Chief Executive - Department of Employment, Economic Development and Innovation v Andrews & A1 Real Estate Pty Ltd

[2010] QCAT 683

CITATION: Chief Executive - Department of Employment, Economic Development and Innovation v Andrews & A1 Real Estate Pty Ltd [2010] QCAT 683

PARTIES:	Chief Executive - Department of Employment, Economic Development and Innovation
v
Mrs Teena Marin Andrews and A1 Real Estate Pty Ltd

APPLICATION NUMBER:   OCR242-10 and OCR243-10

MATTER TYPE: Occupational regulation matters

HEARING DATE:      20 December 2010

HEARD AT:     Decision on the papers

DECISION OF: Ms Peta Stilgoe, Member

DELIVERED ON: 20 December 2010

DELIVERED AT:       Brisbane

ORDERS MADE:

On or before 24 January 2011:

a.    The first respondent pay a penalty of $3,000.00;

b.    The second respondent pay a penalty of         $2,000.00;

c.     The respondents will pay the applicant’s costs of $510, for which they are jointly and severally liable.

CATCHWORDS :  REAL ESTATE AGENTS – where respondents overdrew trust account – where respondents withdrew commission from trust account without authority – where respondents inexperienced in trust accounting – where respondents cooperated with Department – where no member of the public suffered loss

APPEARANCES and REPRESENTATION (if any):

This matter was heard on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009.

REASONS FOR DECISION

1. A1 Real Estate Pty Ltd (“A1”) carries on business as a real estate agency.  Ms Andrews is the principal, executive officer and sole director of A1.

2. The parties agree that:

aBetween 3 February 2009 and 11 January 2010, the respondents did not adequately manage A1’s trust account for rental properties because some owners’ accounts were overdrawn.  An audit of the trust account showed that fifteen accounts were overdrawn because payments to the owners continued even though the tenants were not paying rent as required.

bBetween 3 February 2009 and 11 January 2010, the respondents did not adequately manage A1’s trust account for sales properties and, on three occasions, Ms Andrews withdrew commission from the trust account without authority.

1. Pursuant to section 450 of the Property Agents and Motor Dealers Act 2000 (“the Act”), the Tribunal has jurisdiction to hear and decide disciplinary matters involving licensees. The respondents accept that grounds exist for a disciplinary charge against them.  The Tribunal has been asked to determine penalty.

2. The respondents submit that the appropriate penalty should be:

aA fine of ten penalty units payable by A1;

bA fine of five penalty units payable by Ms Andrews;

cThe respondents jointly pay the Chief Executive’s costs of this proceeding fixed at $510.00.

1. In support of the proposed penalty, the respondents say:

aFrom 1999 to 2008, Ms Andrews worked as a commission only salesperson and had no significant exposure to, or training in, trust accounting procedures.

bMs Andrews bought the A1 business in 2008 with the intention of being assisted by a colleague who could provide administrative support.  Ms Andrews’ colleague did not join the business.

cA1 bought an industry specific software package that was designed to provide, among other things, trust accounting software.  Ms Andrews had no prior experience with the program and did not receive adequate training in its use.

dWhen the industry specific software failed, Ms Andrews conducted the accounting on a basic Excel program.

eMs Andrews appointed the auditor who found the discrepancy.  Upon learning of the discrepancy, Ms Andrews contacted the Department.  She cooperated fully with the Department.

fA1 now has a professional bookkeeper and it has reinstated the industry specific software.  Ms Andrews has taken steps to improve her trust accounting skills.

gThe trust account errors also led to the business underpaying commissions to which it was entitled.

hNo member of the public has suffered loss as a result of these breaches.  Ms Andrews has reimbursed the trust account to address the deficiencies.

1. The Department submits that the appropriate penalty is:

aThat both respondents be reprimanded;

bThat A1 pay a fine of 30 penalty units;

cThat Ms Andrews pay a fine of 20 penalty units.

dThat the respondents pay the Department’s costs fixed at $510.00.

1. In support of the proposed penalty, the Department concedes that any trust account anomalies have been rectified, and that Ms Andrews has cooperated fully with the Department, but says:

aIt is central to the maintenance of standards and integrity within the real estate industry that trust money is dealt with only in accordance with the legal requirements imposed by the Act.

bThe maximum penalty is $200,000 for a corporation and $20,000 for an individual.

cThere is a deterrence aspect to the penalty.

1. The Tribunal has been referred to comparable decisions:

aRuffo[1] The licensee made five unlawful withdrawals from his trust account and used the money to pay his business expenses.  There was no loss to any beneficiary even though there was evidence that the withdrawals had been deliberate, rather than inadvertent.  Ruffo was fined 20 penalty units, the company was fined 30 penalty units and they were disqualified from holding a license for a period of 10 years, which period was wholly suspended.  The Department concedes that the present case is not as serious as the breach in Ruffo.

bCornwell[2] The licensee made five unlawful withdrawals from his trust account and used the money to pay his business expenses.  He repaid the money within 2 months of their removal, entered an early plea to disciplinary charges and expressed remorse for his conduct.  Cornwell was fined 40 penalty units, disqualified from holding a license for a period of 10 years and ordered to pay the Department’s costs of $1,335.00.  Again, the Department concedes that the present case is not as serious.

cBeck[3] Beck admitted to failing to notify the Department of the opening of a trust account, failing to bank trust money promptly and mixing non-trust money with trust money.  The company was ordered to pay a fine of 10 penalty units, the principal was ordered to pay a fine of 5 penalty units, and the parties were ordered to pay the Department’s costs of $1,350.00.

[1]The Chief Executive, Department of Tourism, Fair Trading and Wine Industry v Ruffo Pty Ltd [2006] CCT PD012-06.

[2]The Chief Executive, Department of Tourism, Fair Trading and Wine Industry v Cornwell [2005] CCTX007-05.

[3]The Chief Executive, Department of Tourism, Fair Trading and Wine Industry v Beck Property Group Pty Ltd and D Beck [2006] QCCTPAMD 62.

1. A1 and Ms Andrews argue that their transgression is closer to that of Beck, an administrative error, than either Ruffo or Cornwell, which involved deliberate withdrawal of funds.

2. Beck did not involve any withdrawal of funds from the trust account, or any defalcation which may have resulted in a deficiency in the trust account.  The actions of A1 and Ms Andrews, although not wilful, were deliberate.  I accept that they did so “innocently”, in the sense that they did not understand the intricacies of trust accounting procedure, but they intentionally drew down on the trust account in circumstances where they were not entitled to do so.  That action did result in a deficiency in the trust account.

3. However, I also accept that A1 and Ms Andrews did not draw down on the trust account to supplement their income.  In that respect, their breach is less serious than the breaches by Ruffo and Cornwell and the penalty should reflect that.  I am satisfied that the appropriate way to reflect the less serious nature of the offence is to simply reprimand the parties rather than impose a period of disqualification.

4. The degree of cooperation, remorse and rectification shown by the parties in this instance is comparable with that shown in Ruffo and Cornwell.  The penalty should be commensurate.

5. Despite the terms of section 100 of the Queensland Civil and Administrative Tribunal Act – that each party should bear that party’s own costs of the proceeding – it is appropriate, as part of the deterrent effect of proceedings of this nature, that the respondents should bear the Department’s cost of these proceedings.

6. I order that, on or before 24 January 2011:

aA1 pay a penalty of $3,000.00;

bMs Andrews pay a penalty of $2,000.00;

cA1 and Ms Andrews will pay the Department’s costs of $510, for which they are jointly and severally liable.