COMMISSIONER FOR CONSUMER PROTECTION and AIM INVESTMENTS AUSTRALIA PTY LTD
[2016] WASAT 128
•1 NOVEMBER 2016
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: REAL ESTATE AND BUSINESS AGENTS ACT 1978 (WA)
CITATION: COMMISSIONER FOR CONSUMER PROTECTION and AIM INVESTMENTS AUSTRALIA PTY LTD [2016] WASAT 128
MEMBER: JUSTICE J C CURTHOYS (PRESIDENT)
MS R MOORE (MEMBER)
MR B POUND (SESSIONAL MEMBER)
HEARD: 22 SEPTEMBER 2016
DELIVERED : 1 NOVEMBER 2016
FILE NO/S: VR 6 of 2016
BETWEEN: COMMISSIONER FOR CONSUMER PROTECTION
Applicant
AND
AIM INVESTMENTS AUSTRALIA PTY LTD
First RespondentAMAN DEEP SINGH
Second Respondent
Catchwords:
Deposit Trust account Real estate agent Code of Conduct for Agents and Sales Representatives 2001
Legislation:
Code of Conduct for Agents and Sales Representatives (WA), s 9
Real Estate and Business Agents Act 1978 (WA), s 4(3), s 68(1), s 102(1), s 103
State Administrative Tribunal Act 2004 (WA), s 87(2)
Result:
First respondent fined $8,000
Second respondent fined $8,000
First and second respondent reprimanded
First and second respondent to pay applicant's costs
Summary of Tribunal's decision:
The Commissioner for Consumer Protection alleged that AIM Investments Australia Pty Ltd and Mr Aman Deep Singh, AIM Investments Australia Pty Ltd's sole director, breached s 68(1) of the Real Estate and Business Agents Act 1978 (WA) in that they failed to pay a deposit received from the purchaser of a property into the agency's trust account as soon as was practicable.
AIM Investments Australia Pty Ltd and Mr Singh contended it was a private sale and that they were not acting as selling agents.
The Commissioner further alleged that Mr Singh breached s 9 of the Code of Conduct for Agents and Sales Representatives 2001 by failing to exercise due skill, care and diligence in relation to his failure to transfer the deposit into the trust account as soon as practicable after it was received.
The Tribunal determined that AIM Investments Australia Pty Ltd and Mr Singh were at all times the selling agents for the vendor of the property the subject of the allegations. By failing to pay the deposit for the property, AIM Investments Australia Pty Ltd and Mr Singh breached s 68 of the Act. The Tribunal was therefore satisfied that reason existed for disciplinary action against AIM Investments Australia Pty Ltd and Mr Singh.
Category: B
Representation:
Counsel:
Applicant: Mr J Peppinck
First Respondent : Mr Singh (Acting as Agent)
Second Respondent : In Person
Solicitors:
Applicant: Department of Commerce
First Respondent : N/A
Second Respondent : N/A
Case(s) referred to in decision(s):
A Solicitor v Council of the Law Society of NSW [2004] HCA 1
Briginshaw v Briginshaw (1938) 60 CLR 336
Commissioner for Consumer Protection and Centex Australasia Pty Ltd [2015] WASAT 129 (S)
Legal Profession Complaints Committee and A Legal Practitioner [2013] WASAT 37(S)
Legal Profession Complaints Committee and Leask [2010] WASAT 133
Legal Profession Complaints Committee v Detata [2012] WASCA 2014
Legal Profession Complaints Committee v Masten [2011] WASC 71
Medical Board of Western Australia and Bham [2006] WASAT 190
Medical Board of Western Australia and Roberman [2005] WASAT 81 (S)
Medical Board of Western Australia and Wright [2010] WASAT 48
Meyer v Real Estate and Business Agents Supervisory Board [2002] WADC 258
Mortimer and Commissioner for Consumer Protection [2013] WASAT 126
Paridis v Settlement Agents Supervisory Board [2007] WASCA 97
Quinn v Law Institute of Victoria Limited [2007] VSCA 122
Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
The Commissioner for Consumer Protection (the Commissioner) alleged that AIM Investments Australia Pty Ltd (AIM) and Mr Aman Deep Singh, AIM's sole director, breached s 68(1) of the Real Estate and Business Agents Act 1978 (WA) (REBA Act), in that they failed to pay a deposit received from a purchaser into the agency's trust account as soon as was practicable.
Mr Singh was the sole licensed director and person in bona fide control of AIM. Accordingly, the actions of Mr Singh were the actions of AIM.
Applicant's grounds
The Commissioner alleged that AIM, through its employee Mr Singh, failed to pay deposit monies received into a trust account, in respect of the sale of a property at No 62 (Lot 4) Dorothy Street, Gosnells, Western Australia (the Property) and thereby breached s 68(1) of the REBA Act.
The Commissioner further alleged that Mr Singh breached s 9 of the Code of Conduct for Agents and Sales Representatives 2001 (Code) by failing to exercise due skill, care and diligence in relation to his failure to transfer the deposit into the trust account as soon as practicable after it was received.
