Chief Executive Department of Justice and Attorney-General v Hoppner
[2014] QCAT 296
•2 July 2014
| CITATION: | Chief Executive Department of Justice and Attorney-General v Hoppner [2014] QCAT 296 |
| PARTIES: | Chief Executive Department of Justice and Attorney-General (Applicant) |
| v | |
| Jason Cameron Hoppner (Respondent) |
| APPLICATION NUMBER: | OCR288-13 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Paratz |
| DELIVERED ON: | 2 July 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Jason Cameron Hoppner is reprimanded. 2. Jason Cameron Hoppner is disqualified for a period of 15 years from holding any form of licence or certificate of registration issued under the Property Agents and Motor Dealers Act 2000. 3. Jason Cameron Hoppner is prohibited for a period of 15 years from being an executive officer of a corporation which holds any form of licence issued under the Property Agents and Motor Dealers Act 2000. 4. Jason Cameron Hoppner is to pay a fine of $10,000 to the Chief Executive, Department of Justice and Attorney-General, on or before 31 December 2014. 5. Jason Cameron Hoppner is to pay to the Chief Executive, Department of Justice and Attorney-General, the amount of $35,398.44 on or before 31 December 2014 – being the amount paid out of the Claim Fund and for which he has been named liable to reimburse the Claim fund pursuant to s 482(22) and s 490(2) of the Property Agents and Motor Dealers Act 2000. 6. Jason Cameron Hoppner is to pay a total of $8,668.11 to the following persons in the following amounts on or before 31 December 2014: a. Andrew Bower - $ 1,664.89; b. Liam, Sarah and Martin Todman - $4,332.34; c. Peter Andersen and Peter Wildermouth - $ 1,130.88; d. Bronwyn and Peter Finnen - $1,540.00. 7. Jason Cameron Hoppner is to pay $4,246.36 to Todd Cody on or before 31 December 2014. |
| CATCHWORDS: | Where a real estate agent was the principal of an agency – where a substantial shortfall in the Trust Account occurred due to poor management – where monies were diverted from the trust account to private accounts of the agent – standard of proof in a disciplinary matter – where the Tribunal was reasonably satisfied that the agent had diverted and used monies from the Rental Trust Account – where Orders for compensation as to amounts paid from the Claim Fund and monies diverted from the Rental Trust Account Property Agents and Motor Dealers Act 2000 (Qld), s 496(1)(b), s 496(1)(d), s 496(1)(g)(iii), s 573(2)(a) Re Seidler [1986] 1 Qd R 486 |
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 (Qld) (QCAT Act).
REASONS FOR DECISION
Jason Cameron Hoppner was the principal of a real estate agency at Redcliffe in Queensland. The Chief Executive has brought an application in the Tribunal to start disciplinary proceedings against him.
I made Directions on 14 November 2013 that if no application for an oral hearing was made, that the application would be determined on the papers not before 24 January 2014. I extended that time on 24 January 2014 to 14 March 2014. No application for an oral hearing has been received, and this matter is now being decided on the papers.
Grounds of the Application
The application of the Chief Executive filed on 13 November 2013 applied to start disciplinary proceedings for breaches of the following sections of the Property Agents and Motor Dealers Act 2000 (Qld) (‘the Act’):
Section 496(1)(b): For a licensee – the licensee or employee has contravened or breached (i) of the Act, including a code of conduct
Section 573(2)(a): Wrongful conversion and false accounts
Section 7(1) Code of Conduct: Honesty, fairness and professionalism
Section 496(1)(d): an amount has been paid from the fund because the licensee or employee did, or omitted to do, something that gave rise to a claim against the fund
Section 496(1)(g)(i): For a licensee – the licensee is not a suitable person to hold a licence
Section 496(1)(g)(iii): For a licensee – the licensee has in carrying on a business or performing an activity, been incompetent or acted in an unprofessional way
Particulars of the Application
The Chief Executive attached a Statement of Particulars to the Application. The particulars included the following:
a) Mr Hoppner held a licence as a Real Estate Principal. He was appointed as the principal licensee of a business known as “Hudson Red” on 23 July 2009. The business was owned by Redcliffe Real Estate Investments Pty Ltd but traded under the real estate corporations licence of Hudson Red Real Estate Pty Ltd. He was appointed as a director of Redcliffe Real Estate Investments Pty Ltd in May 2009.
b) The business ceased trading on 1 October 2010 when receivers (SBR Insolvency + Reconstruction) were appointed by the court over Redcliffe Real Estate Investments Pty Ltd. Mr Hoppner resigned from all roles in the business in that month.
c) Maward Pty Ltd took over the running of the business after Redcliffe Real Estate Investments Pty Ltd went into receivership, and Mr Hoppner was a Director of that company as well.
d) The receivers were also retained by the Chief Executive to investigate the management of the trust account after their investigations had revealed a general deficiency in the trust account of approximately $46,600.
