Chief Executive, Department of Employment, Economic Development and Innovation v Belfol Pty Ltd (In liquidation)
[2012] QCAT 265
•28 June 2012
| CITATION: | Chief Executive, Department of Employment, Economic Development and Innovation v Belfol Pty Ltd (In liquidation) and Anor [2012] QCAT 265 |
| PARTIES: | Chief Executive, Department of Employment, Economic Development and Innovation |
| v | |
| Belfol Pty Ltd (In liquidation) Graham John Bell |
| APPLICATION NUMBER: | OCR136-10 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Dr J R Forbes, Member |
| DELIVERED ON: | 28 June 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That the first Respondent, Belfol Pty Ltd, be disqualified for a period of ten (10) years from holding any form of licence or registration under the Property Agents and Motor Dealers Act 2000. 2. That the second Respondent, Graham John Bell, be disqualified for a period of ten (10) years from holding any form of licence or registration under the Property Agents and Motor Dealers Act 2000. 3. That the first Respondent, Belfol Pty Ltd, pay to the Chief Executive Officer, Department of Employment, Economic Development and Innovation the sum of fifteen thousand dollars ($15,000) by 4 pm on 21 July 2012. 4. That the second Respondent, Graham John Bell, pay to the Chief Executive Officer, Department of Employment, Economic Development and Innovation the sum of five thousand dollars ($5,000) by 4 pm on 21 July 2012. 5. That the second Respondent, Graham John Bell, be prohibited for ten (10) years from being an executive officer of a corporation that holds any form of licence issued under the Property Agents and Motor Dealers Act 2000. 6. That the question of costs be reserved for decision, if required, upon the papers. 7. That the Applicant be at liberty to file and serve submissions on costs within 14 clear days of receipt of this decision. 8. That the Respondents be at liberty to file and serve submissions in response to any material served upon them in accordance with Order 7 above, within 14 days of receipt of same. 9. That the charges other than those particularised as numbers 3, 4, 7, 9, 10, 11, 18, 19, 32, 33, 34, 35, 36, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57 and 58 are dismissed. |
| CATCHWORDS: | Whether licensees suitable persons to hold licences – whether second respondent a suitable executive of licensed corporation – unauthorised withdrawals from trust account – false statements of account to clients – disqualifications and fines imposed Property Agents and Motor Dealers Act 2000, ss 385, 496, 591 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
These disciplinary proceedings are brought by the Chief Executive, Department of Employment, Economic Development and Innovation (“the Department”) against licensed agents Belfol Pty Ltd (“Belfol”), as First Respondent, and its director Graham John Bell, (“Bell”) as Second Respondent.
The overarching charges are that the Respondents are not suitable persons to hold a licence under the Property Agents and Motor Dealers Act 2000 (“the PAMD Act”), or alternatively that in carrying on business they have acted in an unprofessional way. It is alleged that the second Respondent is an executive officer of a corporation that is guilty of disciplinary offences.[1] Those allegations are supported by no fewer than 69 sets of particulars.
[1] PAMD Act, s 496(1)(g)(vi).
Preliminary Hearing
The case was set down for hearing on 13 February 2012. In view of the numerous counts and the prospect of a long list of witnesses for the Applicant, including interstate and overseas witnesses, I conducted a preliminary hearing on 3 February 2012, when the Second Respondent appeared in person. I then asked the Applicant to consider whether the heavily burdened “indictment” might be “unjustifiably oppressive”[2] of unrepresented parties. Commendably, the Applicant now relies on 25 counts only.
[2] Rogers v The Queen (1994) 181 CLR 251 at 286 per McHugh J.
Another preliminary question was whether the matter should proceed viva voce, or be dealt with on the papers. It was left to the Respondents to elect, and in the event they consented to a hearing on the papers. That decision brought into effect contingent directions for written submissions. Subsequently the Respondents were granted three extensions of time for that purpose. The final extension, in the form of a “guillotine” order, was not strictly observed, as appears below.
At the preliminary hearing it was carefully explained to Mr Bell (the Second Respondent) that written submissions provide an opportunity for discussion, analysis, and evaluation of pre-existing evidence, but not for adducing new or additional evidence.
Material
The Applicant’s evidence includes statements by Keith Alexander McConnell, John Thomas Moody, Geoffrey Allender, Jessica Bindon, Barry Joseph Farrell, Noel John Bailey, Gai Lorraine Edmonds, Andrew Stuart Mornement, Michael John Niven, Lisa Maree Martin, Murray Alistair Cameron, Ann Marie Walker, Lindsay Margaret Otto, Brian John Brier, Susan Keey, Mary Ioannu, Victor Vincent Earl, Johanne Maree Keys, Richard Lee Holley, Brendan James Brown, Sharon Lee White, Rachel Holley, Patrick Lawrence Tully, and a record of interview of Graham John Bell on 27 November 2009 by officers of the Department (“Bell’s interview”).
