192.

11. Taza does not assist me in determining if Mr Chehade’s conduct is an atypical and unusual example of offending of the type caught by s 24G(2) LB(SC)A. It is just one case. I do not think that to compare what occurred in Taza with the facts of this case provides me with an adequate basis upon which to draw the conclusion invited.

12. Counsel submitted, and the Commissioner did not dispute, that if the sale proceeded as originally intended, that is, to Mr El Haj solely, no offence would have been committed. That is because Mr El Haj is not a relative, and, therefore, an associate of Mr Chehade, within the meaning of s 24G(11) LB(SC)A. A serious question may arise, it was conceded, concerning the proper discharge by Mr Chehade of his fiduciary obligations, but no criminal offence would be committed. I proceed on this basis, however, it occurs to me that the position could so easily have been different. What amounts to a beneficial interest is not defined by the LB(SC)A. In this regard, it is important to note that s 24G(7) LB(SC)A does not limit the obtaining of a beneficial interest to the interests therein enumerated. Thus, it is not beyond the realms of possibility that a spouse, who is also the sister of a sales representative, could, as at the signing of a contract by her husband for the purchase of land sold by that sales representative, stand to obtain a beneficial interest in the property upon settlement by reason of the way in which she and her husband arranged their affairs, with the consequence that the sales representative would be, at that time, concerned in obtaining a beneficial interest in land contrary to s 24G(2). I appreciate that is not this case. I proceed on the basis that was agreed between the parties. However, the possibility does highlight the perilous position in which Mr Chehade placed himself. What if, for example, there existed a deed in which Mr El Haj agreed that he would hold the property on trust for Mrs El Haj and any issue? It is perilous for an agent in the position of Mr Chehade to simply assume that the non-associate relative who purchases land in their own name is the only person obtaining a beneficial interest in the property. It cannot be assumed that the person to whom legal title is to be transferred is the only person who will obtain a beneficial interest upon the transfer being effected. Section 24G(2) is concerned with the obtaining of beneficial interests, not legal title. Accordingly, bearing in mind that reasonable care to avoid committing the offence must be taken, an agent selling to a non-associate relative must have in place practices and procedures that account for the possibility of a person, other than the purchaser, obtaining a beneficial interest so as to ensure that such other person is not an associate of a sales representative employed by the agent or the agent. The risk to my mind is not fanciful.

13. The gravity of Mr Chehade’s offending was accepted by him as being his failure to take reasonable care upon brokering the sale to his brother-in-law to avoid obtaining a beneficial interest in land within the meaning of s 24G(2) LB(SC)A. No doubt this reflects an understanding by the parties of the operative effect of s 37B. What he should have done was not suggested by either counsel. In my view, the reasonable measures that the LB(SC)A and, in particular, s 37B require must involve the making of some sort of inquiry, or the obtaining of some sort of guarantee, that an associate of the agent or sales representative will not obtain a beneficial interest upon settlement. The gravity of the offending, absent an intent to obtain a benefit, lies in the absence of reasonable measures to avoid committing the offence.

14. Stripped bare the submission made is that Mr Chehade did not intend to obtain a beneficial interest in the property. In fact, until 25 March 2013, he did not contemplate the possibility and then he made an attempt to avoid committing the offence. The fragility in the submission is that it does not address what Mr Chehade ought to have done to avoid committing the offence to which he pleaded guilty. His offending cannot be characterised as atypical and unusual unless his failure to take reasonable care to avoid committing the offence can be so described. I do not think it can. In my view, what occurred was a foreseeable possibility the moment Mr King decided to accept Mr El Haj’s offer, sufficiently probable to warrant the taking of reasonable measures to avoid such an outcome.