e) A total of 23 claims were lodged against the claim fund from affected consumers. Investigations by the receivers into these claims identified Mr Hoppner as being involved in the business at the time these matters had arisen. In total, an amount of $26,121.85 was paid out of the Claim Fund in satisfaction of these claims. A total of $6,143.41 was recovered from the trust account of the agency and paid back into the claim fund. Total receivers fees were $15,420 to investigate the claims. The fees were paid out of the fund. The amount owed to the Claim Fund is $35,398.44.
f) Rental monies due to be paid to five different landlords accounts had been diverted into three different bank accounts belonging to Mr Hoppner.
g) A report obtained from REST (property management) software system used in the business revealed that the banking details for the five property owners were altered in October and November 2010. These alterations resulted in monies being paid to Mr Hoppner’s accounts rather than the property owner’s accounts.
h) The first payment made to Mr Hoppner’s accounts was on 1 December 2010. Payments continued into his accounts until 1 April 2011. A total of 13 payments were made to his accounts between 1 December 2010 and 1 April 2011 totalling $12,916.51.
i) In a record of interview conducted on 14 May 2012, Mr Hoppner stated that he was the only person who had access to the money in the bank account and he agreed that he had spent the money. He said that he knew the monies had been deposited, as he regularly checked his account balance online, and this was how he knew to withdraw funds the day after they were deposited. He stated that he did not notice the transaction comments for the deposits into his accounts which included the names of the property owners to whom they were supposed to be paid.
j) Mr Hoppner’s actions caused an additional claim against the claim fund totalling $4,246.36 that was not detected or processed by the receiver. The amount was repaid to the claim fund by Todd Cody, the company director of Maward Pty Ltd who took over the position after Mr Hoppner resigned.
Material provided by the Chief Executive
A statement of evidence by Katherine McKellar, an authorised inspector of Fair Trading was filed on 23 January 2014. It attached two ring binders of statements of witnesses and evidence relied on by the Chief Executive.
Copies of Certificates and Company extracts have been provided which show that:
a) Mr Hoppner was issued with a property agents and motor dealers (real estate agent) licence, licence no 3266814 on 7 October 2008 which was due to expire on 7 October 2013.[1]
b) Redcliffe Real Estate Investments Pty Ltd was issued with a property agents and motor dealers (real estate corporation) licence, licence no 3293959 on 23 July 2009. The licence expired on 23 July 2012.[2]
c) Maward Pty Ltd was issued with a property agents and motor dealers (real estate corporation) licence, licence no 3314275 on 23 July 2009. The licence expired on 23 July 2011.[3]
d) Mr Hoppner was a Director of Redcliffe Real Estate Investments Pty Ltd from 15 May 2009 to 8 January 2012.[4]
e) Mr Hoppner was a Director of Maward Pty Ltd from 20 May 2009 to 27 October 2010.[5]
[1]Exhibit KM 23.
[2]Exhibit KM 24.
[3]Exhibit KM 25.
[4]Exhibit KM 3.
[5]Exhibit KM 4.
A statement of Todd Cody was provided.[6] He says that he was an employee in the real estate agency operating as Hudson Red in 2010.
[6]Exhibit TC.
Mr Cody says that he recall Mr Hoppner acting as the property manager for about 80 rental properties when the previous property manager left. He recalls Mr Hoppner using the REST system quite competently as he was required to run various reports for reporting back to the bosses in Sydney.
Mr Cody described Mr Hoppner as very knowledgeable when it came to anything to do with computers, and recalls that he worked in IT before going into real estate. He also recalled Mr Hoppner saying that he took the computer system login details with him when he left his former employer, Harcourts, and accessed their system after he left to obtain information which he used in his role at Hudson Red. He said that Mr Hoppner was in charge of staff login to the REST system in the office.
Mr Cody said that not long after he took over as principal licensee, on a couple of nights when he was working back late, that he saw the cursor moving around on his screen not controlled by him, as if someone else was using his computer remotely.
Ms Donna Tantram provided a statement. She worked as a property manager for Hudson Red. She said that on a few occasions Mr Hoppner used remote access to their systems, as did a lady in Sydney called Betty Drennan. She recalled a particular occasion when Mr Hoppner was at home sick and he remotely logged in so he could still do his work. He stated to her that he had done that on a number of occasions.
Record of Interview
A formal recorded interview with Mr Hoppner was conducted by Ms McKellar and another Inspector, Nick Pirie, on 14 May 2012. A transcript was prepared.[7]
[7]Exhibit KM 22.
Mr Hoppner was asked if he had much to do with the rental properties. He replied:[8]
I guess, I mean ultimately as licensee I mean I have to take responsibility for that, but really operationally it wasn’t, it was very limited. I suppose only from you know obviously my experience and I’m dealing with you know a few of those you know frustrated landlord you know enquiries and things like that, so I was sort of dealing with you know a few operational things but I guess as far as you know the systems and procedures within the property management division really on a day to day basis didn’t have that much involvement on it.