The Respondent’s evidence is contained in affidavits by Graham John Bell, sworn on 5 October 2010 and 17 February 2011 respectively. In the first deposition he acknowledges that he is (or at material times was) a director of Belfol (First Respondent) and that he is authorised to speak for that company. At the preliminary hearing Bell acknowledged that his affidavit of 17 February 2011, in reply to the Department’s allegations, was prepared with legal advice, and that it is a complete record of the evidence that the Respondents wish to give. It is a lengthy document, with numerous attachments, bearing clear signs of professional assistance.
The Department’s submissions were filed on 28 February 2012, and Belfol’s and Bell’s, on 6 and 8 June 2012. On 29 May 2012 Bell sought, and was granted, a third extension for the Respondents’ submissions, to 4 pm on Wednesday 6 June 2012. On 6 June Bell promised to produce “signed and witnessed documents ... [by] 4 pm on Friday 8th June 2012 at the latest”. An email of slightly more than 2 pages resulted.
Standard of Proof
These proceedings are disciplinary, not criminal in nature, and the appropriate standard of proof is in accordance with Briginshaw v Briginshaw[3] (particularly dicta of Dixon J[4]) and a long line of authorities applying that decision. Some of them are noted below;[5] a disquisition upon them is unnecessary here. The applicable standard is “reasonable satisfaction”, and reasonableness depends, inter alia, upon the gravity of the allegations and the severity of the likely consequences, if the allegations are established.
[3] (1938) 60 CLR 336.
[4] (1938) 60 CLR at 361-362.
[5]See e.g. Clyne v NSW Bar Association (1960) 104 CLR 186 at 200-201; NSW Bar Association v Evatt (1968) 117 CLR 177 at 183-184; Ex parte Attorney-General (Cth); Re a Barrister and Solicitor (1972) 20 FLR 234; Re a Solicitor [1979] Tas SR (NC) 3; Hobart v Medical Board of Victoria [1966] VR 292 at 297; Adamson v Queensland Law Society Inc [1990] 1 Qd R 498; Eckersley v Medical Board of Queensland [1998] 2 Qd R 453 at 458.
The Particulars Relied On, Evidence and Submissions, and Conclusions
In not a few instances, the particulars are quite inartificially drawn, in contrast to the clear and carefully organised submissions of the Department. In some cases I have made minor grammatical alterations to the former, without any changes of substance. In order to avoid confusion with the numbering of paragraphs in this decision, I have substituted Roman numerals for Arabic, within each set of particulars.
I shall consider the specific charges in the same order as the Department’s submissions. They all relate to a unit block at Tugun, known as “Golden Riviera”. Belfol became the letting agent for that property in mid-2004.
Particulars 3, 7, 10, 18 and 53
These particulars relate to money withdrawn from Belfol’s trust account, purportedly to pay for air conditioning services provided by Siganto Air Service and Solutions Pty Ltd (“Siganto”) to several owners of units in “Golden Riviera”.
Particular 3 reads as follows:
(i) On 5 December 2007 Belfol deducted $67.57 from [Barry] Farrell’s income for November 2007 for an air conditioning service that had been completed by Siganto. (ii) Belfol withdrew this money from the trust account and deposited it into its general account. (iii) Belfol did not finalise the transaction as they did not pay Siganto. (iv) Belfol refunded the said amount to Farrell in February 2009.
This conduct, it is alleged, infringes section 385 of the PAMD Act (Permitted drawings from trust accounts).
Identical allegations are made in Particulars 7, 10, 18 and 53, concerning moneys held in trust for unit owners Noel Bailey, Murray Cameron, Ann Walker and Lindsay Otto respectively.
Siganto’s representative, Keith McConnell, states that in October or November 2007 Bell engaged his company to service 64 air conditioners in “Golden Riviera”. Siganto performed that work, and on or about 6 December 2007 sent an invoice to Belfol for payment of $4,083.20 within 30 days. Bell then demanded individual invoices, which Siganto supplied. Bell then expressed dissatisfaction with Siganto’s performance, and failed to pay that company. Meanwhile, however, Bell deducted $67.57 each from the accounts of Farrell, Bailey, Cameron, Walker and Otto and transferred those moneys from Belfol’s trust account to its general account, despite the fact that the transaction with Siganto had not been finalised. So much is admitted in Bell’s interview, and implicitly in his depositions.
Some fourteen months later, after the owners complained to the Department, Belfol refunded $67.57 to Farrell, Bailey, Cameron, Walker and Otto respectively.
However, the complaint about Siganto’s workmanship and the belated refunds do not dispose of the fact that Belfol, in breach of section 385 of the PAMD Act, drew amounts from its trust account before the transactions with Siganto were finalised. Bell’s submission of 6 June 2012, in which he states that “both myself and Belfol have always acted diligently and with great care to care [sic] to all our dealings” cannot be taken seriously.
I am satisfied that the allegations in Particulars 3, 7, 10, 18 and 53 are established.
Particulars 4 and 33
These counts relate to repairs to dishwashers in units owned by Barry Farrell and Andrew Mornement, ordered by Belfol and made by John Moody’s Appliance service (“Moody”). They read as follows:
Particular 4: (i) On 8 May 2008 Belfol deducted $102.50 from Farrell’s income for April 2008 for dishwasher repairs completed by John Moody’s Appliance Service (Moody). (ii) Belfol did not finalise the transaction as it did not pay Moody. (iii) Belfol did finalise the transaction by paying Moody in December 2008.