The details of the Commissioner's allegations are that:
1)AIM holds real estate agent's licence and triennial certificate number RA49020;
2)at all material times AIM was the selling agent for the Property;
3)at all material times Mr Singh was the licensed director and person in bona fide control of the AIM and held a real estate agent's licence and triennial certificate number RA51586;
4)at all material times, the agency maintained a bank trust account (Trust Account);
5)on or about 8 July 2013, Ms Rosemarie McLachlan agreed to purchase the Property;
6)the contract for the purchase of the Property specified that Ms McLachlan pay a deposit amount of $76,500 (the Deposit) to be held in the Trust Account;
7)after 8 July 2013, Mr Singh instructed Ms McLachlan to pay the Deposit into an account other than the Trust Account;
8)on 17 July 2013, Ms McLachlan paid the Deposit into an account other than the Trust Account;
9)settlement for the sale of the Property occurred on 22 August 2013;
10)AIM failed to transfer the deposit into the Trust Account either as soon as practicable or at all; and
11)by failing to transfer the deposit into the Trust Account as soon as practicable or at all, AIM breached s 68(1) of the REBA Act.
12)Mr Singh failed to transfer the Deposit into the Trust Account either as soon as practicable or at all.
13)by failing to transfer the Deposit into the Trust Account as soon as practicable or at all, Mr Singh breached s 68(1) of the REBA Act.
14)by failing to comply with the requirements of the REBA Act, Mr Singh failed to exercise due skill, care and diligence:
a)in his role as the licensed director and person in bona fide control of AIM; and
b)in conducting his practice as a real estate agent.
Orders sought
The Commissioner sought the following orders:
1.AIM be fined an amount not exceeding $10,000 pursuant to s 103(1)(b) of the REBA Act
2.In respect of each allegation, Mr Singh be fined an amount not exceeding $10,000 pursuant to s 103(3)(1)(b) of the REBA Act.
3.AIM and Mr Singh both be reprimanded pursuant to s 103(1)(a) of the REBA Act.
4.AIM and Mr Singh pay the Commissioner's costs of the proceedings, pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA).
Onus and standard
The Commissioner bears the onus of proof. It is to the civil, not criminal standard, but the principles of Briginshaw v Briginshaw (1938) 60 CLR 336 apply. That is, while needing to be proved only on the balance of probabilities, the nature and seriousness of the allegations are relevant to the question whether the issues are proved to the reasonable satisfaction of the Tribunal and the process by which reasonable satisfaction is attained.
By reason of the nature of the allegations, the Tribunal must feel an actual persuasion of the occurrence or existence of the relevant facts in determining whether or not the case against the respondent is made out: Medical Board of Western Australia and Wright [2010] WASAT 48 at [31]; and see Medical Board of Western Australia and Bham [2006] WASAT 190 at [144].
Agreed issues
The parties agreed that the following issues arise.
1)Is there proper cause for disciplinary action against AIM pursuant to s 102(1)(a) and s 103(2)(c)(iii) of the REBA Act?
2)Is there proper cause for disciplinary action against Mr Singh pursuant to s 102(1)(a) and s 103(2)(c)(iii) of the REBA Act?
3)If there is proper cause for disciplinary action against AIM and Mr Singh, what is the appropriate penalty pursuant to s 103(1) of the REBA Act?
It is not in issue that Ms McLachlan's deposit was not paid into the Trust Account at all.
Essentially, AIM and Mr Singh's case was that he had informed Ms McLachlan that the Property was his family trust property and that he was acting in the capacity of a private seller (T:75; 22.09.16).
The substantive factual issue is whether AIM was the vendor's selling agent at the relevant time.
The relevant legislation
Section 68(1) of the REBA Act provides:
Every agent who holds a current triennial certificate shall maintain one or more trust accounts, designated or evidenced as such, in the prescribed manner, with an authorised financial institution and shall, as soon as practicable, pay to the credit of that account or those accounts all moneys received by him for or on behalf of any other person in respect of transactions.
Section 9 of the Code of Conduct for Agents and Sales Representatives 2001 (WA) provides:
An agent must exercise due skill, care and diligence.
Section 4(3) of the REBA Act provides:
The collection by an agent for or on behalf of another person of moneys in respect of
(a)the consideration; or
(b)any terms payments; or
(c)any rent or other payment for use or occupation; or
(d)any payments under a mortgage or other security,
relating to a transaction is deemed to be a service rendered by the agent in his capacity as an agent, and those moneys are deemed to be moneys received by the agent, in the course of his business, for and on behalf of the other person in respect of the transaction, irrespective of whether or not the agent negotiated the transaction or participated in the negotiation thereof[.]
Section 102(1) of the REBA Act provides:
The Commissioner may allege to the State Administrative Tribunal that
(a)there is proper cause for disciplinary action, as mentioned in section 103(2), against an agent; or
(b)there is proper cause for disciplinary action, as mentioned in section 103(4), against a sales representative.
