Chen v Feng

[2020] NSWCATCD 8

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Chen v Feng [2020] NSWCATCD 8

Hearing dates:

26 August 2019
Final submissions 27 September 2019

Date of orders:

05 February 2020

Decision date:

05 February 2020

Jurisdiction:

Consumer and Commercial Division

Before:

P French, General Member

Decision:

(1) Mr Forbes’ application to stay the proceedings is refused.

(2) Mr Forbes’ application to adjourn the proceedings is refused.

(3) Mr Forbes’ application to reopen the hearing is refused.

(4) Mr Forbes’ application for summary dismissal of the application on the ground that the Tribunal does not have jurisdiction to deal with it is refused.

(5) Mr Forbes’ application for summary dismissal of the application on the ground that the Tribunal is not a convenient forum for the determination of the dispute is refused.

(6) Mr Forbes’ application for summary dismissal of the whole or part of the claim on the ground that compensation may be available from a statutory compensation scheme is refused.

(7) Jeffrey Feng must pay Yilin Chen $837.30 immediately.

(8) The application is otherwise dismissed.

Catchwords:

CONSUMER CLAIM – rental guarantee and agency agreement – whether misleading and deceptive conduct – whether unconscionable conduct

JURISDICTION – whether relevant connection to NSW – whether inconvenient forum for determination of dispute – whether claim arises from the supply of services – availability of statutory compensation scheme

PRACTICE AND PROCEDURE – service of evidence - Tribunal’s obligation to provide a party with a reasonable opportunity to be heard – respondent’s access to evidence under control of Administrators of companies subject to external administration - application to reopen hearing – whether mental illness has affected respondent’s capacity to deal with application

Legislation Cited:

Australian Consumer Law (NSW)

Australian Securities and Investments Commission Act 2001 (Cth)

Civil and Administrative Tribunal Act 201 (NSW)

Civil and Administrative Tribunal Rules 2014 (NSW)

Corporations Act 2001 (NSW)

Fair Trading Act 1987 (NSW)

Property, Stock and Business Agents Act 2002 (NSW)

Cases Cited:

Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682
Australian Securities and Investments Commission v Kobelt [2019] HCA 18
Bobolas v Waverley Council [2016] NSWCA 139
Briginshaw v Briginshaw (1938) 60 CLR 336
Mesiha v Murrell [2017] NSWCATAP 1
Miller v Minister for Pensions [1947] 2 All ER 372
Mrjana v Imagine Education Australia Pty Ltd [2016] NSWCATAP 232
NAKX v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1559
Prestige Auto Centre Pty Ltd v Apurva Mishra [2014] NSWCATAP 81
Reid v Brett [2005] VSC 18
Smith v New South Wales Bar Association [1992] HCA 36
Vroth v Manildra Floor Mills Pty Ltd [1990] HCA 55
Wall v Barham [2017] NSWACTAP 61

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Yilin Chen (Applicant)
Callum Forbes (First Respondent)
Jeffrey Feng (Second Respondent)

Representation:

F Zhou (Applicant)
First Respondent (Sef-represented)

File Number(s):

GEN 19/24796

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. This is an application by Yilin Chen (the consumer) an order pursuant to section 79N of the Fair Trading Act 1987 (FT Act) that would require Callum Forbes and Jeffrey Feng (the traders) to pay her a total of $26,139.95 in compensation for several items of damage and loss she contends that she has suffered due to the traders’ misleading and deceptive and unconscionable conduct in relation to a Rental Guarantee and Agency Agreement that subsisted between her and And Chill Property Management Pty Ltd (in liquidation) (ACPM). Mr Feng was the director and licensee of ACPM at the material time for this dispute. Mr Forbes was the director and Chief Executive Officer of And Chill Pty Ltd (in liquidation) (AC) which was a holding company for a company group which included ACPM at the material time for this dispute. This application was made to the Tribunal on 28 May 2019 (the application).

2. For the reasons set out following the Tribunal is comfortably satisfied that Mr Feng was involved in unconscionable conduct as the licensee of ACPM in failing to ensure that payments ACPM caused to be deducted from the consumer’s trust monies for Brisbane City Council rates and utility charges in the total amount of $577.30 were remitted to those vendors, and in making an unauthorised deduction from the consumer’s trust funds for house-keeping in the amount of $260.00. This amounted to a misappropriation and intermingling of trust monies with ACPM’s other monies contrary to the duty imposed upon Mr Feng by section 32 of the Property, Stock and Business Agents Act 2002 (PSBA Act), which may be taken to be an industry code for the purposes of sections 21 and 22 of the ACL. The application has otherwise been dismissed. While it is clear that ACPM breached its contractual obligations to the consumer, the evidence does not establish that this was the result of misleading and deceptive or unconscionable conduct in which Mr Feng and Mr Forbes were relevantly involved.

Procedural history

3. The application was first listed before the Tribunal in a Group List for Conciliation and hearing on 6 June 2019. Ms Fei Zhou, solicitor, attended the hearing on behalf of the consumer. Mr Forbes attended the hearing in person. There was no appearance by Mr Feng. In accordance with the Tribunal’s usual practice where both parties are present in person at the first listing of an application, Ms Zhou and Mr Forbes were provided with the opportunity to attempt to resolve the dispute cooperatively with the assistance of a Tribunal conciliator. Those efforts were not successful. As a consequence, when Ms Zhou and Mr Forbes returned to the hearing room the Tribunal adjourned the application to a Special Fixture Hearing and issued directions to the parties for the filing and exchange of the documentary evidence that they intended to rely upon at that hearing. The Tribunal also granted the consumer leave for Ms Zhou to represent her in the whole of the proceedings for reasons given at that time.

Evidence

4. The Tribunal is satisfied that the consumer complied with the Tribunal’s directions for the filing and exchange of her evidence for the reasons stated below. Her bundle, which was in two volumes, was marked Exhibit A1. It included a statement made by Ms Chen, dated 20 June 2019, and a statement of a witness, Ms Chenyang Wan, dated 20 June 2019. Neither trader submitted any evidence in response to the Tribunal’s directions.

5. Ms Zhou attended the hearing on behalf of the consumer. Mr Forbes attended the hearing in person and gave evidence under a solemn promise to tell the truth. There was no appearance by Mr Feng. Ms Zhou and Mr Forbes had the opportunity to present their respective cases and make submissions to the Tribunal. Ms Zhou had the opportunity to question Mr Forbes.

6. At the end of the hearing, the parties were provided with the opportunity to file and exchange any further submissions they wished to make in relation to the application. That direction was given in response to Mr Forbes’ complaints in the course of the hearing that he had not had a reasonable opportunity to consider the consumer’s documentary evidence (as to which see following). Mr Forbes made such a submission but did not serve it on the consumer, which required the intervention of the Tribunal to direct that the Divisional Registrar do so. The consumer subsequently filed submissions in response.

Preliminary issues

Service of the consumer’s evidence on Mr Forbes

7. At the hearing, and in his subsequent submissions, Mr Forbes complained that the proceedings were procedurally unfair to him as he had not received a copy of the consumer’s evidence because it had been sent to the address of ACPM and AC and was therefore in the possession of those companies’ Administrator. This complaint was to the effect that the proceedings should be stayed or adjourned until Mr Forbes was provided with a copy of the consumer’s evidence.

8. However, it emerged in argument that the consumer served Mr Forbes at the company addresses because he failed to provide her with an alternative address for service of documents on him despite specific requests to him from the consumer’s solicitor that he did so. Additionally, Mr Forbes had attended the first listing of the application and therefore had notice of the Tribunal’s directions for the filing and exchange of evidence. He cannot reasonably complain that the exchange of evidence took him by surprise. Mr Forbes did not contend that he had made any attempt to contact the Administrator to obtain the documents the consumer had served on him, and there is no evidence of this in any event.

9. A party cannot avoid an application by refusing or failing to provide the other party with a current address for service particularly when it is clear that they are on notice as to the application.

10. Rule 13(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NCAT Rules) provides that if a person does not have an address for service, a document may be served on that party by posting the document to the person’s last known business address. That is what the consumer has done in this case. Mr Forbes had therefore been served with the consumer’s evidence according to law and the fact that he did not have it in his possession was entirely due to his own conduct. There is no procedural unfairness to him in these circumstances. The Tribunal therefore declined to stay the proceedings or adjourn the hearing to a later date on this basis.

11. In order to mitigate Mr Forbes’ practical disadvantage in not having the consumer’s evidence with him at the hearing, the Tribunal provided him with its copy, which he returned at the end of the hearing. As noted above, the Tribunal also made directions enabling the parties to make final submissions after the hearing in a further effort to mitigate Mr Forbes’ disadvantage in the conduct of his case at the hearing.

Access to documents necessary for Mr Forbes’ response to the application

12. Mr Forbes also complained at the hearing and in his subsequent submissions that the proceedings were procedurally unfair to him because he had been deprived of the opportunity to file evidence in response to the application as all of the relevant documents were in the custody and under the control of the Administrator and he did not have access to them. Again, the thrust of this complaint appeared to be that the proceedings should be stayed or adjourned because it was unjust to proceed in circumstances where Mr Forbes could not defend himself.

13. Mr Forbes did not provide any evidence of any attempt to contact the Administrator to obtain the documents necessary for his response to the claim or any evidence of a refusal by the Administrator to cooperate with him in this respect. In any event, it was open to Mr Forbes to use the compulsory processes of the Tribunal to obtain these documents if there was such a refusal. He could have issued the Administrator with a summons to produce these documents pursuant to section 46 of the Civil and Administrative Tribunal Act 2013 (NCAT Act). He did not do so. Prior to the hearing he had not requested an extension of time in which to file evidence, nor had he requested an adjournment of the hearing to provide him with further time to obtain evidence.

14. Section 38(5)(c) of the NCAT Act imposes a duty on the Tribunal to take such measures as are reasonably practicable to ensure parties have a reasonable opportunity to be heard and have their submissions considered. However, that obligation is not unlimited. It must be interpreted and applied having regard to the guiding principle set out in section 36 of that Act, which is the just, quick and cheap resolution of the real issues in a proceeding: Wall v Barham [2017] NSWACTAP 61 at [31]; Mesiha v Murrell [2017] NSWCATAP 1 at [29 -60].

15. In this case Mr Forbes had been afforded a reasonable opportunity to file documentary evidence in response to the application by the procedural directions made on 6 June 2019. He had failed to take reasonable, indeed any, steps to do so. He was thus in a predicament entirely of his own making.

16. A party cannot avoid an application by failing to take reasonable steps to obtain evidence necessary for its case. Consequently, although there was a clear disadvantage to Mr Forbes in attempting to respond to the application at the hearing without the documents he contended were necessary for him to do so, this did not result in any injustice to him. It was a predicament of his own making. The Tribunal therefore declined to stay the proceedings or adjourn the hearing to a later date on this basis.

Proceeding in the absence of Mr Feng

17. At the hearing, Mr Forbes complained that it was procedurally unfair to conduct the hearing in Mr Feng’s absence because he was the Principal and Licensee of ACPN and had more detailed knowledge of that company’s dealings with the consumer. Mr Forbes complained that he would be disadvantaged by Mr Feng’s failure to participate in the proceedings.