[8]Transcript of Interview at [135].
He described himself as not very cluey with how to use the REST and Console system. He said that he didn’t ever alter any property owner details, and said that he did not have remote access to the REST system, and didn’t think it ever had access outside of the office.[9] He said that he could not recall ever logging into the REST or Console system using anyone else’s user ID and password.
[9]Ibid at [167].
He said that effectively double rent money was paid out for a number of owners around August/September of 2010. He described the business as being in a poor financial position, and that he was owed substantial money:[10]
And as I said, Martin and Betty were aware of it, the auditor had picked it up, Kylie was aware of it, but fundamentally the business was in free fall, it wasn’t making any money. We’d been locked out of the office a couple of times because rent wasn’t paid on the property. And then I guess as licensee at the time I just said you know what, I want nothing to do with this, this is all going pear shaped. So I effectively resigned with a lot of income not having been paid, or salary not being paid.
[10]Ibid at [207].
He said that he thought he hadn’t been paid about eight weeks of income, plus a year and a half of superannuation.[11]
[11]Ibid at [215].
He described the discrepancy in the Trust Account as arising because Kylie, the property manager, had made a mistake and had never owned up to it:[12]
But it was actually only once the auditor had gone through and with myself gone back through every transaction for the year that we actually determined that no she just made a mistake and had never owned up to it. And that was the problem. And I guess look as licencee I probably, you know I should have been aware of it. You know the reality is though that not really day to day being involved with it I sort of, you know I put a lot of faith and trust in you know the other people in the organisation that it was obviously being taken care of.
[12]Ibid at [221].
Mr Hoppner was asked if there was any reason why bank account details of property owners would be changed on 28 October 2010 to his bank account. He replied:[13]
No. I can’t. Unless that’s, or unless, that would only make sense though if he, if rent money was used to pay me wages for some reason.
[13]Ibid at [384].
He was then asked about deposits that were made to his account, and whether he could give any reason why $1,039.68 had been paid into it, and replied:[14]
No. Well I just, at the time I just assumed it was just money coming in. Or just outstanding wages money coming in. To be honest I don’t even recall noticing rent payment Levi or rent payment Bowe. I do recall seeing Marwood.
[14]Ibid at [432].
He was asked about withdrawals he made from his own accounts, and how he knew there were funds to draw out, and replied:[15]
Yeah, no, that’s a fair question. Well either, I can’t tell you the answer to that question unfortunately. I’m either, well I’m either looking at it or, because I’d normally, I would normally look at the, my accounts you know fairly much on a daily basis. I mean that’s just normal.
[15]Ibid at [557].
He was asked if at any stage noticed that it had other people’s names listed against the payments, and replied:[16]
No. I mean, and look and I mean looking at it now, correct. But I think probably when I saw money in the account I was probably more focussed on the fact that there was money in the account rather than necessarily anything else. And if you look at the credits on the account, yeah it was, I mean I didn’t, I mean since September until probably June I wasn’t working and there was no money from Centrelink either because my, I had too many assets so they wouldn’t, you know they wouldn’t pay any unemployment benefits either, so. It was, yeah so I think any time money hit the account I was just happy that there was money there and I was probably less concerned about necessarily where it came from or why it was there.
[16]Ibid at [845].
He was asked if an amount close to the amount of nearly $13,000 was ever discussed with Mr Mulder, and responded:[17]
Oh it was only because I think it was like 10,000 I think I said. If he pays me 10,000 I’ll go away. It was pretty much to that effect.
[17]Ibid at [973].
Later in the interview Mr Hoppner was asked again about remote access when it was suggested to him that Betty Drennan had remote access. He then agreed that she did have such access. He then replied:[18]
NP: So you are aware there is remote log-ins?
JH: Y-, for, yes, correct. Yes.
NP: Cause you just said before you had no idea that there could be a remote log-in.
JH: No. no. no. it’s. And as bad as that sounds it’s as I said two years ago so I’m just, I’m, informations coming through so I’m just starting to remember a few bits and pieces, so.
[18]Ibid at [1088].
He described himself as “not an IT whiz” and so he didn’t really understand those things that well.[19]
[19]Ibid at [1106].
Response of Mr Hoppner
Mr Hoppner submitted a two and a half page typed response to the Claim dated 21 January 2014. This is the only material he has filed in this application.
Mr Hoppner says that he first became aware of the issue surrounding the operation of the trust account when he was contacted to attend the Office of Fair Trading on 14 May 2012.
He described how the property manager, Kylie Hancock, had performed one off disbursements to enable owners to receive their rental money when there was a system conversion from the Console system to the REST system. He said that the manual disbursement was not recorded in the REST system, and the REST system automatically disbursed those rental monies to those owners at the end of the month, so those owners effectively received double rent money.
He explained the issues as ‘simply a case of poor trust account management in allowing the manual payment to occur and not record it in the REST system’.