Particular 33: (i) On 31 December 2008 Belfol deducted $224.25 from Mornement’s income for April 2008 for dishwasher repairs completed by Moody. (ii) Belfol did not finalise the transaction as it did not pay Moody. (ii) As at 10 December 2009 Belfol still had not finalised this transaction by paying Moody.
This conduct, it is alleged, infringes section 385 of the PAMD Act (Permitted drawings from trust accounts). Farrell and Mornement affirm that the deductions in question were made. Bell’s inadequate answer is that they were lawfully made, because Belfol “had incurred the liability to pay [Moody]”. That is clearly contrary to s 385, which requires finalisation before moneys are drawn from a trust account.
I am satisfied that the allegations in Particulars 4 and 33 are established.
Particulars 11, 32, 35 and 54
These items concern four separate deductions of $385 from the accounts of Murray Cameron, Andrew Mornement, Michael Niven and Lindsay Otto for painting of their units. (Niven eventually secured a refund.) The deductions occurred in September and October 2008, when painting had not even commenced. All four owners state that they were not consulted about the matter. Johanne Keys, a former employee of Belfol, states that Bell explicitly told her to make these deductions.
The Department says that these dealings by Belfol and Bell were contrary to section 7 of the Property Agents and Motor Dealers (Real Estate Agency Practice Code of Conduct) Regulation 2001, (“Code of Conduct”) which provides that an agent must act honestly, fairly and professionally in the conduct of a real estate agency business.
Bell’s answer is that the terms of Belfol’s appointment allowed it to order repairs and maintenance to a maximum of $500 without prior approval by the client. Be that as it may, I do not accept that it was honest, fair or professional to make these deductions before the work ordered was completed.
I am satisfied that the allegations contained in Particulars 11, 32, 35 and 54 are established.
Particular 9
This item reads as follows:
(i) In August 2007 Murray Cameron, a client of Belfol, filled in an insurance proposal to cover his Unit 28 and sent it to Belfol, who advised him that it would pay the premium on his behalf. (ii) Belfol deducted $194.15 from Cameron’s income for August 2007. (iii) In August 2008 Cameron’s unit suffered water damage. (iv) The insurance company was contacted and they advised that the unit was not insured as the premium had never been paid.
The Department alleges that this omission breaches section 8 of the Code of Conduct, requiring an agent to exercise reasonable skill, care and diligence.
Bell does not dispute the claim that Cameron instructed the Respondents to attend to the insurance, and Bell admits that the instruction was not carried out.
It is common ground that the Respondents indemnified Cameron for the damage he sustained. Nevertheless, I am satisfied that, as alleged, the Respondents’ omission was a failure to exercise reasonable skill, care and diligence, as required by the Code.
Particular 19
(i) According to [Ann Walker’s] statement for December 2007, [her] Unit 24 was vacant from 4 December to 13 December 2008. No income was received by [her] for that period. (ii) Johanne Keys, who was the onsite manager at Golden Rivers states that an Associate of Bell (the Second Respondent), namely Dinah Williams, stayed in Unit 24 with her 2 children from 4 to 12 December 2007 without payment. (iii) Consequently the owner’s statement for Unit 24 for December 2007 is false.
The Department alleges that this constitutes a breach of section 7 of the Code of Conduct, requiring property agents to practise honesty, care and diligence.
This allegation is supported by the evidence of the Respondent’s former employee Johanne Keys. According to her, Williams and 2 children moved into Unit 24 on or about 4 December and stayed until “about” 11 December 2007. No guest registration form was completed. Walker received no payment for Williams’ occupation, and was charged for carpet cleaning at or about the time Williams was there. The owner, Ann Walker, affirms that her statement of account for December 2007 records the unit as vacant from 4 December to 13 December. Bell, when interviewed by an officer of the Department, did not deny Williams’ presence, and volunteered: “I have known [her] for quite some time”.
However, in his affidavit, Bell denies that Williams stayed “at the resort” between 4 and 12 December 2007, but admits that an unnamed guest did stay at “the relevant unit during the time” in question. Bell also says that such stays are permitted to “promote and create brand awareness for the resort ... the costs of the stays are borne by [Belfol]”. There is no evidence that the person who stayed in Unit 24 at the relevant time had any qualifications to promote the resort, or that he or she made any effort to do so. The presence of that person deprived Walker of an opportunity to earn income at the height of the tourist season, and Walker was falsely told that that the unit was vacant at the relevant time.
In so far as the evidence of Bell conflicts with that of Walker and Keys, I accept their evidence and reject Bell’s. Bell’s interview does not enhance his credit. He attended the interview on notice, after he was required to produce specific documents to the Department.[6] Despite those opportunities to prepare answers to the Department’s questions, he was frequently unresponsive; replies of “I would have to go back and check”, or word to the same effect, were made on no fewer than 115 occasions in a period of 2 hours. It is noticeable that the frequency of such non-responses diminished sharply when, towards the end of the interview, specific documents were placed before him.