18. Mr Feng is a respondent party to the proceedings. The evidence establishes that he was served with Notice of the Hearing to his last known business address (being the address of the companies) in accordance with Rule 13 of the NCAT Rules, no other address being known to the applicant or to the Divisional Registrar. That notice has not been returned to the Registrar unopened. The Tribunal’s file also indicates that Mr Feng was served with notice of the hearing to a business email address. There is no indication that that email was not delivered. Mr Feng had not indicated to the Divisional Registrar any inability to participate in the hearing and he had not requested an adjournment of the hearing.

19. Rule 35 of the NCAT Rules provides that the Tribunal, when exercising functions allocated to its Consumer and Commercial Division, as it is in this case, may proceed to hear an application in the absence of a party provided it is satisfied that the party has received notice of the hearing. For the reasons set out above Mr Feng is deemed to be on notice of the hearing.

20. To the extent that Mr Forbes relies upon evidence capable of being given by Mr Feng for his own response to the application it was open to Mr Forbes to file a statement by Mr Feng in accordance with the procedural directions made for the filing of evidence on 6 June 2019. If Mr Feng had refused to cooperate in this regard it was open to Mr Forbes to use the compulsory processes of the Tribunal to summons Mr Feng to give that evidence. He has not done so. There can therefore be no procedural unfairness to Mr Forbes arising from Mr Feng’s failure to participate in the proceedings. As a party, Mr Feng has been given that opportunity but has failed to take it up, and Mr Forbes could have compelled his attendance as a witness but he did not. The Tribunal therefore declined to stay the proceedings or adjourn the hearing to a later date on this basis.

Request for adjournment of the hearing on the ground of Mr Forbes’ mental illness

21. At the hearing, and in his subsequent submissions to the Tribunal, Mr Forbes applied for an adjournment of the hearing, and a further hearing of the application, on the ground that the proceedings were unfair because he was not prepared for the hearing because of his mental illness. In support of this application, he attached to his subsequent submissions two WorkCover NSW Certificates of Capacity dated 22 July 2019 and 4 September 2019 which state that Mr Forbes has been diagnosed with “work-related anxiety and depression” and has “no current capacity for employment” for the periods 27 June 2019 to 15 August 2019 and 16 August 2019 to 16 November 2019. Mr Forbes submits that these certificates establish that he has been “severely restricted in [his] ability to get [his] head around this matter and put together a coherent and thorough response.”

22. The medical certificates relied upon by Mr Forbes in support of his adjournment application are of limited probative value. While they establish that he has and is experiencing anxiety and depression, they were prepared for another purpose and do not provide any information as to why this condition would prevent him from attending to his legal obligations as a respondent to this application. For example, they do not state that Mr Forbes is or has been incapable of managing his affairs in the legal sense, or that he has been prescribed any medication that would result in his ongoing sedation, or that he has been admitted to hospital for treatment for an extended period, or at all. In this respect, the certificates do not address the “critical question” of whether, and if so why, the medical condition would prevent him from participating effectively in the proceedings: NAKX v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1559 at [6] per Lindgren J; cited with approval by the NSW Court of Appeal in Bobolas v Waverley Council [2016] NSWCA 139 at [221 to 222].

23. Mr Forbes did not make any application for an adjournment on medical grounds prior to the hearing. It appears that it only occurred to him to do so when he began to appreciate, in the course of the hearing, the strength of the consumer’s case and the weaknesses of his attempted responses to it. Had an application for an adjournment of the hearing on medical grounds been made prior to the hearing, and had better evidence of the impact of Mr Forbes’ condition on his capacity to conduct his case been presented at that time, it may have been appropriate to allow Mr Forbes further time to prepare his case. However, no such application was made. At the hearing, when the request for an adjournment was first made on this ground, no supporting evidence was tendered to prove Mr Forbes’ bare assertions as to his condition.

24. There would have been considerable prejudice to the consumer if the hearing was adjourned at the Special Fixture. She had instructed Ms Zhou to attend the hearing on her behalf. Even if she was successful in obtaining a costs order against Mr Forbes for the hearing thrown away, she would still, in all likelihood, suffer financial loss in legal costs and inconvenience that could not be overcome by that order: Mesiha v Murrell [2017] NSWCATAP 1 at [29 -60].

25. In all of these circumstances the Tribunal refused Mr Forbes’ request for an adjournment of the hearing at the time of the hearing.

Application to reopen the case

26. In substance Mr Forbes’ further request for an adjournment of the hearing, made in the context of his submissions made after the hearing, is a request to reopen the case. Courts and Tribunal’s do have a general discretionary power to reopen a case to admit further evidence after the hearing has concluded but before judgement is delivered: Smith v New South Wales Bar Association [1992] HCA 36 at [27]. The criteria governing the favourable exercise of that discretion were distilled in Reid v Brett [2005] VSC 18 as follows: (a) the further evidence must be so material that the interests of justice require its admission; (b) the further evidence if accepted would most probably affect the result of the case; (c) the further evidence could not with reasonable diligence have been discovered earlier; and (d) no prejudice would ensue to the other party by reason of the later admission of the further evidence.

27. In this case all of the documentary evidence Mr Forbes’ seeks to admit into evidence after the hearing could have been discovered with reasonable diligence prior to the hearing and have been filed and exchanged in accordance with the Tribunal’s directions of 6 June 2019. If Mr Forbes was prevented or inhibited by his mental illness from exercising reasonable diligence to obtain these documents that fact is not established on the limited medical evidence he has submitted for the reasons stated above. The necessary grounds for the exercise of the discretion to reopen the case have therefore not been established. Mr Forbes application for a rehearing of the application must therefore be refused.

Application for summary dismissal of the application on the ground the tribunal does not have jurisdiction to deal with it

28. In his submissions at the hearing, and in his subsequent written submissions, Mr Forbes argued that the application should be summarily dismissed because the Tribunal did not have jurisdiction to deal with it. This objection to jurisdiction is founded upon section 79K of the FT Act which provides that for the Tribunal to have jurisdiction to hear a consumer claim the dispute must have a relevant connection to NSW.

29. It is convenient to quote Mr Forbes’ objections to jurisdiction from his final submissions:

The Applicant’s claim is a consumer claim for property management services supplied in the state of Queensland. NSW Fair Trading Act s79(k) has that consumer matters be heard only if the services were supplied in New South Wales. This matter should therefore not be heard in NCAT, but in the relevant Queensland based forum.

The Applicant engaged And Chill Property Management Pty Ltd to provide property management services for her property located at 22-28 Merivale Street, South Brisbane Qld 4101. All property management services were supplied to this address in South Brisbane.

And Chill Property Management Services Pty Ltd and And Chill Pty Ltd operated in Queensland from an office located at 321 Water Street Fortitude Valley QLD 4006.

The sales representative that closed the deal with the Applicant is a Queensland resident, Rachael Spencer, who at all times during her employment operated within Queensland.

The Agency Agreement which was entered into between the Applicant and And Chill Property Management Pty Ltd was done so under a Queensland Company Real Estate License. The Licensee, Jeffrey Feng, signed the agreement as the authorised Licensee of the Estate License to allow him to act in this capacity.

All cleaning, property maintenance, guest management services were sourced and supplied in Queensland.

And Chill Property Management Pty Ltd did not employ any staff in NSW.

The contract to which this matter relates was not made in NSW. The contract was made by a third party located at 153 Kearny Street, San Francisco, California, U.S. and was signed digitally, which can take place anywhere globally.

Given this claim is not related to services supplied in NSW, nor an agreement made in NSW, this falls outside of the jurisdiction of NCAT. …

30. Section 79K(1) is in the following terms:

79K Supply or agreement made, or supply intended to be made, in New South Wales

(1)   The Tribunal has jurisdiction to hear and determine a consumer claim only if:

(a)    the goods or services to which the claim relates were supplied in New South Wales, or

(b)    a contract or other agreement to which the claim relates contemplated that the goods or services would be supplied in New South Wales (whether or not they were so supplied), or

(c)    a contract or other agreement to which the claim relates was made in New South Wales (whether or not the goods or services were supplied in New South Wales)

31. Section 79K(1) makes it clear that there will be a relevant connection to NSW that will confer jurisdiction on the Tribunal to hear a dispute as a consumer claim if one of the connections specified in paragraphs (a) to (c) is established – it is not necessary that all three connections are established.

32. In her submissions in reply, the consumer argues that the requirements of both paragraphs (a) and (c) of 79K(1) are satisfied in this case:

8.   The current dispute involves the Agreement and the subsequent provision of goods and property management agency services. The services were supplied in NSW within the meaning of section 79H(2)(b) as:

(a)    And Chill Property Management Pty Ltd (ACPM) was incorporated in NSW, has its registered office and principal place of business in NSW at 1502/2 Quay Street, Haymarket NSW 2000 (as is established by the ASIC Company Search submitted in relation to that entity).

(b)    the services of a property management agency, including advertising, bookkeeping, engaging third parties to perform “add on” services such as cleaning, were in fact performed by staff employed by an associated entity of ACPM – And Chill Pty Ltd (AC) which had its registered office and principal place of business in Sydney (as established by the ASIC Company Search submitted in relation to that entity – it was collocated with ACPM)

(c)    AC was also incorporated in NSW, had its registered office, principal place of business in Sydney and operated from an office in Sydney where it had a team of staff.

(d)   There is no indication in the Administrator’s Report or any evidence tendered to show that AC had in fact a separate office in Queensland which employed staff to perform the services of a property management agency.

(e)   when ACPM agreed to the supply of these services by virtue of the Agreement, the consent was provided in NSW as evidenced by its verified electronic signature on the Agreement which indicates its IP address is “49.181.232.147” at the time of signing. The corresponding location of this IP address is in NSW (as is evidenced by an IP Address Check which the consumer has submitted into evidence).

9.   As such, the Tribunal has jurisdiction under section 79K(1)(a) as the services were supplied in NSW.

…

10.   On 20 January 2018, an offer of services was made by ACPM to the Applicant when ACPM caused an email to be sent to the Applicant containing a link to the electronic version of the Agreement generated by PandaDoc (an online document creation, sending, tracking and eSigning platform).

11.   On 29 January 2018, ACPM provided its written consent to the Agreement when Mr Feng signed the Agreement electronically in his capacity as sole director of ACPM and the licensee in charge.

12.   On 30 January 2018, the Applicant provided her written consent to the Agreement when she signed the Agreement electronically.

13.   Per His Honourable Campbell J at paragraph 334 of Entores Ltd v Miles Far East Corporation [1955] 2 QB 327, “The contract is only complete when the acceptance is received by the offeror: and the contract is made at the place where the acceptance is received”, the Agreement was completed when ACPM received the Agreement executed by the Applicant by way of notice generated on PandaDoc and electronically received a copy of the fully executed Agreement. It is submitted that this occurred on or shortly after 30 January 2018 but before 6 February 2018 (being the date of the Agreement). At the time receipt (sic), ACPM was in NSW (by virtue of the location of its registered office) as it has been for all material times. The Agreement was thus formed in NSW.

14.   As such, further and in the alternative to Section 79(1)(a), the Tribunal has jurisdiction under Section 79(1)(c) to determine these proceedings as the Agreement was made in NSW.

I note that the consumer has submitted a supplementary statement with her final submissions, dated 20 September 2019, that deposes to the process by which she signed and submitted the Rental Guarantee and Agency Agreement to And Chill Property Management Pty Ltd. That statement provides the evidentiary basis for her submissions as outlined above.

33. On the evidence before me I am comfortably satisfied that the consumer has established that this dispute has a relevant connection to NSW that confers jurisdiction on the Tribunal to determine her claim because the requirements of both paragraphs 79K(1)(a) and (c) are satisfied in this case.