15. If there is anything unusual about Mr Chehade’s offending it lies in the assertion that, in a way, Mr King shared responsibility because he refused to consent to Mr Chehade obtaining the approval of the Commissioner under s 24G(5), and yet, at the same time, chose to proceed with the sale thereby causing Mr Chehade to obtain the beneficial interest in relation to which he was hoping to obtain exemption. I make three observations about this submission; first, whilst the Commissioner agreed that his s 24G(5) form required consent, it is clear that neither the LB(SC)A nor the regulations conditioned the grant of an approval on the obtaining of the vendor’s consent. I add that neither I nor the learned Magistrate was provided with a copy of the form. No explanation was provided by Mr Chehade as to why he did not consult the Commissioner immediately after Mr King refused his consent to the intended s 24G(5) application. Clearly sometime later Mr Chehade did form the opinion that he should seek approval despite Mr King’s refusal. Second, and more importantly, I do not understand Mr King’s refusal of consent to have been advanced in the Court below as causative of the offending and neither the affidavit material filed in this Court nor the Magistrate’s reasons suggest otherwise. To do so now would be inconsistent with the basis of his plea i.e. his failure to take reasonable care to avoid the commission of the offence. I understand the reference to Mr Chehade’s attempt to obtain an exemption to have been deployed for a more general mitigatory purpose. Third, the commencement of the process for obtaining the approval of the Commissioner is consistent with a lack of intent and knowledge, but does not mitigate in any significant way his failure to take reasonable care to avoid committing the offence.

16. In my view, Mr Chehade’s offending cannot be considered an atypical or unusual example of the conduct caught by s 24G(2).

17. That is enough to dispose of the first argument, however, if I am wrong in my view as to the character of the offending, I will consider the starting point for the first argument, i.e. that the Magistrate erred by failing to make a finding that Mr Chehade was or was not unlikely to commit the offence to which he had pleaded as required by s 16(a). As mentioned, in support of this submission counsel referred me to Ashton v Police.[47] In that case Debelle J said:[48]

    Even if I am wrong in that view, there is the second and more significant error which the magistrate’s remarks suggest has been made. The magistrate has failed to address the question whether the defendant was unlikely to commit such an offence again. That is the first matter which must be determined when considering an exercise of discretion conferred by s 16 of the Sentencing Act. It is a prerequisite to proceeding to consider the other matters listed in s 16(b). The magistrate has not addressed the issue at all and his failure to do so justifies this Court in exercising the sentencing discretion afresh. In reaching this conclusion I repeat that I have regard to the fact that these are ex tempore remarks made by the magistrate.

    [47][2005] SASC 460.

    [48]   Ashton v Police [2005] SASC 460 at [9].

18. With respect, I disagree. On a plain reading of s 16, whilst all jurisdictional facts must be satisfied before the discretion is enlivened, there is no requirement that they be considered in any particular order. It could not be said, for example, that a sentencing court necessarily errs if, without turning to consider s 16(a), it is determined that nothing put forward in support of s 16(b) could amount to good reason. Thus, in my view, a sentencing court does not err ipso facto if, without arriving at a concluded view under s 16(a), it nevertheless decides that the discretion is not enlivened as it cannot be satisfied of any of the matters subject of s 16(b).

19. Counsel also referred me to the judgment of Peek J in Police v Kostoff, where His Honour said:[49]

    So it is that if a magistrate follows the correct statutory process, he or she may frequently determine that he or she does not hold the requisite opinion. But if in a particular case he or she finds that he or she does in fact hold the requisite opinion in relation to the defendant, he or she will then be in a position to approach the following exercise of the s 16(b) discretion against the background to which such a defendant is entitled – namely, a finding that the defendant is favourably differentiated from the many defendants in relation to whom the magistrate would not hold the requisite opinion. Further, it may be added that if the magistrate holds not just a bare requisite opinion that a defendant is “unlikely” to commit such an offence again but rather holds the opinion that such unlikelihood is of a high order, that too may further differentiate that defendant’s position from that of many others.

    [49](2014) 244 A Crim R 327 at [18].

20. Peek J then referred to the judgment of Debelle J and quoted the same paragraph that I have above. His Honour then said:[50]

    While I agree with Debelle J that a proper consideration by the magistrate of the s 16(a) issue is a very important part of the statutory process, I find it unnecessary to decide whether such a failure alone must always lead to a re-sentencing (although it may well be so). However, I do consider that a re-sentencing is required in the circumstances of the present case, particularly having regard to the magistrate’s emphasis on a perceived need for the appellant’s case to have been “unusual” before he could depart from a regime consisting of a starting point of a fine equivalent to the expiation fee and convictions being recorded.

    [50]   Police v Kostoff (2014) 244 A Crim R 327 at [20].