[6] PAMD Act, s 556.
Further, I note that the Respondents have not adduced any evidence from Dinah Williams (or other occupant), nor have they offered any explanation of their failure to so. I infer that her evidence would not have assisted the Respondents.[7]
[7] Jones v Dunkel (1959) 101 CLR 298.
I am satisfied that the allegations in Particular 19 are established. I conclude that the Respondents, contrary to the Code, failed to act honestly towards their client Walker, and that they exercised no care or diligence in furtherance of her interests.
Particular 36
“(i) According to the owner [Bindon’s] statement for September 2008, Unit 46 was vacant from 24 August 2008 to 20 September 2008. No income was received by Bindon for this period. (ii) Johanne Keys, who was the on-site manager at “Golden Riviera” at the time [states] that an associate of Bell’s, Dinah Williams, stayed in Unit 46 with her 2 children for a week without payment on 12 September 2008 and departed on 19 September 2008. (iii) Bell was questioned in relation to this on 17 December 2009.”
Johanne Keys’ statement[8] supports allegations (i) and (ii). Inspection of Bindon’s statement of account for September 2008 shows that it reported a vacancy in the relevant period. Interviewed by an officer of the Department Bell did not deny that Williams occupied Bindon’s unit in that period alleged. Bell claims that Williams was there to promote the resort, but there is no evidence that Williams was qualified to do that, or that she made any attempt to do so. In effect, the Respondents provided her with free accommodation at Bindon’s expense.
[8] 7 March 2011, paragraph 16.
I am satisfied that in so doing, the Respondents failed to act honestly towards their client Bindon, and that they exercised no care or diligence in furtherance of his interests.
Particular 47
(i) Kate Stewart stayed in Unit 62 from 20 February 2009 to 2 March 2009. (ii) The statement for Unit 62 for February included a clean linen service expense of $354 incurred during Stewart’s stay. (iii) Stewart negotiated a better rental deal by agreeing to supply her own linen and do her own cleaning. (iv) The agreement not to provide those amenities was documented with the words “Don’t service” in the booking details for Stewart provided by Bell. (v) Further reference was made to there being no cleaning or service charges in an email from Bell to Lisa Martin dated 10 February 2009. (vi) The $354 charge was therefore not warranted. (vii) Bell maintained on 17 December 2009 that he had refunded that charge to Martin. This is not evidenced in any owner’s statement.”
The Department contends that this conduct constitutes a breach of section 7 of the Code of Conduct, requiring agents to practise honesty, care and diligence on their principals’ behalf.
Kate Stewart confirms that she provided her own linen, and that no other linen was provided. On 10 February 2009 Bell told the owner of Unit 62: “Currently we have a couple in at $400 per week and no servicing or linen costs”. Bell admits that the charge of $354 was incorrectly made, but claims that it was refunded. The Department has no evidence to refute that claim, or to negate the suggestion that the error was an innocent mistake.
I am not satisfied that a disciplinary breach is established by the material relating to Particular 47.
Particular 48
“(i) Joanne Keys, who was the onsite manager at “Golden Riviera” until 8 December 2008, states that on the day she left that position, Jon Page, a long term tenant of Unit 62 was still residing there. (ii) The owner’s statement for Unit 62 for December 2008 show that Unit 6 was vacant until 11 December 2008. (iii) The owner’s statement for December 2008 is therefore false.”
The Department contends that this conduct constitutes a breach of section 7 of the Code of Conduct, which requires agents to practise honesty, care and diligence.
Johanne Keys, an employee of Belfol until 8 December 2008 states that a Jon Page was in occupation of Lisa Martin’s Unit 62 on that date. The owner’s statement of account shows that the unit was vacant until 11 December 2008, and makes no mention of Page. The Respondents say that they were not aware that Unit 62 was occupied at the material time, but do not deny that it was.
Even if no dishonesty is involved, the Respondents’ admission shows, at least, that they did not practise proper care and diligence in the interests of Lisa Martin, and I so find.
Particular 49
“(i) The owner’s statement for Unit 62 for March 2009 shows that the unit was vacant from 4 March 2009 to 27 March 2009. (ii) Sharon White states that she and her husband moved into Unit 62 on 12 March 2009 and stayed there continuously until she moved out on 6 May 2009. (iii) Sharon White was employed by Bell who agreed to provide her accommodation. (iv) Lisa Martin, the owner of Unit 62, did not receive any income from that unit from 12 March 2009 to 27 March 2009. Therefore the owner’s statement for March 2009 is false. (v) Refer also to manipulation of the arrival and departure dates on 7 May 2009, as detailed on the Hirum software tracking records for White, obtained on 11 November 2009. (vi) The record indicates that on 7 May 2009 White’s arrival date was changed from 12 March 2009 to 28 March 2009, and her departure date was changed from 6 May 2009 to 25 April 2009. (vii) Refer also to booking records for White, obtained on 15 December 2009, relating to her stay at the “Grand Apartments” before she moved to “Golden Riviera”. (viii) The record indicates that White moved out of the “Grand Apartments” on 12 March 2009.”