Section 103(2)(c) of the REBA Act provides:
There shall be proper cause for disciplinary action against an agent if
(c)the agent is acting or has acted in breach of
(i)a special condition of his licence or triennial certificate; or
(ii)the requirements of this Act; or
(iii)the agents code of conduct[.]
Section 103(4)(c) of the REBA Act provides:
There shall be proper cause for disciplinary action against a sales representative if
(c)the sales representative is acting or has acted in breach of
(i)a special condition of his registration; or
(ii)the requirements of this Act; or
(iii)the code of conduct for sales representatives[.]
Section 103(1) of the REBA Act provides:
If, in a proceeding commenced by an allegation under section 102(1) against an agent, the State Administrative Tribunal is satisfied that proper cause exists for disciplinary action, the State Administrative Tribunal may do any one or more of the following things
(a)reprimand or caution the agent;
(b)impose a fine not exceeding $10 000 on him;
(c)suspend or cancel his licence and any triennial certificate in respect thereof and in addition, disqualify him either temporarily or permanently, or until the fulfilment of any condition which may be imposed by the State Administrative Tribunal, from holding a licence or triennial certificate, or both;
(d)where the State Administrative Tribunal is satisfied that the agent is acting or has acted in breach of section 60(3), 61(5) or 64(4) (the subsection)
(i)order the agent to pay to a person specified by the State Administrative Tribunal the whole or part of any commission, reward or other valuable consideration received or held in contravention of a provision referred to in the subsection;
(ii)order that a demand by the agent in contravention of a provision referred to in the subsection for the whole or part of any commission, reward or other valuable consideration not be made, or if made, be withdrawn or varied in accordance with the order;
(e)where the State Administrative Tribunal is satisfied that the agent is acting or has acted in breach of section 64(1), order the agent to pay to the agent's principal any profit that the agent has made, or is, in the opinion of the State Administrative Tribunal, likely to make from the transaction.
Agreed facts
The parties agreed the following facts:
1)AIM operates out of its principal place of business at Unit 3, 2328 Albany Highway, Gosnells.
2)At all material times AIM held a licence under the REBA Act and triennial certificate number RA49020.
3)AIM maintains a Trust Account.
4)Mr Singh is the licensed director and person in bona fide control of AIM and at all material times held a REBA Agent's licence and triennial certificate number RA51586.
5)Mr Rajinder Singh and Mrs Manjeet Kaur were the nominated trustees of the RS Bassi Family Trust (the Family Trust) and the parents of Mr Singh.
6)In 2011, Mr Singh was appointed the sole appointor and trustee for the Family Trust.
7)Mr Singh and his family also operated Fix WA Pty Ltd ATF Aman Bassi Family Trust (Family Trust 2).
8)Mr Singh is the sole appointor and trustee for the Family Trust and the Family Trust 2.
9)At all relevant times prior to July 2013, the Family Trust owned the Property.
10)The Property was formerly rented by the Family Trust and managed by AIM.
11)In or about June 2013, Ms Rosemaria McLachlan approached AIM and Mr Singh to enquire about purchasing a property.
12)In or about June 2013, Mr Singh decided to show Ms McLachlan the Property and the adjoining Unit 3, which was also owned by the Family Trust.
13)On or about 8 July 2013, Ms McLachlan agreed to purchase the Property and completed a contract of sale (Contract) that relevantly:
a)was completed on a document that contained AIM's logo and details as agent for the seller;
b)specified that the Deposit in the amount of $76,500 was to be paid;
c)specifically stated that the Deposit was to be held in the Trust Account; and
d)contained a section marked 'Statement by selling agent', which was completed and signed by Mr Singh.
14)In July 2013, AIM (as authorised by Mr Singh) employed Ms McLachlan as an assistant property manager.
15)The date Ms McLachlan commenced work for AIM was on 1 July 2013 for a trial period. Her formal employment commenced on 8 July 2013.
16)The Family Trust 2 has a bank account in the name of 'Fix WA Pty Ltd' (the Fix WA Trust Account).
17)On 17 July 2013, Ms McLachlan drew a bank cheque for the Deposit and deposited the bank cheque into Fix WA Trust Account, payable to the credit of Fix WA Pty Ltd ATF Aman Bassi Family Trust.
18)The purchase and sale of the Property to Ms McLachlan was completed on 22 August 2013.
19)The Deposit was not transferred from the Fix WA Trust Account into the Trust Account prior to settlement of the purchase and sale of the Property or at all.
The parties are to be commended for agreeing the facts which reduced the hearing time.
The documentary evidence
The documentary evidence that AIM was the seller's agent is compelling. The Contract appears in Exhibit A at pages 510. As noted above, the Contract contained AIM's logo and details as agent for the seller. The words 'Agent for the Seller' appear immediately below the description of the licence.