He maintained that through the audit process it was determined which owners were overpaid money, and that before his resignation, the business owner, Martin Mulder, and the supervising property manager (Betty Drennan) were informed that the money would have to be recouped from those owners.
Mr Hoppner argued that although as licensee he had operational responsibilities for the business, he did not oversee the property management division, and that Betty Drennan had clear management over the property management division.
He stated that he was more than willing to pay back the funds that were deposited into his account. He strongly disputes the allegations that he somehow manipulated the system or changed the account details himself. He says that he could not have done so, as the ability to remote access the office computer requires someone to authorise the remote access at the office, and you need to be physically sitting at the computer to do this, and he was no longer employed by Hudson Red when the account details were changed.
He disputes that he remotely logged in to the office when he was sick, as alleged by Donna Tantrum. He says that had a laptop which he took home each day so he never needed to remote access to it.
He also disputes the statements of Todd Cody that he remote accessed the records of his former employer, Harcourts. He says that he already had a copy of the contact details for buyers and sellers.
Mr Hoppner raises the possibility that he was set up as a scapegoat by they owner of Hudson Red, Martin Mulder, who was not happy when he left the employment of Hudson Red. He says that it would not have been difficult for Mr Mulder to organise all this as a way of getting back at him, and avoiding potential litigation with him.
The essence of Mr Hoppner’s arguments are contained in the last three paragraphs of his response, which were as follows:
It should be noted that I was the one who engaged the auditor prior to my departure and discovered that owners had been overpaid. I always acted appropriately with regard to my role in the company and whilst I take responsibility for the lack of supervision within the property management division it was only because of the understanding that this was being done appropriately by Betty Drennan in Sydney. As licensee I now know that I should have been more active in overseeing the operation of the trust account and understanding of my responsibilities as licensee. Since leaving Hudson Red I have worked for a large property management company and have had zero issues with regard to the operation of the trust account under my management nor any concerns raised by Office of Fair Trading.
It is clearly only conjecture and without evidence that these claims are brought against me. As stated in my interview I am more than willing to pay back any monies paid to me incorrectly from the trust account however all additional claims are unwarranted due to the fact that the audit process undertaken prior to my resignation clearly identified the overpayments made to owners. I make the argument that this has been likely been a malicious fabrication by Martin Mulder to avoid personally paying back funds into the trust account to offset the owner overpayments. I have a deed of Indemnity with Martin Mulder which protects me from any debt or liability brought against the business as I never wanted to be a director but only did so on the provision that I could not be held accountable for any debt or liability. I suspect Martin orchestrated this as a way of avoiding that debt and putting responsibility back on me.
As licensee at the time I take responsibility in my role and should have provided better supervision to ensure the overpayments didn’t occur in the first place however I undertook an audit as soon as I was made aware of the issue which I think shows character in how serious I take my responsibilities as a licensee. Since Martin & Betty knew which owners were overpaid prior to my departure they simply had to follow through with the collection process and it would not have resulted in owners seeking claims against the fund.
Submissions of the Chief Executive
The Chief Executive addresses the grounds in two groups – the general management of the real estate agency leading to the payments from the Claim Fund; and the diversion of payments to Mr Hoppner’s personal accounts.
It submits that the receiver’s reports revealed a general deficiency in the trust account of approximately $46,600, and that this deficiency may have come about as a result of poor accounting, poor management and possible overpayment to landlords, and not forwarding bonds to the Residential Tenancies Authority.
It argues that evidence that Mr Hoppner did, or omitted to do, something that gave rise to a claim against the fund is evidenced by:
a) Mr Hoppner was the principal licensee and person in charge of the business at the time the trust funds were lost to the business, and as principal licensee was responsible for day to day control of and proper management of the business
b) He was a director of both Redcliffe Real Estate Investments Pty Ltd and Maward Pty Ltd and required by law to take an interest in the business of the companies
c) He was aware of ongoing issues with the trust account including double payments to landlords, the pushing back of payments totalling $20,000 each month to keep the business going and the non-payment of bonds, and allowed Martin Mulder and Betty Drennan to deal with those issues when he should have been more proactive prior to and after those incidents were discovered.
d) The receivers identified that the property management operations were not appropriately managed, with errors in the records and alleged overpayments to some landlords.
As to the diversion of moneys, the Chief Executive refers to the record of interview and submits that it establishes the following matters:
It is submitted that what the record of interview establishes is that the Respondent was angry about unpaid wages (of up to $10,000) plus no payments having been made to his superannuation, that the Respondent had a detailed level of knowledge of the computerised trust account system including staff member’s usernames and passwords, a clear awareness that the business was going ‘down’ and that the trust account records were in a disarray so no one would care, the Respondent had no current income, he had an investment property and overdraft to service, he needed funds, was going overseas and had an indemnity from financial responsibility for the business from his former boss.