34. First it is relevant to note that Mr Forbes is mistaken as to several of the facts he states in his objection to jurisdiction. Mr Feng was not a real estate agent and ACPM was not a real estate corporation licenced under Queensland law. Both were licenced under the provisions of the Property, Stock and Business Agents Act 2002 (NSW). Nor is it correct to state that ACPM and AC operated from an address in Fortitude Valley in Queensland. The ASIC Company Searches for both entities state that the registered addresses and principal places of business for both entities was located in Pyrmont in NSW. There may have been another place of business for both entities in Fortitude Valley as Mr Forbes contents, but there is no corroborating evidence of this bare assertion in the Administrators’ report to creditors (Administrators’ report) dated 26 July 2019, or otherwise. The Administrators’ report states that AC was the employing entity for staff who conducted the business of the company group. In this respect Ms Spencer, is she was a Queensland resident who worked only in Queensland as Mr Forbes contents, was nevertheless the employee and agent of NSW based companies for the reasons stated above.

35. The “services” ACPM and AC provided to the consumer were not limited to the direct services provided to and in respect of her property in Queensland. These may have been directly supplied or coordinated from an office in Fortitude Valley as Mr Forbes contends although as noted there is no corroborating evidence that such an office actually existed. However, they were “agreed to be supplied” in NSW within the meaning of section 79G of the FT Act because that is where the contract for the supply of these services was made (as to which see following).

36. Additionally, the services that were the subject of the supply included indirect management and administrative support services provided in respect of that property and the direct services which the evidence establishes were supplied from the principal place of business of both companies in NSW. It is not in issue that Mr Feng was situated at ACPM’s principal place of business at all or most of the material time for this dispute and exercised or purported to exercise the functions of a principal and licensee from that location. The account statements issued to the consumer by ACPM are in three formats and two formats do not include address details for ACPM. However, one format does include the address details at that address is that company’s principal place of business in NSW. This would appear to confirm that account management services were provided to the consumer in NSW. Similarly, Mr Forbes was situated at AC’s principal place of business at all or most of the material time for this dispute and exercised or purported to exercise the functions of the Chief Executive Officer of that entity from that location.

37. It is not possible to know on the evidence what proportion of the totality of services ACPM and AC provided to the consumer in Queensland as opposed to NSW, or the proportion of direct or indirect services that were provided to her from each location but even if the direct services were predominately provided in Queensland, and the services provided to her in NSW were primarily indirect, the provision of any services to the consumer in NSW is sufficient to create a relevant connection to NSW and confer jurisdiction on the Tribunal to determine the dispute.

38. With respect to section 79K(1)(c), in Mrjana v Imagine Education Australia Pty Ltd [2016] NSWCATAP 232 at [33] to [34] the Appeal Panel of the Tribunal concluded, after reviewing the relevant authorities, that in circumstances where a contract is made by electronic communication, it is made at the location at which the acceptance of the offer of contract is received from the offeree by the offeror. In this case, the consumer’s evidence is compelling that this was in NSW because that is the IP address of the computer from which the offer to supply services was made and to which its acceptance was communicated. The consumer has submitted into evidence a “What is my IP Address” search result that establishes that this was the case. Mr Forbes’ submission that the contract was made in California is misconceived. A contract is not ‘made’ for the purposes of section 79K where its generic form is drafted. It is made upon the communication of the acceptance of an offer of contract by an offeree to the offeror.

Is the Tribunal an inconvenient forum for determination of the dispute?

39. For completeness, I note that Mr Forbes’ objection to jurisdiction might also be construed as a submission that NSW is an inconvenient forum for the resolution of the dispute. However, I am not satisfied that this is the case. The consumer submits, citing the plurality of the Court in Vroth v Manildra Floor Mills Pty Ltd [1990] HCA 55 at [30], that she has regularly invoked the jurisdiction of the Tribunal and that she therefore has a prima facie right to insist upon its exercise. I accept that submission. She also submits, and I also accept, that there is no basis upon which it could reasonably be said that the proceedings are oppressive, vexatious or an abuse of process. As will emerge, the consumer has been partially successful in her claim.

40. Nor does the balance of convenience favour a Queensland forum for the resolution of the dispute. Mr Forbes resides in NSW, as does Mr Feng (as least in so far as the ASIC Company Searches indicate). The consumer’s solicitor is located in NSW. There are no other witnesses called to give evidence who are located in Queensland. The traders’ former companies’ registered addresses and principal places of business are in NSW (in so far as that continues to be a relevant consideration).

41. Additionally, the objection to jurisdiction is raised at and after the formal hearing has occurred rather than at an early stage in the proceedings. Acceding to that objection at this late stage would thus require the dispute to be re litigated which would result in significant litigant and public costs thrown away and unnecessarily delay the finalisation of this application for no obvious benefit to any party. Such an outcome would be entirely inconsistent with the guiding principle to be applied in all aspects of the Tribunal’s practice and procedure, which as noted above, is the just, quick and cheap resolution of the real issues in dispute. Therefore to the extent that Mr Forbes’ objection to jurisdiction is to be understood as a submission that this Tribunal is not a convenient forum for the resolution of the dispute it must also be rejected.

Application for summary dismissal of the application on the ground that the consumer can apply for compensation from a statutory compensation scheme

42. In his final submissions Mr Forbes submits that the application, at least in part, should be dismissed as there is an alternative form of compensation potentially available to the consumer under a statutory compensation scheme at least in relation to misappropriated trust money. In NSW this is the Property Service Compensation Scheme, established under the Property, Stock and Business Agents Act 2002. That submission is based on the Administrator’s statement at section 4:10 of the Administrators’ report which reads:

Property Owners may claim as unsecured creditors in ACPM, however at this stage it appears unlikely that there will be a return in the external administration

Notwithstanding, property owners separately may have the ability to make claims against their respective state based property service compensation funds administered by the state based OFT (office of fair trading)

43. This application is misconceived. The availability or otherwise of a remedy or part remedy from another source in relation to misappropriated trust money has no bearing upon the personal liability of the traders to compensate the consumer for any damage and loss suffered if she is able to prove that this arises from the traders’ misleading and deceptive and/or unconscionable conduct. The Property Service Compensation Scheme does not indemnify the traders, as wrongdoers, against a consumer claim. Mr Forbes’ application for summary dismissal, or part dismissal, of the application on this basis must therefore be dismissed.

Material facts and contentions of the parties

44. The consumer is a Chinese national who lives in China and who speaks and reads English on a very limited basis. She is the registered proprietor of Lot 11805, Ivy Evergreen, XXX Merivale Street, South Brisbane, which is a one bedroom apartment situated in a residential tower (the property). The consumer completed the purchase of the property in January 2018. The purchase price she paid was $451,000.00. The consumer purchased the property as an investment with a view to it being rented out.

45. The dispute arises from a Rental Guarantee and Agency Agreement dated 6 February 2018 entered into by the consumer with ACPM, which as noted above, is a real estate corporation licensed under the provisions of the Property Stock and Business Acts Act 2002 (NSW)

46. It is necessary to set out the relationship of ACPM to other entities in its company group and Mr Feng’s and Mr Forbes’ roles within the group. This information is taken principally from the Administrators’ report to creditors dated 26 July 2019. ACPM is a subsidiary of AC along with a number of other subsidiaries, being Swiftly Property Services Pty Ltd (Swiftly), And Chill Home Styling Pty Ltd and And Chill Home Cleaning Pty Ltd (the company group). Mr Feng holds a 51% shareholding in AC and Mr Forbes holds the remaining 49% of shares in that entity. Mr Feng was a director of each of these entities until his resignation from these positions on or about 23 June 2019. Mr Feng was also the licensee-in-charge of ACPM until his resignation from that position on or about 23 June 2019. Mr Forbes is a director and was the Chief Executive Officer of AC. Mr Forbes did not hold a real estate agent’s license at any material time for this dispute. At a number of points in their report the Administrators state that Mr Forbes was primarily responsible for the day to day operation of ACPM and AC and that Mr Feng had little direct involvement, despite being APCM’s licensee. AC and ACPM became subject to external administration on 28 June 2019. In their report to creditors the Administrators state the belief that ACPM and AC failed “due to a variety of factors including operating losses, poor financial controls and an inability to raise further funding”.

47. The Administrators state that the company group operated a short-term property rental business. The business model involved managing and listing residential properties on a number of short-term letting platforms including AirBnB, Booking.com and Expedia. ACPM was engaged by homeowners to manage their properties on their behalf pursuant to managing agency agreements. ACPM would then engage AC to undertake listing activities via on-line booking platforms. AC would then engage other entities within the company group to supply services to the homeowners. AC administered the homeowners trust accounts on behalf of ACPM, receiving and crediting funds paid by short-term renters via the on-line platforms, applying various property management charges against these funds (booking fees charged by the letting platforms, repair costs, internet charges etc), and disbursed the net ‘profit’ to the homeowner. AC was also the company group’s employing entity, employing approximately 30 staff at its peak operation.

48. The consumer was referred to ACPM in early January 2018 by a friend, Ms Chenyang Wan, who had also purchased a property in the residential tower and who intended to engage ACPM to manage that property for short-term rental under a managing agency agreement that guaranteed her an annual return upon investment of 6% of the purchase price she paid for her property.

49. The introduction took place via Wechat on 4 January 2018 with a representative of ACPM named Dean. Copies of the wechat messages that passed between the consumer and Dean informally translated from Chinese into English are in evidence. In summary, Dean informed the applicant that if she were to appoint ACPM her managing agent, it would rent the property on the short-term rental market (AirBnB) with a guaranteed annual return upon investment of 6% of the purchase price she paid for her property, which would provide her with a net profit of more than CNY100,000.00 per annum. ACPM would not charge her a management fee and ACPM would also pay for the necessary insurance. Renters would be required to pay a bond which would cover the cost of rectification of any damage to the property they caused during their stay. This would be managed by ACPM. ACPM would also arrange for the property to be cleaned at the renter’s expense after every check-out. The consumer would be responsible for the payment of council rates, water and electricity bills, which he estimated would be approximately $3,000.00 per annum, but these accounts would be managed by ACPM. The only additional cost that the consumer would incur would be the cost of a premium furniture package for the property. ACPM would arrange the supply of the furniture, which would be owned by the consumer, and the value of the furniture could be depreciated annually allowing her to claim a tax deduction for its cost over its life. All of these terms would be set out in a legally binding contract.

44. In her statement the consumer contends that she has been “very close friends” with Ms Wan for an extended period. She claims that she relied upon Ms Wan “to communicate with And Chill for all issues we discovered about And Chill’s management of our properties, the particulars of which are detailed in her affidavit sworn on 20 June 2019”. In her affidavit Ms Wan states that she is a close friend of the consumer and an owner of another property in the residential complex in which the consumer owns her property which she also purchased in January 2018. Ms Wan states that as the consumer “was overseas and had limited command of English, I was her representative in communication with And Chill throughout the matter”. There is no objective evidence that if this was the case that fact was ever directly communicated by either the consumer or Ms Wan to anyone at ACPM or AC.

45. In her affidavit Ms Wan sets out various representations that were made to her by a representative of ACPM named ‘Dean”. It is clear from paragraph 14 of her affidavit that all of these representations were made in respect of Ms Wan’s property and her (prospective) Rental Guarantee and Agency Agreement. However, Ms Wan communicated the information she had received from Dean to the consumer and referred the consumer to ACPM who then made contact with Dean directly.