Mr Singh completed and signed the section entitled:
Statement by selling agent
I, Aman Singh (name of agent),
Of AIM REALTY (name of firm),
As selling agent, hereby certify that the notifiable information for this property as provided by the vendor, has been given to the prospective purchaser(s).
Selling agent's signature Aman Singh
Date: 8.7.13
The sections in italics were completed in handwriting by Mr Singh.
In the face of the documentary evidence, it is difficult to see how any argument that AIM was not the selling agent for the vendor could be advanced.
Mr Singh also completed section (iv) of the Contract relating to 'Manner of payment' as follows:
A deposit of $76,500 of which $ NIL is paid
herewith and $76,500 shall be paid within 7 days of acceptance to be held by
AIM REALTY TRUST ACCOUNT ('the Deposit Holder')
The balance of the Purchase Price shall be paid on the Settlement Date.
The witnesses
The Tribunal found Ms McLachlan to be an honest and reliable witness. The Tribunal prefers her evidence to that of Mr Singh when their evidence conflicts.
Written statements were admitted from four other people. None of their evidence was relevant for the purposes of determining the matters in issue.
Ms McLachlan's visit to AIM's premises and inspection of the Property
In the interview conducted by officers of the Commissioner with Mr Singh, he admitted that he had used AIM for the marketing of the Property, and that it had been advertised on the internet with AIM's banner details (Exhibit 4 document No 21C pages 1516). Ms McLachlan did not see the Property advertised on the internet.
Ms McLachlan was looking for an investment property in mid-2013. She had approached four agencies, one of which was AIM.
Ms McLachlan gave evidence that she went to AIM's premises at Unit 3, 2328 Albany Highway, Gosnells and made enquiries about three bedroom and one bathroom style properties for around $240,000 (Exhibit C paragraph 8).
Mr Singh accepted that, at least at the point where Ms McLachlan came into AIM's premises and was enquiring about properties around the $240,000 mark, he was acting as a real estate agent (T:75; 22.09.16).
Ms McLachlan's evidence was that when she was at AIM's premises Mr Singh said he had a property for sale at 4/62 Dorothy Street, Gosnells. He explained that the building had been constructed as two units so that Ms McLachlan could live in one and rent the other one out. The purchase price was $370,000 (Exhibit C paragraph 9; T:16; 22.09.16).
Ms McLachlan's evidence was that she and Mr Singh inspected the Property together (Exhibit C paragraph 12).
Ms McLachlan approached Mr Singh at the AIM premises to assist her in looking for a property. She made contact in AIM's offices. It is a logical consequence that she would have regarded AIM, and thereby Mr Singh, as acting as real estate agents. Indeed, there is no real dispute by Mr Singh that he, and thereby AIM, were acting as real estate agents to the point where he informed Ms McLachlan about the Property .
Was Ms McLachlan advised that the sale of the Property was a private sale?
Mr Singh's evidence was that he had told Ms McLachlan before the inspection of the Property that it was a family trust property that he was selling.
Mr Singh contended that despite the use of the AIM standard form of offer and acceptance, Ms McLachlan always knew what she was doing and that she was made aware of the details and that she actually agreed, in effect, that it was a private sale (T:76; 22.09.16).
It was put to Ms McLachlan by Mr Singh in crossexamination that he had told her that because it was his family trust property, she would not have to pay any commission. Ms McLachlan denied any such conversation (T:16; 22.09.16).
The vendor would normally pay the commission not the purchaser (in this case, Ms McLachlan) so it is difficult to understand why Mr Singh would have told Ms McLachlan that she would not have to pay commission.
The Tribunal finds that Mr Singh did not explain to Ms McLachlan that it was a private sale, or that he was not acting as the vendor's selling agent.
Even if Mr Singh had told Ms McLachlan that it was a private sale, given that he then used an AIM standard form offer and acceptance which stated that the Deposit was to be paid into the Trust Account. AIM and Mr Singh were still under a contractual obligation to pay the Deposit into the Trust Account, Mr Singh could not explain, given the terms of the contract, how Ms McLachlan would know that AIM was no longer acting as a real estate agent (T:77; 22.09.16).
No commission
The fact that no commission was paid to AIM as a result of the transaction does not of itself lead to a conclusion that AIM was not the vendor's selling agent.
In Mortimer and Commissioner for Consumer Protection [2013] WASAT 126 at [52], the Tribunal stated:
… What determines whether a person is a real estate agent is whether, either solely or as part of its business, it acts as agent for consideration in respect to real estate transactions. In the course of carrying on a business of that nature, an agent may act as agent in some transaction for which no fee is charged. To suggest that, in relation to those transactions, the protective provisions of the REBA Act have no application would be potentially to expose consumers to risks which cannot have been the intention of the legislature.
Principal as agent
Even if it was, in loose terms, Mr Singh's family trust, he could still be both principal and agent.