It submits that there is a ‘logical conclusion’ from the evidence that Mr Hoppner diverted the rental payments to recoup his losses which he had suffered.
Are disciplinary grounds made out?
There are significant factual differences between the material provided by the Chief Executive and the responses and interview of Mr Hoppner. If an oral hearing was conducted, and the various witnesses and Mr Hoppner were subject to cross-examination, then I would have to decide as a matter of credit which evidence I accepted.
No party has asked for an oral hearing. The result is that the statements of the witnesses adduced by the Chief Executive stand on their face. Mr Hoppner raises issue with significant aspects of that evidence in his own response and interview, but his evidence and allegations have not been tested by cross-examination.
Where the evidence of Mr Hoppner and the other witnesses coincide, there is no issue, and those matters can be taken as agreed. Where there are the significant discrepancies however, I have to form a view.
The Chief Executive submits that the standard of proof in a disciplinary matter is on the balance of probabilities, with some measure of flexibility on more serious matters. It refers to the comments of Carter, J in Re Seidler:[20]
In Australia and in England the appropriate standard of proof in disciplinary actions has been closely examined by the courts and this standard is regularly applied in practice by disciplinary bodies. The standard of proof is proof on the balance of probabilities possessing as that standard does the required measure of flexibility so that the more serious the allegation, the higher the degree of probability that is required.
[20][1986] 1 Qd R 486 at 490.
The Briginshaw standard is frequently referred to in disciplinary matters. Briginshaw was a decision of the High Court of Australia.[21] Dixon J made the following comments as to the standard required in a matter that is not a criminal case, but goes beyond a civil case in its ramifications:[22]
The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists which may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.
[21]Briginshaw v Briginshaw (1938) 60 CLR 366.
[22]At [362].
The import of Seidler and Briginshaw is that the seriousness of the allegation is a significant factor in determining the standard of proof. It is neither the civil standard of the balance of probabilities, nor the criminal standard of beyond reasonable doubt. It can be expressed as ‘reasonable satisfaction’ which is to be determined having regard to the nature of the proceedings and the consequences.
Dixon J made specific reference in Briginshaw to ‘the inherent unlikelihood of an occurrence of a given description’ as an example of matters relevant to whether the tribunal is reasonably satisfied.
The question then becomes whether I am reasonably satisfied that disciplinary grounds are made out.
It is apparent that the real estate agency finances were not managed properly. Any discrepancy in a Trust Account is a serious matter. Here, problems arose and lasted for several months whereby funds were rolled over to make cashflow in the Trust Account.
The problems led to a shortfall in the trust account, and the Claim Fund was ultimately called upon by 23 customers to pay them their entitlements.
Mr Hoppner blames the problems with the Trust Account accounting as due to a combination of a change of computer program, and the actions of the employee who was operating it. He acknowledges that as Principal that he bears ultimate responsibility.
His supervision should have been that no problems arose in the first place, and that if they did that they were addressed promptly and effectively. His actions fell below the standard of a reasonably prudent principal and below the standards required by the Act.
In failing to properly supervise the Trust Account he has breached the obligations required of him by s 496(1)(d) as a licensee in that something he did gave rise to a claim against the fund; and of s 496(1)(g)(iii) as a licensee in that he has been incompetent.
The issue of the funds transferred to his personal account is more problematic. There is no clear evidence that Mr Hoppner altered the records of the real estate agency so that rental money paid into the Maward Pty Ltd Rental Trust Account was paid out to his personal accounts rather than to the Property Owner’s accounts.
Mr Hoppner denies that he altered the accounts. He says that he did not access the computer remotely, and further says that he did not have the knowledge to do so.
Against this there is the evidence of Mr Cody and Ms Tantrum who say that Mr Hoppner was very familiar with computers and skilled in using them. Ms Tantrum says that Mr Hoppner did in fact remotely access the computers of the agency.
Mr Cody describes seeing the cursor of the computer moving at times late at night. There is no knowing who was doing this, it may have been someone who did remotely access the computer such as the IT consultants or Betty Drennan from Sydney, it could have been a complete third party hacking into the system, or it could have been Mr Hoppner.
One telling event in the interview with Mr Hoppner was that he firstly denied that anyone could remotely access the computer, but then when it was put to him that other witnesses said that Betty Drennan did so, he changed his recollection.
Monies were transferred into Mr Hoppner’s personal accounts. He was aware that monies were deposited, and withdrew them within days of each deposit. He did not make any queries of the agency as to why monies were being transferred to him. He also says that he did not notice the notations accompanying the deposits on his statements showing that they were rental payments in respect of named persons.
Mr Hoppner’s behaviour in not making enquiries as to the source of the monies, and as to whether he was legitimately entitled to them, and then using them, are significant behaviours in their own right. Even if he had no part in redirecting the funds to his accounts, he had no entitlement to them, and acted dishonestly in appropriating them. A parallel can be drawn with a person who receives a sum of money deposited into their bank account by a bank mistake, and then takes and uses the money. An offence occurs in dealing with the money.