46. The particular significance of the contention that Ms Wan was in some way the consumer’s agent in communications with ACPM though Dean is in relation to the “Home Styling Furniture Package” the consumer was required to purchase. In other respects the representations made by Dean to the consumer and Ms Wan in relation to the terms of the Rental Guarantee and Agency Agreement were essentially the same. The sections of Ms Wan’s affidavit relevant to the furniture package are set out below:

5   During our initial discussions on wechat:

Dean advised me, “The plan provides 6% net profit. The only expense for you is to buy furniture. Once your 2-year 6% contract expires, furniture is all yours.”

Dean also advised, “The content of service includes purchasing furniture, delivery, assembly, photographing and advertising online. For a one bedroom, it costs $8,990 which can be paid in instalments with interest charged. ...

…

11   On 13/12/2017, one month before the settlement of my property, I have contacted Dean again regarding the guaranteed rental matter, asking about the details.

I asked him “we have do (sic) know where does this $8000+ is spending at? Otherwise what if they give us second-hand furniture? Or pile of crap?”

He replied “not possible, they can’t rent properties out with second-hand furniture. How can they guarantee 6%”.

12   On 20/12/2017, upon knowing the price of the furniture has changed to $10,450. I have contacted Dean again about the reason why the price increased. He replied in the context that now they are using better furniture with good quality.

I asked, “Dean, can the furniture be a little bit cheaper? I have asked people who do Airbnb … they day $10000+ is enough to decorate a 2 bedroom, because we are ordering in bulk quantity. Why did it suddenly change?

He replied, “because of the brand, it was $9000, used IKEA, now using from the website I sent you. Customer complained that the IKEA furniture were really bad in quality and they broke after a short while, and have to be fixed. Now they change to the better one altogether, can ensure 3-4 years without big problems.” …

13   I have double checked the price with Dean again later that day,

I asked, “isn’t the furniture supposed to be $9950?”

He replied, “that is for IKEA, this is not for idea (sic). When you receive invoice and find anything IKEA I will exchange for you for free.”

I said ‘OK, but isn’t it they don’t give out invoices?”

He replied “in the past there is. Can be used for tax refund, also for depreciation and negative gearing.” …

Dean has also sent me a screenshot in wechat of the email he received from And Chill titled “Home Styling – Furniture Packages”. The email states “we offer our clients superior products and styling with Temple and Webster and their 130,000 product range.” And “we do not manage any property on the 6% guaranteed model that has not been styled by our team to ensure quality control”. …

14    With the knowledge of the information Dean provided to me, I communicated this information to Yilin. …

15.   During the few months after the execution of the contract there were already problems happening, first I discovered from a detailed review on my property on Airbnb using the link And Chill sent me when my property was live that the furniture in the apartment were indeed IKEA. …

16.   I have contacted Dean immediately after seeing this review and he has contacted Rachael Spencer, who is in charge of the Brisbane properties regarding the furniture matter. Rachael’s reply indicated that she sent an urgent message to Billy their general manager regarding this matter, she was told they stopped using anything from IKEA las year and they do have an agreement with Temple and Webster to furnish the properties. She does not know why this happened and Billy needs to investigate. … I have not received any response or solution in this regard from And Chill in relation to any of my, Yilin Chen or my mother’s property.

53. On or about 17 January 2018 the consumer received an email from an ACPM representative, Rachael Spencer, enclosing a copy of a Rental Guarantee and Agency Agreement. ‘Dean’ also sent her a further copy that day via wechat. The consumer deposes that she could not read this document because it was in English but assumed that its terms were in accordance with the representations as to its contents that Dean had made to her in their wechat communications on 4 January 2018. As noted above, the agreement was signed digitally by Mr Feng on behalf of ACPM on 29 January 2018 and by the consumer on 31 January 2018. It is dated 2 February 2018.

54. The agreement is in two parts. Part 1 is the Rental Guarantee Agreement. It is relevant to extract some of the terms of this part of the Agreement:

Introduction

A.   The Client has bought the Property for the Purchase Price under the Sale Contract,

B.   The Agent wishes to let and manage the Property for the Client during the Term.

C.   Subject to the Client entering into the Agency Agreement for the Term and purchasing the standard Home Setup Package from the Agent, the Agent has agreed to give the Rental Guarantee to the Client on the terms and conditions set out in this Agreement.

Schedule 1

…

2.    Agent            Jeffrey Feng

Licensed Real Estate Agent, Director, and chill property management pty ltd

…

5.    Purchase price:            $451,000

6.    Guaranteed Minimum Rental Amount:   $27060

The Guaranteed Minimum Rental Amount

is to be equal to 6% of the Purchase Price

calculated on a per annum basis during

the Rental Guarantee period.

7.   Guaranteed Weekly Rental Amount:      $521

Guaranteed Weekly Rental Amount

means the weekly rental amount

calculated by the application of the

following formula: = Purchase Price x

6% / 52 weeks e.g. $600,000 x

6% / 52 = $692.31

8.   Rental Guarantee Commencement Date

The latter of either the date of settlement of the purchase of the Property under the Sale Contract or the date of the go live date of the Property listing on short term rental platforms

9.   Rental Guarantee Expiry date

24 months from the Rental Guarantee Commencement Date.

Payment required

Price      QTY      Subtotal

Home Setup package      $10,450.00   1      $10,450.00

Payment processing fee   $182.88

(1.75%)

Total:            $10,632.88

….

Agreement

…

2.   Rent Guarantee reconditions

2.1   The Agent’s obligations to make payments to the Client under the Rental Guarantee is subject to and conditional upon:

(a) the Client appointing the Agent for the Term as its real estate agent to let and manage the Property on behalf of the Client by signing and returning to the Agent the Agency Agreement on or before the Settlement Date, or any later date as approved by the Agent.

(b) the Client providing the proof of the Purchase Price in a Sale Contract that forms the basis of the calculation of the Weekly Rental Guarantee Amount

2.2   If any of the conditions in clause 2.1 are not complied with by the Client when due then the Rental Guarantee by the Agent to the Client will no longer apply.

3.   Client Obligations

…

3.9   The Client authorises the Agent to take reasonable steps to facilitate the short term letting of the Property during the Term of the Agreement.

3.10   The Client must accept the persons or persons introduced by the Agent as prospective Guests for the Property at a reasonable rate for the Property at the relevant time as determined by the Agent in its sole discretion. …

3.11   The Client authorises the Agent during the Term of the Agency Agreement to act as required to manage the Property on behalf of the Client.

…

3.14   The Client authorises the Agent to determine short-term rental nightly rates and cleaning fees.

3.15   Repairs and maintenance relating to the structural integrity of the Property are the sole responsibility of the Client, to be managed by the Agent. The Client must pay all rates, taxes, charges ad strata fees in connection with the Property as and when they fall due for payment.

…

4.   Agents Obligations

4.1   Subject to the Client appointing the Agent for the Term under the Agency Agreement and subject to this Agreement, the Agent guarantees to pay the difference, if any, between:

1.    The rental payout paid to the Landlord (if any) from any short term rental reservation for the Property during the previous calendar year or part thereof after Property Management Commission fees charged by the Agent have been subtracted; and

2.   The Guaranteed Weekly Rental Amount for the Property for that previous calendar year or part thereof.

This payment will be paid to the Client in arrears within 5 Business Days at the end of each 12 month period from the Rental Guarantee Commencement Date.

The rental compensation under clause 4.1 will be calculated from an including the Rental Guarantee Commencement Date.

The rental compensation under clause 4.1 will expire on the Rental Guarantee Expiry Date or as otherwise provided for in this Agreement.

The rental compensation under clause 4.1 is payable pro-rata in respect of periods less than a week calculated on a daily basis.

…

5.   Termination

5.1   The Agent’s obligation to pay the Client rental compensation under the Rental Guarantee given by the Agent under this Agreement will terminate and end if any one or more of the following occur:

…

2.   The Client terminates or cancels the Appointment (after the appointment has been entered into by the Agent and the Client);

…

7.   The Client at any time offers to rent or rents the Property on its own account or through another agent or person;

8.   The Client at any time ceases to offer the Property for lease or rent through the Agent;

5.2   Upon termination of this Agreement, the Rental Guarantee will end from the date of termination of this Agreement and the Agent will have no further obligations to the Client under this Agreement from the date of termination of this Agreement

5.3   For the avoidance of doubt the Agent will remain liable to pay to the client any payments due under the Rental Guarantee that arise before the date of termination of this Agreement.   

55. Part 2 of the Agreement is the Agency Agreement. The following terms are notable:

Schedule 1

…

Start Date:                2018-02-20

Property Management Fee (inc GST)   30%

(% of all monies received on behalf of

Property Owner, excluding cleaning &

AirBnB service fees)

Additional Terms   Each month the client will be disbursed the revenue generated during that period from short term rental websites after commission has been charged. The twelve (12) month period will be dated from once the property has been listed on-line for one month. If the total revenue after twelve (12) months generated after commission is less than the guaranteed amount, then and chill will pay back the Property Owner the difference in revenue.

Party Responsible for Organising Payments

Electricity   Agent (and chill)

Gas   Agent (and chill)

Internet   Agent (and chill)

Water   Agent (and chill)

Council    Agent (and chill)

Strata Levies   Agent (and chill)

…

Smoke Alarms   Agent (and chill)

Repairs &Maintenance   Agent (and chill)

From time to time engage tradespersons as may be

necessary, and effect repairs and maintenance to the

Property to a Maximum Pre-approved Maintenance

Expenditure not greater than:               $150

Agreement

…

2.   Reporting

The Property Owner will receive a statement on the last day of the month via email itemising the rental revenue received during the month and any expenses incurred payable by the Property Owner. Payment will be sent electronically on the same day.

A property management commission as itemised in schedule 1 on the total monthly AirBnB payout (net of cleaning fees and AirBnB fees) will be payable monthly to an chill and will be deducted from the short-term rental income earned. This will be itemised on the monthly statement provided.

…

3.   Furniture

All furniture and other items purchased by and chill remains the property of and chill and is provided to the Property Owner for the entire length of this agreement for a flat-fee as listed in Schedule One.

After a period of 24 months from the initial listing of the property on the short-term rental market by and chill, all furniture and items purchased by and chill shall have ownership transferred that (sic) of the Property Owner, and an chill will be responsible for replacing damaged furniture and maintaining the quality of the furniture (originally provided by and chill, excluding pre-existing furniture) throughout the duration of the agreement.

If termination of this agreement occurs before furniture ownership has transferred to the Property Owner, and chill will arrange for removal of the furniture and return the property in the same condition it was in at the start of the management agreement, accounting for fair wear and tear.

4.   Repairs and Insurance

Damage to the property caused by guests will be charged to the guest responsible under the ‘AirBnB Host Guarantee.” This will be itemised on the monthly statement provided to the Property Owner.

‘AirBnB Host Protection Insurance’ is provided through a policy issues by Lloyds of London. The Host Protection Insurance program provides primary liability coverage for up to US$1millio per occurrence in the event of third party claims of bodily injury or property damage. The Host Protection Insurance programme covers landlords and strata associations when claim are brought against them because a guest suffers an injury during a stay. The Host Protection Insurance programme also covers claims if a guest damages building property.