The tendentious expression “manipulation” should have been replaced by a more neutral term.
The Department submit that these facts, if proved, constitute a breach of section 7 of the Code of Conduct, requiring agents to practise honesty, care and diligence.
Sharon White was formerly employed by Belfol and was under the direction of Bell. He provided her with accommodation. She states that she stayed in Lisa Martin’s Unit 62 from 12 March 2009 until about 6 May 2009. Bell told her that he would pay Martin the weekly rent of $350.
However, Martin’s statement of account for March 2009 describes the unit as vacant from 4 to 27 March. There is no mention of Sharon White’s occupancy. Belfol used a computer recording system known as Hirum, designed for highrise unit management and trust account recording. It records White’s arrival, incorrectly, as 28 March 2009 and departure as 25 April 2009. The computer record was altered to display that information, and Bell signed the printout of same as true and correct by Bell. When questioned about the changes Bell merely said “I will have to check that information”. In his affidavit of 5 October 2010 he denies any intentional alteration of the Hirum system entries.
The Respondents have not provided any evidence to discredit the statements of White and Martin. Bell’s explanation, such as it is, is unconvincing. I have already commented upon his credit. I find that the Respondents wrongfully and dishonestly used Martin’s unit for their own purposes, concealing that conduct by a false statement of account.
Particular 50
(i) The owner’s statement for Unit 62 for April 2009 shows that the unit was vacant from 25 April 2009 to 30 April 2009. (ii) Sharon White states that she and her husband moved into Unit 62 on 12 March 2009 and stayed there continuously until she moved out on 6 May 2009. (iii) Sharon White was employed by Bell who agreed to provide her accommodation. (iv) Lisa Martin, the owner of Unit 62, did not receive any income from 25 April 2009 to 30 April 2009. Therefore the owner’s statement for April 2009 is false. (v) Refer also to manipulation of the arrival and departure dates on 7 May 2009 as detailed on the Hirum software tracking records for White obtained on 1 November 2009. (vi) The record indicates that on 7 May 2009 White’s arrival date was changed from 12 March 2009 to 28 March 2009, and her departure date was changed from 6 May 2009 to 25 April 2009.
I repeat my disapproval of the word “manipulation”.
The Department submit that these facts, if proved, constitute a breach of section 7 of the Code of Conduct, requiring agents to practise honesty, care and diligence.
Sharon White states that she stayed in Unit 62 from 12 March 2009 until 6 May 2009, while she was employed by Belfol. She says that Bell told her that he would be responsible for the rent of $350 per week. The owner of Unit 62, Lisa Martin, received a statement of account for April 2009 showing a vacancy from 25 to 30 April 2009. A printout from Belfol’s Hirum system falsely shows White’s date of arrival as 28 March 2009 and departure on 23 April 2009. The computer also shows that those alterations were made by “Graham”. There is no suggestion that any “Graham”, other than the second Respondent, was connected with Belfol at any material time. Bell signed a printout of the altered entries as true and correct.
Bell denied any improper alteration, promising to make an analysis that has never eventuated.
Upon this count, I accept the evidence of Sharon White, and am satisfied that the Respondents wrongfully and dishonestly used Martin’s unit for their own benefit, deliberately concealing that conduct by giving Martin a false statement of account.
Particular 51
“(i) The owner’s statement for Unit 62 for May 2009 shows the unit was vacant from 1 May 2009 to 10 May 2009. (ii) Sharon White states that she and her husband moved into Unit 62 on 12 March 2009 and stayed there continuously until she moved out on 6 May 2009. (iii) Sharon White was employed by Bell who agreed to provide her accommodation. (iv) Lisa Martin, the owner of Unit 62, did not receive any income from 1 May 2009 to 10 May 2009. Therefore the owner’s statement for May 2009 is false. (v) Refer also to manipulation of the arrival and departure dates on 7 May 2009 as detailed on the Hirum software tracking records for White obtained on 11 November 2009. (vi) The record indicates that on 7 May 2009 White’s arrival date was changed from 12 March 2009 to 28 March 2009, and her departure date was changed from 6 May 2009 to 25 April 2009.”
Again, the word “manipulation” is improper.
The Department submit that these facts, if proved, constitute a breach of section 7 of the Code of Conduct, which requires agents to practise honesty, care and diligence.
Once again, the allegation is that the Respondents used Martin’s Unit 62 for their own purposes, without payment to her. The owner’s statement of account for May 2009 falsely recorded that the unit was vacant from 1 to 10 May 2009. Again the relevant computer printout discloses an alteration by “Graham” of the original entry for White – 12 March to 6 May – to 28 March to 25 April. Bell signed the printout as true and correct.
I find that Belfol and Bell wrongfully and dishonestly used Martin’s unit for their own purposes, concealing that conduct by giving Martin a false statement of account.
Particular 52
“(i) Sharon White is listed on April 2009 owner’s statement as staying in Unit 62 from 28 March 2009 to 5 April 2009. (ii) The statement for April 2009 includes a clean linen service expense of $354 during White’s stay. (iii) White states that she did her own cleaning and collected linen once a week which she fitted herself. (iv) The $354 charge was therefore not warranted. (v) Linen charges are $9 per person per week. White did have her children stay on occasions, so the maximum charge [if any was applicable] should have been $144 for the 4 weeks, not $354.”