In Meyer v Real Estate and Business Agents Supervisory Board [2002] WADC 258 at [42] it is stated that:
[A] real estate agent can be both principal and agent for the other party in the same transaction is clearly contemplated by s 64 of the Act. Clearly, this section enables a real estate agent to act as agent and also be interested as a principal in the same real estate transaction.
Finance approval
After inspecting the Property, Ms McLachlan approached a bank and a finance broker to see if she could arrange finance to purchase the Property. She was unsuccessful because at that point she had no income (Exhibit C paragraphs 1216).
Ms McLachlan's evidence was that when Ms McLachlan told Mr Singh that she was unable to obtain finance, he asked what was her occupation. She told that him she had managed a small motel in Queensland. He then offered her a position as an assistant property manager employed by AIM. Mr Singh suggested that he would put her on a one week's trial and thereafter AIM would employ her for eight weeks while the property manager was away (Exhibit C paragraphs 2025).
Ms McLachlan then resubmitted her application and received approval for finance from Westpac Banking Corporation (Westpac). While this conduct is not the subject of any complaint, it is at least superficially not an appropriate course of action for an agent to support.
Completing the offer and acceptance form
Ms McLachlan's evidence was that Mr Singh instructed her to obtain a form, 'Contract For Sale Of Land or Strata Title By Offer And Acceptance', from a drawer in AIM's office. She completed and signed the top section marked 'The Buyer(s)' after Mr Singh had completed the section marked 'Schedule' (Exhibit C paragraphs 3234).
Mr Singh conceded that he had signed and completed the section of the offer and acceptance entitled 'Statement by selling agent', that he had put his name on it and that he had signed the document as 'Selling Agent' (T:52; 22.09.16). Mr Singh was asked why, if it was a private transaction, he had not used a blank form rather than the AIM form. Mr Singh's evidence was that that was exactly what he should have done (T:52; 22.09.16).
Mr Singh conceded that it was possible he could have amended the AIM form so as to change the account into which the deposit was to be paid by altering the name of the account from 'AIM REALTY TRUST ACCOUNT' on the contract to 'FIX WA TRUST ACCOUNT' and then initialling it.
Ms McLachlan stated that although she and Mr Singh had verbally agreed on a purchase price of $370,000, Mr Singh wrote $385,000 on the Contract. That amount was written in by Mr Singh without any consultation by Ms McLachlan. Ms McLachlan raised this with him when the offer was presented to her and after some negotiation he reduced the price down to $382,500. The Deposit was $76,500 (Exhibit C paragraphs 3740).
It is of note that that Deposit amount represents a deposit of over 20%, a very high figure for a purchaser of a suburban unit.
Why no settlement agent?
Ms McLachlan's evidence was that on 10 July 2013 she contacted Robertson Hayles Lawyers to make enquiries about the costs of settlement. They provided a quote. A sales agent at AIM suggested a settlement agent whom Ms McLachlan then contacted.
Ms McLachlan's evidence was that she was waiting for a response from the settlement agent when Mr Singh asked if she had a settlement agent organised. She said that she did. Mr Singh told her to cancel the settlement agent because he could do the settlement and teach her how to do it.
The Tribunal finds that Ms McLachlan cancelled the use of a third party, either a solicitor or a settlement agent, for settlement on Mr Singh's assertion that he would train her in how to handle the settlement of a property. While this conduct is not the subject of any complaint, a third party might have raised the issue of the payment of the Deposit directly to the vendor.
Vacant possession?
The Tribunal also notes that the two units in the Property were sold as tenanted but the Contract did not provide for this.
Ms McLachlan's employment at the agency
Ms McLachlan's evidence was that her duties as an assistant property manager included:
•conducting incoming and outgoing property inspections
•document preparation
•preparing the due leases of rental properties
•coordinating the day to day operation of the property service
•arranging property repairs
•customer service and [e]nquiries
•recording data into the business' record systems
(Exhibit C paragraph 29)
Mr Singh submitted that by reason of Ms McLachlan's employment in the agency that she had access to the files and to data as a result of which she should have been aware and understood that the Deposit was not being paid into the Trust Account and that she should have understood that neither AIM nor Mr Singh were representing the owners of the property as agents.
In crossexamination, Mr Singh put to Ms McLachlan that she was familiar with the trust accounts of the agency by reason of the fact that she worked as a property manager. Ms McLachlan denied that she was familiar with them (T:1719; 22.09.16).
In the course of her work as an assistant property manager, Ms McLachlan did not have any involvement in property sales (T:12; 22.09.16).
Ms McLachlan's evidence was that she had seen a file for the property management of the Property but not for its sale. Ms McLachlan's evidence was that she was given very little training or assistance with the property management duties she had to undertake (Exhibit C paragraph 120).
Ms McLachlan's evidence was that she was not involved in the financial management of the business, although she did enter some data. That was the only thing she had to do with figures while working in the office. She did not have any dealings with the agency's Trust Account or any knowledge of it (T:1213; 22.09.16).