…

And chill has public liability insurance provided by DUAL Australia Pty Ltd with an indemnity limit of $5,000,000 for claims for compensation for personal injury or property damage arising out of an occurrence in connection with real estate residential property management.

In instances of maintenance or repairs not due to short-term guests (such as an antenna on the roof failing), the cause can’t be identified, or relate to the structural integrity of the property, the cost of repair will be paid by the Property Owner. And chill will coordinate the response and communicate the cost of repairs with the Property Owner. All expenses will be itemised on the monthly statement.

The Owner authorises and chill to initiate and pay for caretaking (where applicable) maintenance and repairs on the Property, enlisting qualified tradespersons where required, without first seeking permission from the Owner up to the Maximum Pre-approved Maintenance Expenditure stated in Schedule One. and chill will obtain the Owner’s written approval before ordering maintenance and repairs in excess of the Maximum Preapproved Maintenance Expenditure, provided in emergency circumstances, and chill is authorised to immediately initiate repairs which may be in excess of the authorised amount.

and chill is authorised to deduct from monies received by and chill on behalf of the Owner all Fees and other authorised outlays owing to or incurred by and chill in association with this agreement

Utilities, Supplies and Cleaning

Utilities (gas, electricity and water) and internet services will be connected and managed by and chill on behalf of the Property Owner, unless specified in Schedule one. Disbursement for payment will be itemised in monthly statements of accounts.

…

Cleaning and laundry services will be charged to each guest in addition to their nightly rate at cost price, with reference to market commercial rates for equivalent services, and payment will be made directly to the service provider, as appointed by and chill

…

56. The consumer has submitted into evidence a copy of 13 monthly statements of account rendered on her on behalf of ACPM for the period 1 March 2018 to 31 March 2019. These statements are in three different formats. Doing the best that I can with this evidence it appears to reveal the following:

Period	Total rent revenue, exclusive of booking fee	Booking fee charged by booking agency	Managing Agent fee	Expenses charged	Net payment to consumer
1 to 31 March 2018	$1,645.99	$494.00	nil	$388.50 (to Swiftly – $49.50 internet set up and $99.00 monthly fee; Swiftly – dishwasher repairs- $240.00)	$763.49
1 to 30 April 2018	$2,332.38	$1,039.00	nil	$99.00 (to Swiftly - internet monthly fee)	$1,194.38
1 to 31 May 2018	$2,892.85	$918.41	nil	$1,227.34 (to Strata Care Australia Pty Ltd – Electricity charges - $76.40); to Swiftly - $99.00 internet monthly fee; to Brisbane City Council – rates $1,051.94)	$747.10
1 to 30 June 2018	$332.23	$100.00	nil	$177.00 (to Swiftly- kitchen maintenance - $78.00; to Swiftly $99.00 internet monthly fee)	$55.23
1 to 31 July 2018	Incomplete statement in evidence
1 to 31 August 2018	$1,272.66	$381.90	nil	$661.30 (to Strata Care Australia Pty Ltd – Electricity charges - $168.40; to Brisbane City Council – Rates - $393.90; to Swiftly – monthly internet charges - $99.00)	$229.46
1 to 30 September 2018	$3,087.65	$926.29	nil	$245.15 (to Strata Care Australia Pty Ltd – utility charges - $141.50; to Swiftly – monthly internet charges - $99.00)	$1,916.21
1 to 31 October 2018	$3,076.50	$922.96	nil	$1,212.62 (to Strata Care Australia Pty Ltd – Admin and Sinking fund - $1,113.62; Swiftly – monthly internet charges - $99.00)	$940.92
1 to 30 November 2018	$1,870.70 (revenue stated as $1,915.01 but includes 80.30 in compensation for late payment of strata fees)	$1152.09	nil	$677.85 (to Brisbane City Council – rates - $398.70; Strata Care Australia Pty Ltd – electricity charges - $165.15; Swiftly – monthly internet charges - $99.00; Swiftly – light bulb - $15.00)	$85.07
1 to 31 December 2018	$949.97 (revenue stated as $1,711.16 but includes temporary credit of $761.19)	$421.99	nil	$1,289.17 (to Strata Care Australia Pty Ltd – Admin and Sinking fund - $1,033.32; Swiftly – monthly internet charges - $99.00; Strata Care Australia Pty Ltd – electricity charges - $156.85)	nil
1 to 31 January 2019	nil (revenue stated as $1039.74, but includes a temporary credit of $1,039.74)	nil	nil	$1,039.74 (to Strata Care Australia Pty Ltd – electricity charges - $179.55; Swiftly – monthly internet charges – $99.00; reversal of previous month’s credit $761.19)	nil
1 to 28 February 1019	$456.96 (revenue is stated as $1,886.68, but includes temporary credit of $1,429.72)	$276.09	nil	$1,610.59 (to Brisbane City Council – rates - $398.70; Strata Care Australia Pty Ltd – electricity charges - $73.15; Swiftly – monthly internet charges - $99.00; reversal of previous month’s credit - $1,039.74)	$nil
1 to 31 March 2019	$2,526.71	$971.44	Nil	$527.10 (to ‘Housekeeping’ - $260.00; to internet charges - $99.00; to utility charges - $168.10)	$1,999.61
TOTAL (12 month)	$17,917.89	$6,632.73	Nil	$8,628.26	$5,913.89
TOTAL (13 month)	+ $2,526.71	+$971.44	Nil	+$527.10	+$1,999.61

57. In her submissions to the Tribunal the consumer appears to contend that she was paid $11,948.57 in net rent by ACPM for the period 6 March 2018 to 27 April 2019. It is not clear how that figure has been arrived at. It is not the total rent revenue she received, which the evidence establishes was at least $17,917.89 for the first 12 months and at least $20,444.60 for the 13 month period (the complete July 2019 statement not being in evidence). Nor is it the net payment she received after the deduction of expenses, which the evidence establishes was at least $5,913.89 for the first 12 month period and $7,913.50 for the 13 month period (again, the complete July 2019 statement not being in evidence).

58. In any event on 6 March 2019, after the end of the first 12 month rental guarantee period, the consumer wrote to ACPM by email to inquire when the balance owing to her under the rental guarantee for that year would be paid. She received no response to that email.

59. On or about 17 April 2019 the consumer notified ACPM that she terminated the Rental Guarantee and Agency Agreement with immediate effect. By return email sent on that day a representative of AC, Sushant Sharma, whose position title is “Operations Lead” acknowledged and accepted the consumers termination of the agreement and set out the arrangements for the handover of possession of the property to the consumer. Relevantly, Mr Sharma stated that the property would be cleaned on 27 April 2019 after the last booking of short-term renters vacated and that the key handover would take place on 28 April 2019 and that “wear and tear will be repaired as per the agency agreement”. Mr Sharma also advised the consumer that ACPM would not charge her a “break fee” in relation to the furniture package, and would impose no charge on her for the termination of the agreement without the required 90 day notice period.

60. The consumer subsequently engaged a different real estate agency to manage the property on her behalf. A representative of that agency collected the keys to the property from AC on 30 April 2019. The consumer contends that when the new agent inspected the property a representative notified her that it was not clean, that one key was missing, that the TV and several homewares were broken, that the internet was not working, that the carpet and sofa were very dirty, and that the fabric of the property was in ‘terrible condition’. Additionally, she contends that she was advised that the furniture appeared to be IKEA pieces with a new value of less than $3,000.00.

61. In support of these contentions the consumer has submitted into evidence an email dated 6 June 2019 addressed “to whom is may concern” written by “Angela” who identifies herself as a property manager working for an entity trading as “mysurplushome”, which is the trading name of the new agent. ‘Angela’ states: “[t]he units also wasn’t properly cleaned and there were some damages in the units as well. The furniture appears to be IKEA pieces. … We estimate that the furniture’s (sic), even when new would cost less than $3,000 to purchase. I hope these can help provide evidence in the case”. That email evidently attached photographs of the property, but these are not in evidence.

62. On or about 1 May 2019 the consumer sent an email to AC to complaining about the condition of the property and requesting that it arrange for the property to be re-cleaned and the damage repaired. She received no response to that email.

63. The applicant contends that she suffered $1,278.87 in damage and loss as a result of the ACPM’s failure to properly clean and repair the property in accordance with its obligations under the Rental Guarantee and Agency Agreement. As proof of that loss she has submitted into evidence a copy of an IKEA Distribution Order form dated 3 May 2019 which itemises the purchase of five items at a total cost of $905.93. Although not entirely clear from the order form, it appears that those items are fitted sheets ($59.97), other linen ($34.99), a quilt cover ($34.99), a sofa ($699.00) and a waste bin ($7.98). The consumer has also submitted a copy of a receipt for the purchase of a HD LED TV and Antenna Cable at a total cost of $372.94 which is dated 3 May 2019.

64. On or about 3 May 2019 the consumer received an email from Strata Care Australia Pty Ltd, which is the strata manager for the strata scheme in which the property is situated which advised her that her strata levies were in arrears and had to be paid urgently to avoid debt collection action. She has submitted into evidence a statement for the period 1 December 2017 to 4 June 2019 subsequently provided to her by the strata manager which states that invoices for the payment of levies to the Admin Fund, Sinking Fund, and for Insurance dated 26 June 2018 and 7 March 2019 were unpaid along with arrears notice fees which together totalled $2,243.22.

65. The statements of account rendered on the consumer by ACPM set out at paragraph 52 above do not disclose if any amount was deducted from the consumers’ trust account in respect of the June 2018 strata invoices (note that the July 2018 statement which is in evidence is incomplete). However, the March 2019 statement does not include any amount deducted from the consumer’s account in respect of strata levies, contrary to the consumer’s contention, possibly because those invoices would not have been payable until April 2019, which was after the consumer had terminated the Rental Guarantee and Agency Agreement.

66. The consumer appears to contend that ACPM deducted strata levies totalling $1,033.32 from her account in December 2018 for the period 1 December 2018 to 31 March 2019 but failed to remit these funds to the owners corporation. However, that is not correct. The statement in respect of strata levies she has submitted into evidence clearly shows that the strata manager receipted those funds (receipt no.s R0000823, RA000823 and RB000823), and an additional payment of $80.30 which appears to be the late payment fee applicable which was not charged to the consumer by ACPM.

67. As far as I can ascertain from the evidence the strata manager imposed late payment fees on the consumer totalling $160.60 up until she terminated the Rental Guarantee and Agency Agreement, of which $80.30 was paid the owners corporation without charge to the consumer as set out above.

68. On or about 8 May 2019 the consumer received correspondence from AP2U, which appears to be a trading name for the owners corporation of the strata plan which advised that her electricity supply was disconnected on that date because she owed a balance of $500.40, and that there would be a reconnection fee of $200.00 when this outstanding balance was paid. In fact $134.60 of the amount claimed to be owed was for the period 28 February 2019 to 31 March 2019 and was the subject of an account rendered on 23 April 2019, and which was due for payment on 17 May 2019, which were both after the consumer had terminated the Rental Guarantee and Agency Agreement.

69. The actual amount that was overdue was $365.80 which arose from three invoices rendered on each 27 February 2019 and 29 March 2019. The invoices rendered on 27 February 2019 were for a total of $168.10 (after being adjusted by the provider). The March 2019 statement ACPM rendered on the consumer indicates that this amount was withheld from the funds disbursed to her that month. The statement provided to the consumer by AP2U indicates that this amount was not receipted by it. The remainder of the amount outstanding as at 8 May 2019 was not withheld by ACPM as the consumer contends. Although it is not possible to be certain on the evidence, it is unlikely that that balance was payable before 17 April 2019 when the consumer terminated the Rental Guarantee and Agency Agreement because it they were monthly accounts rendered on 29 March 2019.