Mr Hoppner offers no reasonable explanation as to why he did not query the source of the money, or as to why he took it as his entitlement.
It is not plausible that Mr Hoppner did not see the clear notations on the deposits to his accounts that they were for rent in respect of named persons. He says he was focussed on the fact that there was money in the account, but that would have caused him to be even more aware of the presence of it, and be curious as to the source of it.
His suggestion that the real estate agency was paying him some amounts of money in respect of moneys he claimed to be owed for back wages and superannuation is unlikely in the absence of any agreement to do so. If the agency or Mr Mulder was going to pay Mr Hoppner any amount in settlement of a claim, then they would surely have created some form of notification, whether by email, letter or formal deed, whereby both parties acknowledged that the matter was being settled by such payments, in order to protect themselves from future claims. There is no evidence of any such record.
His proposition that he was ‘set-up’ by Mr Mulder in some complex conspiracy is not supported by any of the circumstances, or any evidence. There is no substantiation of any significant ill-will between Mr Hoppner and Mr Mulder. Mr Hoppner does say that Mr Mulder was ‘not happy’ that he left the agency – this may be a euphemism for extreme displeasure, but that does not necessarily extend to such a feeling of bitterness that Mr Mulder would engage in illegal acts in an attempt to incriminate Mr Hoppner.
Further, Mr Hoppner says that he had an agreement with Mr Mulder that if he was paid $10,000 then he would accept that amount in settlement of his claims for unpaid wages and superannuation. He ultimately received about $13,000 into his account.
Between 28 September 2011 and 12 July 2012 the Chief Executive allowed 22 claims against the Claim Fund for the sum of $26,121.85. On 24 July 2012 the Chief Executive also determined a claim against the Claim Fund for $4,246.36. These total claims paid out are $30,368.21. In addition, fees were paid to the receiver of $15,420.00, making a total of $45,788.21. The receiver paid the balance of $6,143.41 being the balance of the Trust Account. This left a shortfall of $39,644.48. Mr Cody paid an amount of $4,246.36 leaving a current amount owing to the Claim Fund of $35,398.44.
In each of the decisions allowing the claims, the Chief Executive found that both Mr Hoppner and Mr Mulder had contravened the Act and pursuant to s 490(2) were jointly and severally liable to reimburse the amounts of the claims.
The question then arises, why would Mr Mulder divert clients funds to Mr Hoppner to incriminate him, when in doing so he was exposing himself to potential liability to pay back the amounts, some of which were eventually paid out by the Claim Fund, and for which he has been named personally liable? Instead of diverting $12,916.51 to Mr Hoppner, of which Mr Mulder now has a personal liability to pay back $4,246.36, and perhaps a possible liability in respect of the other $8,668.11 in other possible proceedings, wouldn’t it have been cheaper and simpler for him to just pay Mr Hoppner the $10,000 that he was said to have agreed to do in the first place?
Mr Hoppner says that he has a Deed of Indemnity with Mr Mulder which protects him from any debt or liability brought against the business, the effect of which Mr Mulder is trying to evade. The suggestion is that Mr Mulder set out to incriminate Mr Hoppner in order to make the Indemnity inapplicable. Mr Hoppner is relying on an assumption that the Deed of Indemnity would have extended to cover Orders made against him as an Executive Officer under the Act for breaches of the Act in any event, even if personal wrongdoing was not shown. That is a legalistic argument which would depend on the wording of the indemnity, and which may have no validity. There would likely be litigation to determine the effect of such an indemnity. It is hard to accept that Mr Mulder would undertake a criminal activity which ultimately relied on a legal ruling to be effective.
If some other person did remotely access the computer of the agency (apart from Mr Mulder as part of an incriminating plan) why would they direct the money to Mr Hoppner? A hacker who was trying to steal the money would direct the money to one of their own accounts.
Mr Hoppner’s version of events generally is largely implausible and hard to accept, and at variance with the evidence of Mr Cody and Ms Tantrum.
There has to be an extremely strong suspicion that Mr Hoppner did in fact access and alter the records of the agency to redirect funds to his own accounts. That suspicion is so strong in all the circumstances, and the possibility that anyone else would do so is so low, that allowing for the seriousness of that allegation, I am reasonably satisfied that he actually did do so.
Mr Hoppner then compounded his actions by withdrawing and taking the funds.
Section 573 of the Act applies if a licensee, in the performance of the activities of a licensee, receives an amount belonging to someone else and dishonestly converts the amount to the licensee’s own use. A licensee who does so commits a crime. In that section, licensee includes a former licensee (s 573A(4)).
In this instance the monies were received by the agency in the performance of its activities, and therefore the impact of the section extends to Mr Hoppner as a former licensee, even though he was not managing the agency at the time the monies were converted.