Ms McLachlan was only employed in the property management division of the business, not the property sales division. She was poorly trained, if at all. At the time of signing the contract on 17 July 2013, she would have been employed for a very short period of time. She denied that she had any experience in property sales other than private sales or that she was aware of the significance of the accounts into which she deposited the money. It is clear from her evidence that she acted on the directions of Mr Singh in relation to the purchase of the Property.
The Tribunal finds that Ms McLachlan acted on Mr Singh's direction. The Tribunal finds that her position as acting property manager was not sufficient for her to understand the significance of to whom she paid the Deposit and that she in fact did not understand its significance.
Other conduct over the sale of the Property
Ms McLachlan's evidence was that throughout her dealings, contact with Mr Singh by telephone or email was made using the AIM contact details (T:14; 22.09.16).
Paying the Deposit
It is common ground that the Deposit was never paid into the Trust Account maintained by AIM and that it was paid directly into Fix WA Trust Account.
Mr Singh's submitted that there had been a verbal agreement and consent that the money be paid into the Fix WA Trust Account, rather than the agency Trust Account (T:8283; 22.09.16).
Mr Singh put to Ms McLachlan that a few days after signing the Contract, he had come over to her and said that the Deposit can be paid directly into the Family Trust Account because the property had not been sold by the agency. Ms McLachlan denied that such a conversation took place (T:23; 22.09.16).
Ms McLachlan's evidence was that Mr Singh provided her with a piece of paper with a BSB and account number written on it and he told her to pay the Deposit into that account. The Deposit was made in two payments because Ms McLachlan got the initial figure wrong. Ms McLachlan paid an initial amount of $76,250 and subsequently an amount of $250.
Ms McLachlan admitted that she had written 'Fix WA Pty Ltd' on the note of the bank details but denied that she was aware of the significance of it or that it was not the AIM Trust Account (T:2628; 22.09.16).
Ms McLachlan denied that that she had understood the significance of the name on the Deposit slip (T:2930; 22.09.16).
When it was put to Ms McLachlan by Mr Singh that she was fully aware that this was not the real estate account, Ms McLachlan stated that she was not aware of anything, just what Mr Singh had given her and what she needed to do (T:30; 22.09.16). Ms McLachlan admitted that she signed a deposit slip and deposited the Westpac bank cheque of $76,250 into the Fix WA Pty Ltd as Trustee for the AIM Realty Family Trust (T:33; 22.09.16). Ms McLachlan denied that she was aware that AIM generally dealt with only Westpac and that she was aware that she knew that she was paying the Deposit to the owner of the Property (T:33; 22.09.16).
Ms McLachlan's evidence is that when she took the Deposit cheque to the ANZ Bank, she was working for AIM. Ms McLachlan took the cheque across to the ANZ Bank because she was instructed to do so by Mr Singh (T:3839; 22.09.16).
The Tribunal accepts Ms McLachlan's evidence that she did not understand the significance of to whom she was paying the Deposit and that she acted at Mr Singh's direction.
The settlement sum
A few days after the Deposit was paid into the Fix WA Trust Account, Mr Singh gave Ms McLachlan another piece of paper with the same BSB and account number and told her to pay the stamp duty, registration of transfer and mortgage registration fee into the account (Exhibit C paragraphs 4360).
Ms McLachlan's evidence was that Mr Singh informed her that the total amount required to settle was $307,333.14. This figure included the council rates for 20132014 of $1,333.14. Settlement was arranged on three occasions because Mr Singh had cancelled on two occasions (Exhibit C paragraphs 6473).
Ms McLachlan initially requested a cheque for $307,333.14 payable to Fix WA Pty Ltd. Mr Singh subsequently asked her to make the total balance payable in two cheques, one for the sum of $50,480 to ANZ Bank and the other of $256,853.14 to Fix WA Pty Ltd.
Before settlement, Ms McLachlan received a rates notice from the City of Gosnells for $1,333.14. She had forgotten this amount was included in the total settlement sum and paid the bill herself.
On Monday 26 August 2013, Ms McLachlan attended work at AIM and had a discussion with Mr Singh about several issues, including the process of buying the Property, the refund of the money that she had overpaid and her pay as an assistant property manager. She decided to leave her employment with AIM (Exhibit C paragraphs 7794).
Conclusion
The Tribunal finds that AIM was at all times the selling agent for the vendor of the Property. By failing to pay the Deposit into the Trust Account for the Property, AIM and Mr Singh breached s 68 of the REBA Act.
The Tribunal is therefore satisfied that reason exists for disciplinary action against AIM and Mr Singh.
It is unnecessary to consider the application of s 4(3) of the REBA Act because AIM, by Mr Singh, was in fact acting as selling agent at all times.
By reason of Mr Sing's breach of s 68(1) of the REBA Act he breached s 9 of the Code. He failed to exercise due skill as an agent. The payment of a deposit into a trust account in accordance with the requirements of the Code and s 68(1) of the REBA Act is one of the basic duties of an agent and a sales representative.