1. Clearly Peek J deliberately refrained from deciding whether a sentencing court errs ipso facto when, without arriving at a concluded view under s 16(a), it nevertheless decides that the s 16 discretion is not enlivened as it cannot be satisfied of any of the matters subject of s 16(b).

2. If I am wrong in my conclusion that a sentencing court does not err ipso facto if, without arriving at a concluded view under s 16(a), it nevertheless decides that the s 16 discretion is not enlivened as it cannot be satisfied of any of the matters subject of s 16(b), I nonetheless do not think that the Magistrate’s remarks should be construed as containing no such finding. In fact, I consider such finding implicit. In arriving at this conclusion I do not rely upon paragraph [21] of the Magistrate’s remarks.[51] I do not think paragraph [21] can be construed as a finding amounting to an expression of opinion for the purposes of s 16(a) CL(S)A. Rather I rely upon the structure of the Magistrate’s remarks and, more importantly, the nature of the forensic contest. The affidavit material placed before me makes plain that the Commissioner did not take issue with the first three jurisdictional facts contained within s 16, but, rather, focused upon s 16(b) and the exercise of the discretion in the event that it was enlivened. I read paragraphs [29]-[32] of the Magistrate’s remarks as his resolution of that dispute.[52] If that is right, the Magistrate must be taken as implicitly accepting a concession that the first three jurisdictional facts contained within s 16 were satisfied. That is what I think he did. Here I bear in mind that these remarks, although not ex tempore, are the reasons of an experienced magistrate sitting in a busy court. I also bear in mind the distinct absence of any evidential material that would support a conclusion that it was not unlikely that Mr Chehade would commit a second offence against s 24G LB(SC)A beyond his plea to the offence for which he was being sentenced.

   [51]Set out at [23] above.

   [52]Set out at [25] above.

3. However, even if I am wrong in my view that the Magistrate’s remarks betray an implicit acceptance of the opinion that it is unlikely that Mr Chehade would commit the same offence again, I am not persuaded that if the Magistrate did not proceed in a lexical order and did not form an opinion for the purposes of s 16(a), it meant that he necessarily failed to truly appreciate the atypical and unusual nature of Mr Chehade’s offending and how unlikely it was that Mr Chehade would commit the same offence in the future, and, therefore, must have failed to give such factor the weight it truly deserved in the determining whether he was of the opinion that good reason existed for the purposes of s 16(b). The argument before me was that an assessment of the likelihood of Mr Chehade offending in the same manner again exposed the atypical and unusual nature of his offending. I do not see how this could be so. The atypical and unusual nature of Mr Chehade’s offending was said to arise from the facts I have set out above. Those facts were not disputed and there is no suggestion that they went unnoticed. They gain no added force from a consideration of the likelihood of Mr Chehade committing an offence against s 24G again. In my view, any inquiry as to the likelihood of Mr Chehade offending in the same manner again invited not so much a consideration of how the offending in this case unfolded, but of the absence of reasonable care to avoid it occurring and the reasons why. Paragraph [30] of the Magistrate’s reasons suggest this is exactly what he did.

4. Paragraphs [29]-[32] of the Magistrate’s reasons record, in effect, that the public interest in the recording of convictions outweighs those factors proffered as amounting to good reason not to do so. Paragraphs [30] and [32] in particular are significant as they address the conduct the subject of the charges. The characterisation of that conduct in paragraphs [30] and [32] is appropriate. Further, the reference in paragraph [32] to the conduct admitted “however explained” could only be a reference back to paragraphs [18] and [19] wherein the Magistrate records the explanation for the offending provided by counsel for the defendants. The explanation contained in paragraph [18] refers largely to the same factors that counsel on appeal relied upon as demonstrating that the offending was atypical or unusual.

5. In concluding my consideration of this argument, it is not evident to me how arriving at a conclusion as to whether Mr Chehade was unlikely to commit an offence of the type to which he had pleaded guilty again would have necessarily resulted in a conclusion any different to that recorded at paragraph [30] of the Magistrate’s reasons. The conclusion arrived at in paragraph [30] of the Magistrate’s reasons was open on the evidence. The point made is the absence of reasonable care in each case including count 3. I reject the first argument. However, entertaining this permutation (i.e. that s 16 requires a sentencing court to proceed in lexical order and the Magistrate passed over s 16(a)) involves accepting than an error of law has occurred. That has the consequence that the sentencing discretion has miscarried. Below I consider the exercise of the power contained in s 16 afresh.