These actions of Mr Hoppner do therefore constitute wrongful conversion by a licensee, and a breach of the Act, under s 573(2)(a).
I therefore find that grounds for disciplinary proceedings exist on the grounds of s 496(1)(d) (giving rise to a claim against the fund); s 496(1)(g)(iii) (incompetence); and s 496(1)(b)(i) (breaching s 573(2)(a) of the Act - conversion).
Penalty
The Chief Executive submits that the conduct of Mr Hoppner as a whole is most serious and requires a significant penalty be imposed so as to ensure the ongoing protection of the public and the integrity of the real estate industry.
It seeks the following penalties:
·Mr Hoppner be reprimanded;
·He be disqualified permanently from holding any form of licence or certificate of registration issued under the Act;
·He be permanently prohibited from being an executive officer of a corporation which holds any form of licence issued under the Act;
·He pay a fine of $70,000 to the Chief Executive on or before 1 September 2014;
·He pay costs of $500 to the Chief Executive.
It also seeks the following orders by way of compensation under s 529(1)(g) or s 529(1)(ba) of the Act:-
·An order that Mr Hoppner reimburse the Claim fund a total of $35,398.44 on or before 1 September 2014 – being the amount paid out of the Claim Fund and for which he has been named liable to reimburse the Claim fund pursuant to s 482(22) and 490(2) of the Act as a result of his conduct in this matter;
·An order that he reimburse $8,668.11 to the persons (excluding Kylie and Nicholas Levitt) named in Attachment B to it’s submissions on or before 1 September 2014 – as funds which were diverted to Mr Hoppner’s bank accounts and which he has failed to repay;
·Am order that Mr Hoppner reimburse $4,246.36 to Todd Cody who paid the amount to reimburse the Claim Fund (relating to the amounts due to Kylie and Nickolas Levitt as detailed in attachment B to its submissions) on or before 1 September 2014 – as funds which were diverted to Mr Hoppner’s bank accounts and which he has failed to repay.
Mr Hoppner did not make any submissions as to penalty, or provide any material in mitigation.
The Chief Executive referred to three decisions in relation to penalty (Halmarn, Schellaars, and Cornwall), and submitted these as comparative cases. I will deal with each of those cases in turn.
The decision in Chief Executive Department of Justice and Attorney-General v Halmarn Pty Ltd t/as Magnetic International Resort & Anor[23] is a recent decision, handed down on 20 March 2014, by a single member of the tribunal. I had delayed the handing down of this decision pending the expiry of any Appeal period in relation to that decision, and to allow time in the event of the lodgement of any Application for an extension of time for an appeal. No Appeal appears to have been lodged.
[23][2014] QCAT 099.
In Halmarn disciplinary action was brought against Halmarn Pty Ltd and its principal Mr Donald McGrath. The Tribunal found that Halmarn contravened s 117 of the Act on 1,135 occasions by over charging related to credit and charge card transactions, agents commissions, and the charging of ACCOR fees and commissions without authority. It also found contraventions of s 16 of the Code of Conduct by acting for unit owners where it had conflicting interests with those of the unit owner.
The Tribunal noted that it was an exceptional case:[24]
[19]There are no analogous Tribunal decisions that afford guidance about the appropriate penalty for the Tribunal to impose in these circumstances. The distinguishing factor between this case and others previously decided relates to the long-term conduct and numerous contraventions by Mr McGrath. In contrast, previous PAMDA disciplinary proceedings commenced in the Tribunal have involved minimal numbers of contraventions (usually one or two). Halmarn and Mr McGrath’s conduct is unparalleled.
[24][2014] QCAT 099 at [19].
The Tribunal imposed a monetary penalty of $418,716.78 on the following basis:
[28]As exhibited in attachment 5 to the Department’s submissions on penalty, Halmarn and McGrath’s conduct resulted in Halmarn’s retaining $209,358.39 that it was not entitled to. Accordingly, the Tribunal will fix the penalty that Mr McGrath is to pay for this conduct at $418,716.78 (twice $209,358.39). The fixing of a penalty for which there can be no mathematical formulae, must have regard to the unique factual matrix of each case. In doubling the amount retained by Halmarn to calculate the penalty Mr McGrath must incur for his conduct, I have had careful regard to both the Department and Mr McGrath’s submissions.
In that case orders were also made as to compensation, the Respondents were disqualified permanently, and Mr McGrath was ordered to pay the Chief Executive’s costs of the proceedings fixed in the amount of $135,056.51.
I do not consider that Halmarn is a good comparator to the present case. That case was unparalleled as the Member noted. It turns on its own facts and circumstances.
The Chief Executive has sought a penalty of $70,000 in this matter. That seems to equate to about double the amount outstanding to the Claim Fund. I note the calculation in Halmarn where the monetary penalty imposed was twice the amount wrongfully retained. However, as the member noted, there is no mathematical formulae in fixing a penalty. I do not consider that Halmarn establishes a principle that the appropriate penalty in a disciplinary proceeding of this nature is twice the amount wrongfully dealt with. Each application is to be considered on its own merits, having regard to appropriate previous decisions.