AIM's and Mr Singh's conduct was a serious breach of the REBA Act. A deposit is paid into the Trust Account to protect a purchaser in the event of a failure by the vendor to settle. If a deposit is paid directly to a vendor before settlement, it greatly increases the purchaser's risk of financial loss in the event of a default by a seller/vendor.
Penalty
AIM's and Mr Singh's conduct occurred in the exercise of their occupation as agents at a time when they held licences.
In Commissioner for Consumer Protection and Centex Australasia Pty Ltd [2015] WASAT 129 (S) at [14], the following principles were stated to be relevant to penalty:
In Paridis at [30], Buss JA set out the relevant factors in assessing a penalty under s 83 of the Settlement Agents Act:
1)the conduct giving rise to the allegations and its seriousness;
2)the agent's explanation for the conduct;
3)the necessity to maintain proper standards among settlement agents and maintain public confidence in relation to the professional and ethical behaviour of agents;
4)the necessity for general deterrence; and
5)personal matters, of a mitigatory nature, including the agent's professional behaviour before and after the incidents in question, and the extent of the agent's rehabilitation.
In Legal Profession Complaints Committee and Wells [2014] WASAT 112 (Wells) the Tribunal set out a list of 12 factors to be considered. Thematters set out in Wells are illustrative of the matters set out by the Court of Appeal in Paridis.
The matters set out below are interrelated and are not mutually exclusive. The list of matters is not exhaustive and it is not a code. The twelve factors are:
1)any need to protect the public against further misconduct by the agent (Craig v Medical Board of South Australia (2001) 79 SASR 545 (Craig) at [47]; Legal Profession Complaints Committee and Amsden [2014] WASAT 57 (S) (Amsden (S)) at [8]; Law Society of New South Wales v Foreman (1994) 34 NSWLR (Foreman at 440C; NSW Bar Association v Hamman [1999] NSWCA 404 (Hamman) at [77]);
2)the need to protect the public through general deterrence of other agents from similar conduct (Jemielita v Medical Board of Western Australia (unreported, WASC Library No 920584, 13November 1992); Veterinary Practitioners Board of New South Wales v Johnson [2010] NSWADT 308 (Johnson) at [103]; Hamman at [77]); Paridis at [30(4)]);
3)the need to protect the public and maintain public confidence in the profession by reinforcing high professional standard and denouncing transgressions and thereby articulating the high standards expected of the profession (Amsden (S) at [8]; Foreman at 444F; and Hamman at [77] and [79]), such that, even where there may be no need to deter an agent from repeating the conduct, the conduct is of such a nature that the Tribunal should give an emphatic indication of its disapproval (Craig at [64]; Johnson at [103]); Paridis at [30(3)]);
4)in the case of conduct involving misleading conduct, including dishonesty, whether the public and fellow agents can place reliance on the word and conduct of the agent (Johnson at [109]; Foreman at 445B-445G);
5)whether the agent has breached any:
a)Act;
b)Regulations;
c)Guidelines or Code of Conduct, issued by the relevant professional body; and
d)whether the practitioner has done so knowingly;
6)whether the agent's conduct demonstrated incompetence, and if so, to what level;
7)whether or not the incident was isolated such that the Tribunal can be satisfied of his or her worthiness or reliability for the future (Foreman at 442E-442G; New South Wales Bar Association v Evatt (1968) 117 CLR 177 at 183; Council of the Law Society (NSW) v A Solicitor [2002] NSWCA 62 at [80]; Chamberlain v Law Society of the Australian Capital Territory (1993) 118 ALR 54 at 62 and 63);
8)the agent's disciplinary history (Legal Profession Complaints Committee v O'Halloran [2013] WASC 430 at [93]);
9)whether or not the agent understands the error of his ways, including an assessment of any remorse and insight (or a lack thereof) shown by the agent, since an agent who fails to understand the significance and consequences of misconduct is a risk to the community (Law Society of New South Wales v Walsh [1997] NSWCA 185 per Beazley JJA (Walsh); Legal Profession Complaints Committee v Lashansky [2007] WASC 211 at [31]-[52] and (second) at [35]; Amsden (S) at [8]; Foreman at 444E; Love at[9]);
The agent's conduct of the defence and the veracity and candour of his testimony will often be the best evidence as to whether any mitigating circumstances, including remorse, reform, character change and subsequent good deeds, are to be accepted (A Legal Practitioner (S) at [24]; Barwick v Council of the Law Society of NSW [2004] NSWCA 32 at [108][109]; New South Wales Bar Association v Maddocks [1988] NSWCA 102).
Lack of remorse should not, in the absence of aggravating factors, be the predominate factor leading to a heavy sanction if otherwise a lighter sanction would be applied; Re H (a Barrister) [1981] 1WLR 1257.