70. On or about 29 May 2019 the consumer received an email from a Rates Revenue Officer from Brisbane City Council which advised her that her rates were overdue and that Council was about to commence action in the Magistrates Court to recover the debt. The debt was $803.35 which related to the quarters 1 January 2019 to 31 March 2019 ($398.72 plus $10.66 in interest due to non payment = $409.38) and 1 April 2019 to 30 June 2019 ($393.97). The February 2019 statement ACPM rendered on the consumer states that $398.70 was deducted from her account in respect of council rates and charges due for the quarter 1 January 2019 to 31 March 2019 and paid to Brisbane City Council. There is no evidence that ACPM withheld or deducted any amount from the consumer’s account in respect of the April to June 2019 quarter as appears to be contended by the consumer.

71. The consumer complains that various deductions were made from her ACPM trust account in respect of services provided by Swiftly totalling $1,579.50. She contends that she only recently became aware that Swiftly was a related entity to ACPM and that she has requested original provider invoices for the services supplied by Swiftly which ACPM has refused or failed to supply. Although not clearly articulated in the submissions made on her behalf it appears to be contended that the services for which invoices were rendered on her by Swiftly and paid by ACPM were not supplied in fact or were overcharged. There is no objective evidence offered in support of that contention.

72. The consumer claims that she suffered the following heads of damage and loss as a result of the alleged misleading and deceptive and unconscionable conduct by the traders:

1. Lost rent, being the shortfall from the rental guarantee:   $15,137.62

2. Funds deducted from her account for strata levies

3. not paid:  $1,033.32

4. Funds deducted from her account for council rates

5. not paid and interest:                  $409.20

6. Funds deducted from her account for electricity

7. charges not paid:                  $168.10

8. Difference in value between furniture package

9. supplied and that contracted for:            $7,632.88

10. Housing keeping fee charged but not owed:      $260.00

11. Compensation for the cost of replacing damaged

12. furniture and homewares:               $1,330.83

TOTAL:  $26,136.95

Jurisdiction

73. Mr Forbes’ objection to the Tribunal exercising jurisdiction because the dispute has no relevant connection to NSW has been dealt with as a preliminary issue above and rejected.

74. More generally, the Tribunal has jurisdiction to hear and determine this application as a consumer claim under Part 6A of the FT Act because the claim is for a specified sum of money that arises from the supply of services by a supplier, being ACPM, under a contract for the supply of those services, being the Rental Guarantee and Agency Agreement: see ‘meaning of consumer claim’ in section 79E(1) of the FT Act. Mr Feng and Mr Forbes did not supply services to the consumer directly, the supplier of the services was ACPM for the purposes of sections 79D and 79G of the FT Act. However, her claim “arises from the supply of those services” because the traders were the directors of companies involved in the supply and her allegation is that they engaged in misleading and deceptive and unconscionable conduct in relation to the supply: Jenkinson v Chaw [2015] NSWCATAP 127 at [28] and [32].

75. There is no issue that the applicant is a consumer entitled to bring this action: section 79H of the FT Act. The claim is less than the monetary limit imposed upon the Tribunal’s order making power by section 29S and it has been brought within the time limitation periods specified by section 79L of the FT Act.

Applicable law

76. The Australian Consumer Law (NSW) (ACL) is part of the law of NSW and may be applied in the determination of a consumer claim made under Part 6A of the FT Act: section 28 of the FT Act. Chapter 2 of the ACL contains a number of general protections for consumers in consumer transactions, including in section 18, a prohibition against misleading and deceptive conduct, and in section 21, a prohibition against unconscionable conduct.

77. Section 18 provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

78. In Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682 at [10] Gordon J summarised the principles to be applied in determining if conduct is misleading and deceptive for the purposes of section 52 of the former Trade Practices Act 1974. Those principles have equal application to section 18 of the ACL and are stated following (references omitted):

A contravention of s 52(1) of the TPA is established by “conduct” which is misleading or deceptive or likely to mislead or deceive. The “conduct”, in the circumstances, must lead, or be capable of leading, a person into error and the error or misconception must result from “conduct” of the corporation and not from other circumstances for which the corporation is not responsible. “Conduct” is likely to mislead or deceive if there is a “real or not remote chance or possibility regardless of whether it is less or more than fifty per cent”.

Section 52(1) is concerned with the effect or likely effect of “conduct” upon the minds of that person or those persons in relation to whom the question of whether the “conduct” is or is likely to be misleading or deceptive falls to be tested. The test is objective and the Court must determine the question for itself. Section 52 is not designed for the benefit of persons who fail, in the circumstances of the case, to take reasonable care of their own interests. Moreover, it would be wrong to select particular words or acts which although misleading in isolation do not have that character when viewed in context.

“Conduct” can, of course, include making a statement which is misleading or deceptive or likely to mislead or deceive.

By making a statement of past or present fact, a corporation’s state of mind is irrelevant unless the statement involved the state of the corporation’s mind. Contravention of s 52(1) does not depend upon the corporation’s intention or its belief concerning the accuracy of the statement of fact but upon whether the statement conveys a meaning which is false. A false meaning will be conveyed if what is stated concerning the past or present fact is inaccurate but also if, although literally true, the statement conveys a meaning which is false.

Precisely the same principles control the operation of s 52(1) to statements involving the state of mind of the maker when the statement was made (e.g. promises, predictions and opinions). A statement which involves the state of mind of the maker ordinarily conveys the meaning (expressly or impliedly) that the maker of the statement had a particular state of mind when the statement was made and, commonly, that there was a basis for that state of mind.

A statement of opinion will not be misleading or deceptive or likely to mislead or deceive merely because it turns out to be incorrect, misinforms or is likely to do so. An incorrect opinion does not of itself establish that the opinion was not held by the person who expressed it or that it lacked any or any adequate foundation. An expression of an opinion which is identifiable as an expression of opinion conveys no more than that the opinion is held and perhaps that there is a basis for the opinion. If that is so, an expression of opinion however erroneous misrepresents nothing.

However, an opinion may convey that there is a basis for it, that it is honestly held and when it is expressed as the opinion of an expert, that it is honestly held upon rational grounds involving an application of the relevant expertise. If the evidence shows that the opinion was not held or that it lacked any or any adequate foundation, particularly if the opinion was expressed as an expert, a statement of opinion may contravene s 52 of the TPA.

79. Section 21 provides that a person must not, in trade and commerce, in connection with (relevantly) the supply or possible supply of goods or services to a person engage in conduct that is, in all the circumstances, unconscionable. Section 21(3) provides, relevantly, that for the purpose of determining whether a person has contravened section 21(1) the Court (which includes the Tribunal) must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention. Section 21(4) provides that it is the intention of Parliament that section 21 is not limited by the unwritten law relating to unconscionable conduct; that the section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and, in considering whether conduct to which a contract relates is unconscionable, the Tribunal’s consideration of the contract may include consideration of the terms of the contract itself and the manner in which and the extent to which the contract is carried out, and is not limited to consideration of the circumstances relating to the formation of the contract.    

Section 22 of the ACL sets out the matters the Tribunal may have regard to in determining if there has been a contravention of the prohibition on unconscionable conduct, without limiting those matters. The following matters are notable in the circumstances of this case: the relative strengths of the bargaining positions of the supplier and the customer; whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; the extent to which the supplier's conduct towards the customer was consistent with the supplier's conduct in similar transactions between the supplier and other like customers; the requirements of any applicable industry code; and, the extent to which the supplier and the customer acted in good faith.

80. The meaning of the term “unconscionable conduct” was recently considered by the High Court in Australian Securities and Investments Commission v Kobelt [2019] HCA 18. That case concerned the use of the term in section 12CB(1) of the Australian Securities and Investments Commission Act 2001, however the terms of the proscription of unconscionable conduct in that section are identical to those contained in the ACL. At [14] and [15] of that judgement Keifel CJ and Bell J (who participated in the majority) state as follows:

14. … the values that inform the standard of conscience fixed by s 12CB(1) include those identified by Allsop CJ in Paciocco v Australia and New Zealand Banking Group Ltd: certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made, and:

“the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage.

15.   It is the application of the last-mentioned value with which the appeal is concerned. In Kakavas v Crown Melbourne Ltd and Thorne v Kennedy it was said that a conclusion of unconscionable conduct requires not only that the innocent party be subject to special disadvantage, but that the other party must also unconscientiously take advantage of that special disadvantage. This has variously been described as requiring victimisation, unconscientious conduct or exploitation. (footnotes omitted)

81. In the same case Gageler J (who also participated in the majority) stated at [92]:

92.    … conduct prescribed by the section as unconscionable is conduct that is so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience.

82. Again, in the same case, Keane J (who also participated in the majority) stated at [118]:

118.   The use of the word “unconscionable” in s 12CB – rather than terms such a “unjust”, “unfair”, or “unreasonable” which are familiar in consumer protection legislation – reflects a deliberate legislative choice to proscribe a particular type of conduct. In its ordinary meaning, the term “unconscionable: requires an element of exploitation. The term imports a high level of moral obloquy associated with the victimisation of the vulnerable. As five members of this Court observed recently in Thorne v Kennedy a finding of unconscionable conduct requires the unconscientious taking advantage of a special disadvantage, which has “been variously described as requiring ‘victimisation’, ‘unconscientious conduct’, or ‘exploitation’. And in Kakavas v Crown Melbourne Ltd, this Court unanimously confirmed that “[h]eedlessness of, and indifference to, the best interests of the other party is not sufficient” to establish the “predatory state of mind” that must be shown (footnotes omitted).

83. Section 236 of the ACL provides that if a person (the claimant) suffers loss or damage because of the conduct of another person which is in contravention of a provision of Chapter 2 the claimant may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

84. The meaning of the word “involved” in is found in section 2 of the ACL. A person is involved in a contravention if the person has aided, abetted, counselled or procured the contravention; or has induced, whether by threats or promises or otherwise; or has been in any way, directly or indirectly, knowingly concerned in, or a party to, the contravention; or, has conspired with others to effect the contravention.

85. Section 32 of the PSBA Act sets out the duties of a licensee of a real estate corporation. A licensee must properly supervise the business carried on by the licensee: section 32(1). The requirement to properly supervise employees engaged in the business includes the following requirements: a requirement to properly supervise employees engaged in the business, a requirement to establish procedures designed to ensure that the provision of the PSBA Act and any other laws relevant to the conduct of that business are complied with, and a requirement to monitor the conduct of business in a manner that will ensure as far as practicable that those procedures are complied with: section 32(3).

86. The consumer bears the onus of proving her case to the civil standard of proof, which is the balance of probabilities: Briginshaw v Briginshaw (1938) 60 CLR 336. This standard of proof was described by Lord Denning in Miller v Minister for Pensions [1947] 2 All ER 372 at [374] as requiring the Tribunal to be satisfied that an alleged fact was more probable than not”. However, the Tribunal must “feel an actual persuasion of [the alleged fact’s occurrence or existence before it can be found. It cannot be found as a result of mere mechanical comparison of probabilities independently of any belief in its reality” … [the occurrence or existence of the fact must be established] … “to the reasonable satisfaction of the Tribunal”.