6. In respect of the second argument, I accept that the Magistrate’s observation that on 25 March 2013 Mr King signed a contract in the same amount with both Mr and Mrs El Haj as purchasers was incorrect. The contract was signed on 1 February 2013. On 25 March 2013, the Memorandum of Transfer was executed. Mr Chehade attempted to link this factual error to what was described as the implicit acceptance of the Commissioner’s incorrect submission that “Mr Chehade chose to go down the perilous path of selling to a relative without divulging this information to the vendor’s son Mr King who discovered the connection himself at the very last minute when Mr King was vulnerable and felt under pressure to proceed with the sale.” I find no reason to draw the link suggested. In fact, I do not consider the Commissioner’s submission erroneous. Mr Chehade did choose to go down the perilous path of selling to a relative, Mr El Haj, without divulging this information to the vendor’s son, Mr King. That path was perilous in that the likelihood of his sister obtaining a beneficial interest in the property became a real possibility. As much is evident in what transpired and is reflected in the basis of his plea as put to the Magistrate – Mr Chehade’s failure to advise the vendor of his relationship with Mr El Haj and the resultant potential interest of a relative obtaining a beneficial interest in the property constituted a failure on the part of Mr Chehade to take reasonable care to avoid the commission of the offence. There is nothing in the reasons to suggest that the Magistrate sentenced Mr Chehade on the basis of his possessing an intent to obtain a beneficial interest for an associate or that he considered this intent and related act to have occurred on 25 March 2013.

7. I do not think the error concerning the nature of the document signed on 25 March 2013 is of any moment. It has not led to any distortion in the Magistrate’s understanding of the gravity of the conduct subject of the offence. As indicated above, I consider the characterisation of the gravity of that conduct as set out in paragraph [30] of the Magistrate’s reasons appropriate. I appreciate that in that paragraph the Magistrate summarises the gravity of the offending for all three counts but that is understandable. Consideration of the likelihood of Mr Chehade committing such offence again and the criteria contained in s 16(b) in this case meant that, for each defendant, consideration of the conduct of the business by Mr Chehade was highly relevant. The offending of the corporate defendant of which Mr Chehade was the sole director, shareholder and controlling mind was relevant to an assessment of whether good reason existed for not recording a conviction against Mr Chehade. It was in this connection that the Commissioner submitted that regard could be had to the circumstances subject of count 2. I agree. The Magistrate summarised the facts giving rise to the commission of the offence charged in count 2 as follows:

   [16] As to Count 2 against the company, the facts are that in the period 10 April – 26 November 2013 the company employed Mr Scuteri as a sales representative but unbeknownst to vendors he was not during that time registered either as a land agent or as a sales rep. During this period he was training to become a sales rep but was assigned to three properties advertised for sale as particularized in the Complaint. He subsequently became registered as a land agent on 26 November 2013.

8. The circumstances subject of count 2 speak to Mr Chehade’s approach to the conduct of the business. That, in turn, informs the likelihood of whether he will commit the same offence again and is relevant to the formulation or not of the s 16(b) opinion.

9. The Magistrate correctly recorded that settlement subsequently occurred and that no offence would have been committed if the sale had proceeded solely in the name of Mr El Haj. I do not accept that the factual error as to what actually occurred on 25 March 2013 has caused the Magistrate to incorrectly characterise the offending as more grave than it truly was. I repeat, I think the characterisation at paragraph [30] open on the evidence. I reject the second argument. I consider the factual error of no moment.

10. The third argument contended that the discretion had miscarried in that, in essence, the conclusion arrived at was plainly wrong. This argument also relied upon characterising the offending as atypical and unusual. I have already set out my opinion on this issue. On this argument, the significance of concluding to the contrary, i.e. that the offending was atypical and unusual, lay in such conclusion denying force to the submission that as a regulatory offence the imposition of a conviction was important to securing general deterrence. For the reasons I have given, I do not consider the Magistrate to have committed any error in his conclusion that the offending “displays at a minimum poor insight, management and oversight in circumstances where supervision in each case was an essential part of ensuring fidelity and confidence”.