The Department submit that these facts, if proved, constitute a breach of section 7 of the Code of Conduct, which requires agents to practise honesty, care and diligence.
Lisa Martin’s statement of account for April 2009 shows a debit against rent of $345 for linen charges during Sharon White’s stay. In fact White provided her own linen. Bell has provided no explanation for this deduction.
I find that the Respondents wrongfully and dishonestly charged Martin $345 for linen services when in fact no such charge was applicable.
Particular 55
“(i) In 2008 Mary Ioannu and her partner Craig Harrison booked two, two bedroom units for 2 weeks at “Golden Riviera”, arriving on 24 December 2008 and departing on 7 January 2009. (ii) On arrival they moved into Units 6 and 10. (iii) Due to a family tragedy they had to vacate their units and return to Victoria. Unit 6 was vacated on 31 December 2008 and Unit 10 was vacated on 1 January 2009. (iv) Ioannu states that June Foley agreed to refund them if the units were able to be re-let. No refund was ever received. (v) Brian Grier moved into Unit 6 on 2 January 2009 and departed on 9 January 2009. (vi) The owner’s statement for Unit 6 in January 2009 lists Harrison as staying in Unit 6 from 24 December 2008 to 9 January 2009. (vii) There is no reference to Grier’s stay on this statement. (viii) As such the owner’s statement for Unit 6 in January 2009 is false. (ix) Refer explanations offered by Bell (Exhibit PLT 54 lines 389 to 428). (x) Also refer to manipulation of data as detailed on the Hirum software tracking records for Harrison obtained on 11 November 2009: (a) at 11.47 on 1 January 2009 the Unit number was changed from 06 to waiting list (b) At 14:30 on 1 January 2009 the unit number was changed from 02 to 06, and the departure date was changed from 7 January 2009 to 2 January 2009 (c) At 16:47 on 6 April 2009 the departure date was changed from 2 January 2009 to 7 January 2009 (d) At 16:51 on 6 April 2009 the departure date was changed from 7 January 2009 to 9 January 2009. (xi) Also refer to manipulation of data as detailed on the Hirum software tracking records for Grier obtained on 11 November 2009: On 4 February 2009 the arrival date was changed from 2 January 2009 to 26 January 2009 and the unit number was changed from 06 to 44.”
The Department submit that these facts, if proved, constitute a breach of section 7 of the Code of Conduct, which requires agents to practise honesty, care and diligence.
Mary Ioannu states that she stayed in Units 6 and 10 from 24 December 2008. She was due to leave on 7 January 2009, but because of a family emergency she left Unit 6 on 31 December 2008 and Unit 10 on 1 January 2009. Belfol’s employee June Foley told her that she would receive a refund if the units could be re-let. In fact she received no refund, but Brian Grier states that he occupied Unit 6 from 2 to 9 January 2009.
An extract from Belfol’s records shows a false entry for Grier from 26 January to 2 February 2009. Bell signed the printout as correct. Thus Ioannu was deprived of a partial refund as promised, and the record was altered to show Grier in Unit 44 from 26 January to 2 February 2009. Bell signed the printout as true and correct.
Bell’s response is the same in his interview and his affidavit. He says his staff didn’t think the unit could have 2 bookings applied to it and the second booking was changed to another unit that had a gap in January and that happened to be Unit 44. He does not dispute that the computer records are incorrect and misrepresent the true position.
I find that Belfol and Bell failed to honour the promise of a refund to Ioannu when one was due, and that they dishonestly or inefficiently deprived the owner of Unit 6 of rent due for Grier’s occupation from 2 January to 9 January 2009.
Particular 56
“(i) Grier is stated on the owner’s statement for unit 44 in January 2009 as staying in Unit 44 from 26 January 2009 to 2 February 2009. (ii) Grier moved into Unit 6 on 2 January 2009 and departed on 9 January 2009. (iii) The statement states that a net payment of $1202.54 was wrongfully converted to the owner of Unit 44, Susan Keey. (4) Refer offence 55. (5) Refer explanations offered by Bell (Exhibit PLT 54 lines 389-428).”
Grier did not stay in Unit 44, but in Unit 6. The payment by Grier of $1,202.54 (net) should not have been paid to the owner of Unit 44. The Department alleges that the incorrect payment was unprofessional, contrary to section 7 of the Code.
I am satisfied that Particular 56 is established.
Particular 57
“(i) Grier is listed on the owner’s statement for Unit 44 in January 2009 as staying in Unit 44 from 26 January 2009 to 2 February 2009. (ii) Grier moved into Unit 6 on 2 January 2009 and departed on 9 January 2009. (iii) A such the owner’s statement for Unit 44 in January 2009 is false. (iv) Refer offence 55. (v) Refer explanations offered by Bell.”
I accept Grier’s evidence that he was in Unit 6 from 2 January to 9 January 2009 and never in Unit 44. I find that Grier did not occupy any unit in “Golden Riviera” from 26 January to 2 February 2009, as recorded in Belfol’s computer.