Consideration

87. Having regard to the consumer’s cause of action, the material facts and contentions of the parties, and the applicable law, the questions the Tribunal must pose and answer in order to determine the outcome of this application may be stated as follows:

1. Did the traders engage in either or both misleading and deceptive or unconscionable conduct with respect to any of the following:

1. The rental guarantee

2. The furniture supply

3. The payment of strata fees, council rates and electricity accounts

4. Cleaning and maintenance of the property, including the charging of a housekeeping fee

2. If so, did the consumer suffer reasonably foreseeable damage and loss as a result of that misleading and deceptive or unconscionable conduct?

3. If so, what orders are necessary to compensate the consumer for this loss?

Rental Guarantee

88. It is clear, and apparently not in issue, that ACPM through its representative Dean, made a representation to the consumer prior to her entering into the Rental Guarantee and Agency Agreement that she was guaranteed an annual 6% rental return on the purchase price of her property. It would also appear to be uncontroversial that Mr Feng was “involved” in the making of that representation because he was the licensee of the business that made that pitch to its potential customers and he must have known such a pitch would be made. It was a key platform of his agency’s business model. It also appears to me uncontroversial that Mr Forbes was involved in the making of that representation because he was the Chief Executive Officer of AC, the employer of staff deployed to ACPM, including Dean, and he had primary conduct of ACPM’s affairs despite not holding a license. He must have known such a pitch would be made.

89. However, that representation is reflected in the terms of the Rental Guarantee and Agency Agreement set out 54 and 55 above. Under the terms of that Agreement the consumer was guaranteed a rental income of $27,060.00 being 6% of $451,000,000 which was the purchase price she paid for her property. To this extent the representation that Dean made was not misleading or deceptive. It was, in fact, a term of the contract the consumer entered into with ACPM.

90. The consumer appears to contend that the representation was misleading and deceptive and unconscionable on two bases. First, because she did not achieve a rental return equivalent to 6% and ACPM did not honour the rental guarantee when she requested it to do so in accordance with the terms of the Rental Guarantee. Second, because ACPM deducted various expenses from the gross rental she received contrary to the representations Dean made to her which were that no agency fee would be charged, that ACPM would cover the insurance, that tenants would pay for cleaning and provide a bond which would be used to meet the costs of rectification of any tenant damage, and that apart from the cost of the furniture package, she only be responsible for the payment of council rates, strata levies, and water and electricity charges which he estimated would be not more than $3,000.00 per year.

91. The consumer has not proved on her evidence for the reasons stated at paragraph 57 what her rental return was for the period the Rental Guarantee and Agency Agreement subsisted. However, it appears reasonable to assume that it fell short of $27,060.00. Accordingly, the consumer had a contractual right, enforceable against ACPM, for the payment of the shortfall amount in accordance with the rental guarantee. That contractual right cannot be enforced because ACPM is in administration.

92. In order for the consumer to succeed in this element of her claim she must prove that the representations made to her by ACPM as to her expected rental return and the rental guarantee were misleading and deceptive at the time they were made to her, and that Mr Feng and Mr Forbes were relevantly involved in this act of deception, or in the alternative that Mr Feng and Mr Forbes engaged in some other unconscionable act in relation to the rental guarantee which means that they should be personally liable to pay it.

93. There is no evidence before the Tribunal that would provide the foundation for a finding that the 6% annual rental return on investment guaranteed by ACPM prior to and at the time the Rental Guarantee and Agency Agreement was made lacked sufficient or any foundation or that it was dishonestly made. It subsequently proved to be incorrect but that fact by itself is not sufficient to establish that this representation was misleading and deceptive at the time it was made. There is no evidence that this was not the return ACPM genuinely believed was achievable based upon whatever information it had available to it at the time.

94. Similarly, there is insufficient evidence before the Tribunal to allow it to conclude that ACPM’s representation that it would guarantee and pay any rental shortfall up to $27,060.00 lacked sufficient or any foundation or that it was dishonestly made. The Administrators’ report to creditors provisionally concludes on the basis of several analyses that both AC and ACPM were trading on an insolvent basis from at least December 2018 which was before the Rental Guarantee and Agency Agreement was signed. If that was the case, it may be arguable that in entering into the Rental Guarantee and Agency Agreement with the consumer ACPM contravened insolvent trading law because it was not a going concern at that time and the rental guarantee gave rise to a contingent liability which could not be satisfied should a debt be incurred in relation to it. It might then be arguable that this was unconscionable conduct in which Mr Feng was involved as the director and licensee of ACPM, having regard to his obligations under law not to trade on an insolvent basis.

95. However, even if such propositions are arguable (and I do not say that they are more than that) the evidence does not enable such factual findings to be made having regard to the gravity of those findings and the seriousness of the consequences that would flow from such findings. In this respect, at section 8.11 of their report, the Administrators make it clear that insolvent trading by AC and ACPM is at this stage not proven and would require further investigation prior to establishing that valid, pursuable claims exist on this basis. In his oral evidence, Mr Forbes denied that AC or ACPM or he in his capacity as a director of AC had engaged in any wrongdoing of the kind alleged by the Administrators and indicated an intention to defend any proceedings brought against him on these bases. For completeness I also note that this Tribunal does not have jurisdiction to determine if AC or ACPM or Mr Feng or Mr Forbes contravened the provisions of the Corporations Law 2001 with respect to insolvent trading.

96. In relation to the other representations Dean made to the consumer, there is an inconsistency between the representation that no agency fees would be charged and the terms of the Agency Agreement which stipulate a 30% agency fee. However, no agency fees were charged to the consumer, so this representation was not misleading and deceptive, or in the alternative, the consumer suffered no loss because of it.

97. The representation made in relation to insurance appears to be fulfilled by the ‘Airbnb Host Protection Insurance’ and ACPM’s public liability insurance policy – at least, no other insurance type is contended for by the consumer. The Agency Agreement included both insurances as terms, and there is no evidence that these policies were not operative.

98. The representations as to the estimated outgoings for utility charges and council rates were also accurate (as far as can be ascertained due to the incomplete July 2018 statement). The consumer appears to have been charged/paid a total of $1,129.10 in utility charges, and $1,565.93 in council rates (after deducting the $677.31 opening arrears balance) over the 13 month period of the Rental Guarantee and Agency Agreement (see paragraph 56 above).

99. Leaving aside the $260.00 ‘housekeeping’ charge (as to which see following) the consumer incurred no cleaning charges over the 13 month period of the agreement and the only repairs for which she was charged appear to have been general maintenance, not tenant damage, being dishwasher repairs, kitchen maintenance, and light bulb replacement (again, see paragraph 56 above). The consumer appears to contend that no cleaning was ever carried out at the property because it was in unclean condition on the date of termination of the Rental Guarantee and Agency Agreement. For reasons set out following the consumer’s evidence is not sufficient to establish to the requisite standard of proof what the condition of the property was on the date of termination. However, even if it were unclean at that time, this does not mean that no cleaning was ever carried out over the 13 month period of the Agreement. I consider it inherently unlikely that this would have been the case. The property received guests/tenants during most months apparently in the absence of complaint or adverse review (at least none is in evidence) which would appear to suggest that the property was in acceptable condition upon their arrival.

100. What this leaves is the representation that Dean made in relation to the repair of tenant damage, which the consumer contends included a representation that each guest/tenant would be required to pay a bond. In his oral evidence to the Tribunal Mr Forbes denied that such a representation would have been made by Dean or any other person acting for ACPM because it did not require this of guests and nor was this standard industry practice in the short term rental market. He stated that this would have been a disincentive to guests/tenants booking the property, as this was not generally required by other agencies in the short term rental market, and it would be too costly and inconvenient to administer due to the short term nature of each booking. He stated that, nevertheless, guests/tenants who caused damage to a short-term rental property were required to compensate the landlords for that damage through an AirBnB Host Guarantee, and if they failed to do so, this was managed through the Airbnb Host Protection Insurance policy.

101. There is a difficulty for the consumer in relation to the informal translation of the wechat conversation she had with Dean prior to her entering into the Rental Guarantee and Agency Agreement. For the reasons stated by the Appeal Panel of the Tribunal in Prestige Auto Centre Pty Ltd v Apurva Mishra [2014] NSWCATAP 81 at [30] to [33], despite the relative informality of the Tribunal’s practice and procedure, a certified translation of a document in a foreign language will usually be required, particularly if the evidentiary purpose of that document is to prove serious misconduct by a person. There is no objective or surrounding evidence that has a tendency to support the informal translation of a Chinese word or concept into the English word “bond.” Ms Wan does not depose to any such representation having been made to her. The Rental Guarantee and Agency Agreement does not contain a term of this nature, even though it has a section that deals specifically with repairs (see paragraph 55). It speaks of the “AirBnB Host Guarantee”.

102. Given the seriousness of the allegation made (misleading and deceptive and unconscionable conduct) and the gravity of the consequences flowing from such a finding I am not prepared to accept on the basis of the informal translation provided by the consumer that a representation was made to her that guests/tenants would be required to pay a bond. I find that it is more likely than not that a representation was made to her that there would be a “guarantee” that guests/tenants would be liable to compensate her for any damage to the property they caused. Such a guarantee was incorporated into the Rental Guarantee and Agency Agreement, and the consumer’s contention that guest/tenant damage was not repaired fails for the reasons stated following.

103. For completeness, I note that the consumer appears to allege that the traders were involved in misleading and deceptive conduct in relation to the Rental Guarantee and Agency Agreement because it was not disclosed to her at the time the Agreement was made that Swiftly would be engaged to provide internet services and that it was a member of AC and ACPM’s company group. Further, the consumer appears to contend that the internet fees she was charged by Swiftly were excessive. She has not sought the refund of these charges. On the evidence before me I cannot be satisfied that there was any act of deception or unconscionable conduct associated with the provision of internet services by Swiftly. ACPM was clearly authorised by the consumer under the Rental Guarantee and Agency Agreement to engage an internet service provider on her behalf. It was not precluded from engaging that supplier from a related entity. The claim that the internet charge was excessive has not been proved. The consumer relies upon hearsay evidence to claim that she could have obtained internet services at a much cheaper monthly rate. However, she bears the burden of putting sufficiently probative evidence before the Tribunal to prove that this was the case and that she has thus been the victim of a sharp or exploitative business practice. She has not done so. There is no satisfactory evidence of the general market rate the consumer would have expected to pay for a service equivalent to that supplied to her by Swiftly.

104. For the foregoing reasons I am not satisfied on the evidence that the ACPM engaged in misleading and deceptive or unconscionable conduct in relation to the rental guarantee in the offer and execution of the Rental Guarantee and Agency Agreement, and it therefore follows that Mr Feng and Mr Forbes were not involved in any such conduct.

105. It remains to be considered if the traders were involved in unconscionable conduct in relation to the rental guarantee after the Rental Guarantee and Agency Agreement was signed, specifically, at the time the consumer requested the payment of the shortfall from the guarantee on or about 6 March 2019. In this respect, the Administrators’ report to creditors does note that in the months leading up to those companies becoming subject to external administration there were a number of preferential payments to creditors and unexplained transfers of monies between AC and ACPM which appear to have had the purpose of obscuring the true financial position of those entities. If proven, such conduct may contravene proscriptions in the Corporations Law 2001 against insolvent trading and preferential payments.