11. Counsel also contended that considerable weight ought to have been attached to the adverse impact that a conviction would have upon Mr Chehade’s employment prospects and, in particular, his inability to obtain finance. The argument was couched in terms of appropriate weight. To warrant intervention such argument can only form part of a submission that there was manifest error such that the outcome is one at which no reasonable Magistrate could have arrived. Above I have had regard to the Legislature’s purpose in creating the regulatory offence contained in s 24G(2) LB(SC)A and the significance to that purpose of the defence contained in s 37B. In my view, the section is intended to call real estate agents and their sales representatives to a high level of observance of the regulatory requirements of the LB(SC)A. Reasonable care to avoid the commission of the offences contained in Part 4 must be taken. That did not occur here and there is no suggestion that compliance would have required measures bordering on the unreasonable. The deterrent value of a conviction in such circumstances is obvious. I appreciate the consequences for Mr Chehade, for his family, for his future in the real estate business and for his business future more generally. However, I do not think it can be said that the conclusion arrived at by the Magistrate, that he was not of the opinion that good reason existed for not recording a conviction, was an arbitrary, capricious or irrational decision, nor was it one lacking in bona fides or support in the evidential material. Further, it was not so unreasonable as to be plainly wrong. That last conclusion necessarily carries with it the conclusion that the imposition of a conviction has not resulted in the imposition of a penalty disproportionate to the gravity of the offending. In this regard, I refer again, without repeating, to the legislative purpose underpinning the creation of the offence and the public interest in a conviction being recorded. I reject the third argument.

12. I return to the first argument. If I am wrong in my conclusions that s 16 did not require the Magistrate to proceed in lexical order and that the Magistrate should be taken to have formed the opinion required by s 16(a), then an error of law has occurred and it is for me to consider the exercise of the power contained in s 16 afresh.

13. Mr Chehade has been found guilty of an offence for which the appropriate penalty is a fine. In my opinion, he is unlikely to commit such an offence again. I do not, in arriving at this conclusion, think his offending atypical or unusual for the reasons I have given. I consider him careless in that he failed to implement some practice or procedure amounting to reasonable care to avoid committing the offence with which he was ultimately charged. No reason arises to think that he would not learn from this experience.

14. I turn to s 16(b). I bear in mind the contribution that the imposition of a conviction makes to the enforcement of the norm of conduct prescribed by s 24G(2) LB(SC)A. I bear in mind the legislative intent underpinning the creation of this offence as one of strict liability and the practical onus that s 37B places upon the agent and sales representative in the conduct of real estate agency work. Reasonable care was absent here and no explanation has been offered as to why. This observation cannot come as any surprise. The basis upon which Mr Chehade pleaded indicates an awareness of the requirements of s 37B. Further, on the hearing of the appeal, his counsel acknowledged the offence contained in s 24G(2) was likely a strict liability offence and did not challenge its characterisation by the Commissioner as a regulatory offence. The focus was upon diluting the force of the Commissioner’s submission.

15. Nothing in Mr Chehade’s character, antecedents, age, physical condition or mental condition leads me to form the opinion that good reason exists not to record a conviction. This offending cannot be considered trifling. Here I bear in mind His Honour Judge Brebner’s observation[53] and the intent behind the amendments made to the LB(SC)A in 2007.[54] I appreciate the impact the adverse publicity has had upon Mr Chehade and his family and the impact that a conviction will have on his ability to obtain finance for certain purposes. In my view, they do not amount to extenuating circumstances within the meaning of s 16(b). In the end, like the Magistrate, I do not consider that good reason exists not to proceed by recording a conviction. I am particularly influenced by the legislative intent to capture those who do not take reasonable care. Accordingly, the discretion contained in the foot of s 16 is not enlivened.

    [53]   Commissioner for Consumer Affairs v Taza [2011] SADC 192 at [29].

    [54]   South Australia, Parliamentary Debates, House of Assembly, 26 October 2006 at 1146-7.

    Conclusion and orders

16. For the reasons I have given, I dismiss the appeal.