I am satisfied that this inaccuracy amounts to unprofessional practice by the Respondents, contrary to section 7 of the Code.
Particular 58
“(i) In 2008 Mary Ioannu and her partner Craig Harrison booked 2 two-bedroom units for two weeks at “Golden Riviera”, arriving on 24 December 2008 and departing on 7 January 2009. (ii) On arrival they moved into Units 6 and 10. (iii) Due to a family tragedy they had to vacate their units and return to Victoria. Unit 6 was vacated on 31 December 2008 and Unit 10 was vacated on 1 January 2009. (iv) Ioannou states that June Foley agreed to refund them if the units were able to be re-let. No refund was ever received. (v) Vic Earl moved into Unit 10 on 2 January 2009 and departed on 10 January 2009. (vi) The owner’s statement for Unit 10 for January 2009 lists Harrison as staying in Unit 10 from 24 December 2008 to 2 January 2009. (vii) The owner’s statement for Unit 10 for January 2009 lists Earl as staying in Unit 10 from 25 January 2009 to 1 February 2009. (viii) As such, the owner’s statement for Unit 10 is false. (ix) Refer explanations offered by Bell (Exhibit PLT-54 lines 389-428). (x) Also refer to manipulation of data as detailed on the Hirum software tracking record for Harrison obtained on 4 December 2009. On 2 January 2009 the departure date was changed from 7 January 2009 to 2 February 2009. (xi) Also refer to manipulation of data as detailed on the Hirum software tracking record for Earl obtained on 4 December 2009. On 4 February 2009 the arrival date was changed from 2 January 2009 to 25 January 2009 and the departure date was changed from 9 January 2009 to 1 February 2009.”
I repeat my earlier comment on the inappropriate term, “manipulation”.
Victor Earl states he moved into Unit 10 on 2 January 2009 and left on 10 January 2009. I find that Earl was not in Unit 10, or elsewhere in “Golden Riviera” from 25 January to 1 February 2009 as stated in Belfol’s records, certified by Bell. Accordingly Belfol’s statement to the owner of Unit 10 for January 2009 was false.
I find that the Respondents’ record keeping for Unit 10 in January 2009 was unprofessional, within the meaning of section 7 of the Code.
Conclusions with respect to liability
I am satisfied that Belfol was simply the alter ego of the Respondent Bell, who was “well and truly the mind of the company, and an active participant in the contraventions”.[9] Both Belfol and Bell were licensed real estate agents at all material times. When interviewed, Bell admitted that he was an executive officer of Belfol, authorised to act and to speak on its behalf. There is no suggestion of anyone else in that position.
[9] Department’s submissions, page 23. See PAMD Act, ss 496(1)(g)(vi) and 591.
The most significant offences, in my view, are the trust account breaches described in Particulars 3, 4, 7, 10, 11, 18, 32, 33, 35, 53 and 54, and the false statements of vacancies, and consequent failure to account for rents due to owners, set out in Particulars 19, 36, 48, 49, 50 and 51. No satisfactory explanation for any of those events has been given. Refunds made 14 or 15 months after the event are suggestive of insincere repentance. Meanwhile the Respondents had the use and benefit of moneys improperly transferred to Belfol’s general account.
When answers at the Bell interview were responsive, they effectively admitted that deductions were made from several accounts before “finalisation” and, therefore, in breach of section 385. Repeated assertions that Belfol was entitled to make the deductions in question as soon as it “incurred liability” simply ignore the provisions of section 385. Time for his submissions to the Tribunal was extended from 26 March 2012 to 8 June 2012. In the event, he produced less than 3 pages of material, attempting to shift responsibility from himself to Belfol’s employees White, Keys and Brown, and for the first time seeking to discredit them as “disgruntled employees who no longer work for Belfol”. However, no motive or explanation for their alleged disaffection is offered.
Overall, with the Briginshaw doctrine well in mind, I am satisfied that the Respondents embarked on, and persisted in a course of conduct designed to deprive their clients of funds and accounts to which they were entitled, in serious disregard of their fiduciary duties. I find that each Respondent is not a suitable person to hold a real estate agent’s licence. I find, also, that the second Respondent is, or at all material times was an executive officer of a corporation that is guilty of disciplinary offences.
It remains to consider appropriate sanctions, not as criminal penalties, but as protective measures, in the interests of the public, and the integrity of the real estate industry.[10]
[10]Clyne v NSW Bar Association (1960) 104 CLR 186 at 201-202; NSW Bar Association v Evatt (1968) 117 CLR 177 at 183-184; Ziems v Prothonotary of the Supreme Court of NSW (1957) 97 CLR 279 at 286; Police Service Board v Morris (1985) 156 CLR 397 at 412; Adamson v Queensland Law Society Inc [1990] 1 Qd R 498 at 504; Filippini v Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development [2008] QCA 96 at [17].