In TheChief Executive, Department of Employment, Economic Development and Innovation v Schellaars[25] an agent withdrew $42,239.50 from a trust fund for her own use over 23 separate occasions. A fine of $5,000 and a disqualification for five years was imposed. The full amount had been repaid and full admissions had been made to the authorities.
[25][2010] QCAT 477.
In Chief Executive DTFTWID v Cornwell[26] an agent withdrew $36,612.30 of trust funds over five separate withdrawals. He was disqualified for 10 years and a fine of $3,000 was imposed.
[26][2005] CCT X007-05.
On the material before me, there is no indication that Mr Hoppner has repaid any of the monies that were paid out from the Claim Fund or redirected to his account. I am therefore proceeding on the basis that he has not repaid any monies.
Mr Hoppner has not shown any remorse for his actions. He has denied diverting the rental monies to his personal accounts. He has sought to minimise his involvement in the management of the agency, and to pass the responsibility for the discrepancies in the Trust Account onto a junior employee.
The grounds which I have found made out are very serious in nature. They encompass incompetence in management of the agency, as well as dishonesty in dealing with Trust Funds. They go to the essence of the confidence the public places in real estate agents.
Mr Hoppner says that he is still engaged in the property industry in another State, where he is the licensee for a large property management company, and has experienced no difficulties with regard to the operation of the Trust Account under his management nor any concerns from the regulator. He may wish to re-enter the industry in Queensland at some future stage, and a permanent disqualification would deprive him of his opportunity to earn income in the future, but a substantial period of disqualification should be imposed for the protection of the public in Queensland, and having regard to the seriousness of the matters.
The mismanagement of the agency would most likely draw a period of disqualification, but it is the conversion element that is of greater significance in this respect. The conversion involved Trust Fund monies of $12,916.51 over 13 incidents over a four month period. The conversion amount is only about a third of the amount involved in Schellaars or Cornwell where disqualification periods of five years and 10 years were imposed.
In the absence of any mitigating factors, and having regard to the seriousness of the conversion offence, and the additional mismanagement elements, however, I consider that a term of disqualification of 15 years is appropriate in this case.
Orders for compensation are sought. There are two tables in evidence which list payments which have been made by the Claims Fund and amounts diverted to Mr Hoppner’s personal accounts.
One table[27] in respect of the Claims Fund lists 22 claims in relation to Redcliffe Real Estate Pty Ltd in a total amount of $26,121.85. A further claim is listed in relation to Maward Pty Ltd in the amount of $4,246.36 in respect of a claim by the Levitt Family Super Fund. This gives a total of $30,368.21 paid out by the fund for claims.
[27]Attachment BG1to the Affidavit of Brett Gough sworn on 7 January 2014.
A different table[28] shows the amounts diverted to the personal accounts of Mr Hoppner in a total amount of $12,916.51. This amount includes the amount of $4,248.40 where the property owner was the Levitt Family Super Fund - that amount however is included in the first table (although it shows there as $4,246.36, this is a discrepancy of $2.04 which reoccurs). This leaves a balance of $8,668.11 in respect of diverted funds in relation to the other persons on that table.
[28]Attachment B to the submissions of the Chief Executive filed on 25 March 2014.
The names of the persons who are owed rental monies which were diverted to Mr Hoppner’s personal accounts, and the amounts are as follows:-
Andrew Bower $ 1,456.70
$ 208.19
Bower total $ 1,664.89
Liam, Sarah and Martin Todman $ 2,003.67
$ 583.68
$ 1,744.99
Todman total $ 4,332.34
Peter Andersen and Peter Wildermouth $ 1,130.88
Bronwyn and Peter Finnen $ 770.00
$ 770.00
Finnen total $ 1,540.00
Total $ 8,668.11
The total amount of compensation sought is as follows:-
Balance owing to Fund $ 35,398.44
Rental monies diverted $ 8,668.11
Pay to Cody (Levitt amount) $ 4,246.36
Total $ 48,312.91
I am satisfied that the amounts sought for compensation are appropriate, and will make Orders as sought. I will allow Mr Hoppner until 31 December 2014 to pay.
A monetary penalty should apply. The penalty needs to be sufficient to act as a deterrent to other persons. There is already a monetary liability of $48,312.91 which I will order Mr Hoppner to pay as compensation. I do not have any evidence in relation to Mr Hoppner’s financial situation.
I have regard to the fine in Schellaars where a fine of $5,000 was imposed, however there the agent showed remorse and repaid the monies. In the absence of these mitigating factors, I consider that a fine of $10,000 is appropriate in this case. I will allow Mr Hoppner until 31 December 2014 to pay.
The Chief Executive has sought costs of $500.00, but no material has been provided in support of this, and I do not allow this amount.
I will make formal orders as indicated.
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