106. However, these allegations do not assist the consumer to establish that Mr Feng and Mr Forbes were involved in unconscionable conduct with respect to the rental guarantee in or about March 2019 for two reasons. First, because they are not proven for the reasons stated at paragraph 95. Second, on the evidence before the Tribunal this alleged conduct, even if it were to be proven, is too remote from the rental guarantee to constitute unconscionable conduct in relation to the Rental Guarantee and Agency Agreement. In this respect there is no evidence that any of the alleged conduct, if it occurred, was for the purpose of unconscientiously evading the obligation to pay the consumer the shortfall from the rental guarantee. It appears to be conduct that was relating to and arising from the financial collapse of AC and ACPM which indirectly impacted on the consumer. That conduct may have been contrary to other law, but it did not constitute unconscionable conduct by ACPM with respect to the rental guarantee directly or specifically (or the general ‘system’ of rental guarantees provided to homeowners by ACPM) in which Mr Feng and Mr Forbes were relevantly involved.

107. For the foregoing reasons I am not satisfied that the traders were involved in unconscionable conduct in relation to ACPM’s failure to meet its contractual obligation to pay the consumer the rental guarantee.

Furniture contract

108. The consumer contends that Dean represented to her prior to her entry into the Rental Guarantee and Agency Agreement, in effect, that the “furniture package” she was required to purchase would be personal property which would be a depreciable asset for taxation purposes. She also contends that Dean represented to her that the furniture would be “quality” Temple and Webster furniture and not “cheap” furniture sourced from IKEA (for example). She contends that in fact the furniture package was not personal property and that her apartment was in fact furnished with “cheap” IKEA furniture. She claims as compensation the difference in value between the Temple and Webster furniture she was promised and the value of the furniture package actually provided. She also claims the cost of replacement of damaged furniture and home wares.

108. There are a number of difficulties for the consumer in relation to this element of her claim. First, the evidence does not establish to my satisfaction that Dean represented to the consumer that the furniture would be personal property. In this respect, I am not prepared to accept the informal English translation to this effect of the wechat conversation between Dean and the consumer in which this representation is alleged to have been made for the reasons I have stated at paragraph 101.

109. Additionally, there is objective and surrounding evidence that has a strong tendency to negate that interpretation of what Dean communicated to the consumer. In this respect, the terms of the Rental Guarantee and Agency Agreement make it clear in section 4 that property in the furniture remains with ACPM for the first 24 months at the end of which period property in the furniture would vest in the consumer. In her affidavit, Ms Wan deposes to this exact arrangement being explained to her by Dean prior to her entering into her own Rental Guarantee and Agency Agreement. Ms Wan also deposes in her affidavit at paragraph 14, in effect, to having communicated this information to the consumer.

110. I am satisfied that what the consumer purchased by the “furniture package” was a chose in action, being a service to furnish her property ready for rental on the short-term rental market and maintain it in furnished condition over the course of the Agreement. I cannot see any reason why this expenditure would not be a deductable expense for taxation purposes, and in any event, the consumer has submitted no evidence to the effect that such a tax deduction could not be made in relation to this expense. I am thus not satisfied that the consumer was misled or deceived by Dean into thinking that the furniture would be her personal property from the outset. It follows that Mr Feng and Mr Forbes could not have been involved in any act of deception of this nature.

111. The second difficulty for the consumer is that the evidence does not establish that any representation was made to her by any representative of ACPM or AC that the furniture package would be comprised of Temple and Webster items. It is not contended that Dean made any such representation to the consumer in his wechat conversation with her on 4 January 2018. The source of that information is a representation Dean allegedly made to Ms Wan, which Ms Wan says she communicated to the consumer. There is no evidence before the Tribunal which would permit it to conclude that Ms Wan was acting in some capacity as agent or other authorised representative of the consumer when she was communicating with Dean, and still less that Dean knew this. Thus, to the extent that the consumer came to believe the furniture supplied to her property would be Temple and Webster it was because of what Ms Wan communicated to her, rather than because of any direct representation made to her by Dean or ACPM more generally. ACPM therefore cannot be found to have made a misleading and deceptive representation to the consumer about the quality or brand of the furniture in these circumstances.

112. The third difficulty for the consumer is that there is insufficient probative evidence before the Tribunal to allow it to conclude what furniture was in fact supplied under the furniture package and what its value was. The consumer has submitted no inventory or other objective evidence of the furniture actually supplied and no valuation of it given by a person appropriately qualified to provide such a valuation. The only evidence the consumer has offered to prove the value and brand of the furniture is an email addressed ‘to whom it may concern’ from a property manager working with her new managing agent.

113. The procedural directions made by the Tribunal on 6 June 2019 directed parties that any witness evidence had to be in the form of a statutory declaration, affidavit, statement or expert report. The email falls far short of that requirement. Moreover, it does not set out a sufficient basis for the opinion expressed or indicate the experience, qualifications or other attribute that entitles the property manager to form the opinion she has. For these reasons the email can be given little weight, given the gravity of the facts to be found and the seriousness of the consequences of such findings being made.

114. For the foregoing reasons I cannot be satisfied that ACPM contravened with prohibitions in relation to misleading and deceptive and unconscionable conduct with respect to the furniture package. It thus follows that Mr Feng and Mr Forbes were not involved in any such conduct.

115. For completeness, I also note in relation to the consumer’s claim for compensation for the cost of replacing allegedly damaged furniture the following points. At the time the consumer terminated the Rental Guarantee and Agency Agreement the furniture package remained a chose in action. The furniture supplied to her property was not personal property and the consumer was therefore not capable of suffering damage and loss in relation to the furniture. If the furniture was damaged it was a loss to And Chill Home Styling Pty Ltd or ACPM, whichever actually owned the furniture (which is not clear on the evidence). Her claim for compensation in relation to the damaged furniture is therefore misconceived.

116. In any event, there is no satisfactory evidence of any such damage. In so far as this element of the claim concerns the TV and antennae there is no evidence that would permit the Tribunal to conclude that the alleged damage that required the replacement of these items was caused by guests/tenants and not rectified in accordance with the ACPM’s obligation under the Rental Guarantee and Agency Agreement as opposed to a mechanical failure for some other reason. Nor is there any evidence that has any bearing upon why it was necessary to replace bed linen and a waste paper basket. The consumer bears the onus of proving her entitlement to compensation. Her evidence of damage and loss falls short of the requisite evidentiary standard even if liability had been proved (which it has not).

Strata fees, council rates and electricity charges

118. The evidence discussed at paragraphs 64 and 67 above does not provide a foundation for the Tribunal to conclude that there was any unconscionable misappropriation of the consumers’ trust money or intermingling of her trust monies with ACPM’s monies in relation to the payment of strata levies. It appears to establish that ACPM failed to pay the consumer’s June 2018 strata levies for which she incurred late payment fees in the amount of $80.10. ACPM’s failure to pay the consumer’s strata levies when they fell due was a breach of contract by ACPM, but there is no evidence that this was the result of misleading and deceptive or unconscionable conduct by ACPM in which Mr Feng and Mr Forbes were involved.

119. The evidence discussed at paragraphs 68 and 69 above does establish that ACPM withheld (deducted) $168.10 for electricity charges from the trust funds it received on behalf of the consumer in March 2019 but that it failed to remit that amount to the electricity supplier. This constituted a misappropriation of trust funds or in the alternative or additionally an intermingling of the consumers’ trust monies with ACPM money in contravention of the Mr Feng’s obligations as director and licensee of ACPM as prescribed by section 32 of the PSBA Act. That evidence does not establish any other breach of contract or misleading and deceptive or unconscionable conduct by ACPM in which Mr Feng and Mr Forbes were involved in relation to electricity accounts.

120. The evidence discussed at paragraph 70 above also establishes that ACPM withheld (deducted) $398.70 for council rates from the trust funds it received on behalf of the consumer in February 2019 but that it failed to remit that amount to Brisbane City Council. The consumer incurred late payment fees as a result of that failure in the amount of $10.66. ACPM’s failure to remit to Brisbane City Council the money it deducted from the consumers trust funds constituted a misappropriation of trust funds or in the alternative or additionally an intermingling of the consumer’s trust monies with ACPM money in contravention of the Mr Feng’s obligations as director and licensee of ACPM as prescribed by section 32 of the PSBA Act.

121. The PSBA Act is consumer protection legislation that imposes strict duties on real estate corporations and licensees with respect to the management of their clients’ trust monies. I am satisfied that this legislative regime is to be considered an industry code of practice for the purposes of section 21 and 22 of the ACL. Having regard to that industry code, I am satisfied it was unconscionable for ACPM to cause or permit the misappropriation of the consumer’s trust funds or the intermingling of those funds with ACPM’s monies. It was dishonest and outside societal norms of acceptable commercial behaviour for it to allow this to occur. Mr Feng was clearly involved in this unconscionable conduct because he was the licensee of ACPM and section 32 of the PSBA Act reposed in him the duty to ensure that his agency and its employees and agents complied with the requirements of the PSBA Acts. He failed to do so.

122. I am not satisfied that Mr Forbes was relevantly involved in this unconscionable conduct. He was the director of AC which was not a corporate real estate agency and in any event was the holding company for ACPM. That relationship, by itself, is too remote from the Rental Guarantee and Agency Agreement. Mr Forbes may in fact have been involved in the direct administration of ACPM’s affairs as Chief Executive Officer with day to day management and administrative responsibility for the company group, but he was not a licensed real estate agent. The obligation to ensure that his conduct of ACPM’s business complied with the requirements of the PSBA Act was reposed in Mr Feng as licensee of ACPM.

123. For the foregoing reasons I am satisfied that Mr Feng was involved in unconscionable conduct in relation to the trust monies held by ACPM on account of the consumer. As a result of that unconscionable conduct the consumer suffered a loss of $577.10, being $409.20 in respect of funds misappropriated in respect of council rates plus late payment fees, and $168.10 in respect of funds misappropriated for electricity charges. She is entitled to an order that will require Mr Feng to compensate her for this loss in his personal capacity.

Cleaning and maintenance and housekeeping fee

124. The consumer is critical of the state of cleanliness and maintenance of the property on the date she recovered possession which she contends was in breach of ACPM’s obligations to maintain the property in clean condition and good repair. However, she does not pursue any specific head of damage and loss in relation to these alleged breaches (other than in relation to furniture and home wares which has been dealt with above). It is thus unnecessary to deal with these criticisms in detail. Suffice to say that the consumer has submitted no evidence that is capable of proving to the requisite standard of proof what the condition of the property was when she recovered possession. The deficiencies with the property manager’s email have already been stated and there is no other objective evidence bearing upon this issue.

125. The consumer seeks to recover from the traders a ‘housekeeping fee’ in the amount of $260.00 which was deducted from her trust funds in March 2019. She contends that ACPM incurred this expenditure without her approval, and further, that no service was provided in respect of that deduction.

126. Whether or not any service was actually provided in relation to this expenditure it was clearly not authorised by the terms of the Rental Guarantee and Agency Agreement or otherwise authorised by the consumer. It thus constituted a misappropriation of the consumer’s trust money by ACPM. This was unconscionable conduct by ACPM in which Mr Feng must be taken to have been involved as director and licensee of ACPM, but not Mr Forbes, for the reasons stated above. The consumer is thus entitled to an order that will require Mr Feng to compensate her for this loss.

Conclusion

127. For the foregoing reasons, Mr Feng must pay the consumer the sum of $837.30 immediately. The application is otherwise dismissed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 17 March 2022