Sanctions
The Department submits that propriety in dealings with trust moneys is “absolutely central to maintain the standards and integrity of the real estate industry”. It contends that the Respondents’ trust account defaults were persistent, repetitive and occurred over a lengthy period of time, and that, by the device of false “vacancies”, several owners were deprived of rents that they were entitled to receive. The Department points out that in criminal proceedings based on section 385 of the Act, a maximum penalty of 3 years’ imprisonment and substantial fines may be imposed. It has calculated, without contradiction, that the unlawful benefit to the first Respondent amounts to $7,271.75.
The Respondents have made no submissions regarding an appropriate sanction, beyond Bell’s statement that he “understand[s] the penalty applicable to the company, however I do not believe that my personal licence which was not registered against the building where the offence allegedly accured [sic] should also be included in the proceedings”.[11]
[11] Bell’s submissions 8 June 2012 page 3.
The Department’s submission refers to The Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development v Cumerford.[12] In that case an agent who was guilty of failing, twice, to have his trust account audited, and failing to lodge a rental bond with Residential Tenancies Authority was permanently disqualified. However, that order was made by consent. A ten-year disqualification, and substantial fines were imposed on a company and its unrepentant executive officer in The Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development v Furness[13], involving 20 charges.
[12] [2006] QCCT PD005-06.
[13] [2005] QCCT X005-05.
In The Chief Executive, Department of Employment, Economic Development and Innovation v Schellaars[14] a real estate agent was disqualified for 5 years and fined $5,000. Her error was to withdraw money from her trust account and deposit it in a holiday account. However, none of her clients suffered financial loss, she did not use the money in the operation of her business, she did not contest the charges, she co-operated fully with the Department and she was remorseful. Those mitigating factors are not present in this case. The Respondents have persistently, albeit unconvincingly, denied wrongdoing, and the Department has been obliged to make painstaking, time consuming and expensive inquiries to assemble evidence of a pattern of insidious fraud, while the Respondents have repeatedly obfuscated and delayed proceedings.
[14] [2010] QCAT 477.
In Department of Employment, Economic Development & Innovation v Baldwin[15] five unauthorised withdrawals from a trust account resulted in permanent disqualification, an $8,000 fine and an order for costs. The Respondent did not contest the charges, but the amounts involved were substantially greater than in the present case. The Respondent in The Chief Executive, Department of Employment, Economic Development and Innovation v Welburn[16] pleaded guilty and co-operated with investigators. Nevertheless, she was permanently disqualified, fined $5,250 and ordered to pay costs. In the earlier case of Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development v Cornwell[17] the licensee, who unlawfully transferred trust moneys to his working account was disqualified for 10 years and fined $3,000, although he repaid the moneys within 2 months, pleaded guilty at an early stage, and co-operated with the authorities.
[15] [2011] QCAT 484.
[16] [2010] QCAT 202.
[17] [2005] QCCTPAMD 49; [2005] X007-05.
The only mitigating factor in this case is that the financial benefit to the Respondents was significantly less than the improper gains in the cases noted above. Repayments were not made for many months, and then only under pressure of complaints.
In determining sanctions, it is pertinent to consider, inter alia, prevention of a repetition of the offences, the culpability of the respondents, the nature and number of offences the amount of money involved, and the presence or absence of co-operation with the investigating authority. I consider that in the present case, appropriate orders for the protection of the public and the industry to be a disqualification of each Respondent for a period of 10 years, prohibition of the second Respondent for a period of 10 years from being an executive officer of a corporation that holds any form of licence issued under the Property Agents and Motor Dealers Act 2000, and fines of $15,000 upon the first Respondent and $5,000 upon the second Respondent respectively.
The original application seeks an order for costs on the Magistrates Court scale, with an indication that submissions on quantum would subsequently be made. In fact no such submissions are available, but I shall give leave for that omission to be remedied, if the Department so desires.
ORDERS
That the first Respondent, Belfol Pty Ltd, be disqualified for a period of ten (10) years from holding any form of licence or registration under the Property Agents and Motor Dealers Act 2000.
That the second Respondent, Graham John Bell, be disqualified for a period of ten (10) years from holding any form of licence or registration under the Property Agents and Motor Dealers Act 2000.
That the first Respondent, Belfol Pty Ltd, pay to the Chief Executive Officer, Department of Employment, Economic Development and Innovation the sum of fifteen thousand dollars ($15,000) by 4 pm on 21 July 2012.
That the second Respondent, Graham John Bell, pay to the Chief Executive Officer, Department of Employment, Economic Development and Innovation the sum of five thousand dollars ($5,000) by 4 pm on 21 July 2012.
That the second Respondent, Graham John Bell, be prohibited for ten (10) years from being an executive officer of a corporation that holds any form of licence issued under the Property Agents and Motor Dealers Act 2000.
That the question of costs be reserved for decision, if required, upon the papers.
That the Applicant be at liberty to file and serve submissions on costs within 14 clear days of receipt of this decision.
That the Respondents be at liberty to file and serve submissions in response to any material served upon them in accordance with Order 7 above, within 14 days of receipt of same.
That the charges other than those particularised as numbers 3, 4, 7, 9, 10, 11, 18, 19, 32, 33, 34, 35, 36, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57 and 58 are dismissed.
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