10)the desirability of making available to the public any special skills possessed by the agent;
11)the agent's personal circumstances at the time of the conduct and at the time of imposing the sanction. However, the weight given to personal circumstances cannot override the fundamental obligation of the Tribunal to provide appropriate protection of the public interest in the honesty and integrity of legal practitioners and in the maintenance of proper standards of legal practice (Love at [59]); Paridis at [30(5)]); and
12)the Tribunal may consider any other matters relevant to the agent's fitness to practise and other matters which may be regarded as aggravating the conduct or mitigating its seriousness (A Legal Practitioner (S) at [25]). In general, mitigating factors such as no previous misconduct or service to the profession are of considerably less significance than in the criminal process because the jurisdiction is protective not punitive (Walsh)
All of the above matters are to be considered in the context of the Tribunal's findings as to liability, that is, how serious was the conduct and the agents' explanation for the conduct (Paridisv Settlement Agents Supervisory Board [2007] WASCA 97 at [30(1)][30(2)]).
General matters relating to sanctions
Where there is a choice of sanctions, the Tribunal will choose that sanction which maximises the protection of the public (Quinn v Law Institute of Victoria Limited [2007] VSCA 122 at [31]).
The dominant purpose of the disciplinary provisions of the REBAAct is the protection of the public by the maintenance of proper standards within the profession. Hence, the impact which an appropriate penalty would have upon a practitioner guilty of misconduct, and personal hardship to a practitioner, are necessarily secondary considerations (see Legal Profession Complaints Committee v Detata [2012] WASCA 2014 at [47] and Legal Profession Complaints Committee v Masten [2011] WASC 71 at[29]; Legal Profession Complaints Committee and Leask [2010] WASAT 133 at [54]).
It is the agent's conduct that attracts any sanction (Legal Profession Complaints Committee and A Legal Practitioner [2013] WASAT 37(S) at [24]; Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256 at 267-268 and 271-272; A Solicitor v Council of the Law Society of NSW [2004] HCA 1).
Factor 1: Is there a need to protect the public against further misconduct by AIM and by Mr Singh?
AIM's duty to pay a deposit into a trust account in accordance with the REBA Act is central to an agent's obligation to comply with the REBA Act. Any breach of that obligation raises the risk of further misconduct because it reflects a breach of such a fundamental obligation. However, the risk of further misconduct is to be considered in the context of an agent's disciplinary history. A failure to pay a deposit into a trust account exposes a purchaser to financial risk in the event of default by the seller.
Factor 2: Is there a need to protect the public through general deterrence of other agents?
Given the fundamental obligation of agents to act in accordance with the REBA Act, there is a need to protect the public through general deterrence of other agents.
Factor 3: Is there a need to protect the public by reinforcing high professional standards and denouncing transgressions?
Given the fundamental obligation of agents to act in accordance with the REBA Act, there is a need to protect the public by reinforcing high professional standards and denouncing transgressions.
Factor 4: Dishonesty
There are aspects of AIM's and Mr Singh's conduct that raise concerns the size of the deposit and not using a third party to act for Ms McLachlan on settlement. However, the Tribunal has not considered that AIM's and Mr Singh's conduct was dishonest.
Factor 5: Breach of an Act, Regulations, Guidelines or Code of Conduct
AIM's and Mr Singh's conduct involved a serious breach of the REBA Act.
Factor 6: Incompetence
AIM's and Mr Singh's failure to understand their obligations under the REBA Act demonstrates incompetency.
Factor 7: Was the incident isolated?
AIM's and Mr Singh's conduct was essentially one incident, although the conduct took place over a number of days.
Factor 8: AIM's and Mr Singh's disciplinary history
Neither AIM nor Mr Singh has any disciplinary history.
Factor 9: Whether or not AIM and Mr Singh understand the error of their ways, including an assessment of any remorse and insight (or a lack thereof) shown by them
AIM and Mr Singh have not demonstrated any remorse.
Factor 10: Are there any special skills possessed by AIM and Mr Singh?
AIM and Mr Singh do not possess any special skills.
Factor 11: Mr Singh's personal circumstances
There was no evidence as to AIM's or Mr Singh's circumstances.
Factor 12: Are there any other matters related to AIM's and Mr Singh's fitness to practise?
There are no other matters related to AIM's and Mr Singh's fitness to practise.
Costs
In Medical Board of Western Australia and Roberman [2005] WASAT 81 (S) at [30] (Roberman S), the Tribunal held that where a regulator successfully brings a complaint which justifies disciplinary action, there will usually be a strong case for the awarding of costs to that regulator.
Although the decision in RobermanS does not limit the discretion of the Tribunal in awarding costs, and the presumption is that costs will not be awarded, the public obligations of the Commissioner to prosecute agents who breach the Code of Conduct is an important factor to be considered.
Having considered the circumstances, the Tribunal is satisfied that AIM and Mr Singh should pay the Commissioner's costs of $9,000.
Conclusion as to penalty
The Tribunal finds that the risk to the public of further misconduct by AIM and Mr Singh is low.
However, the breach of an agent's obligation to act in accordance with the REBA Act in the circumstances of this case was serious. Whilst the Tribunal finds that the breach is at the lower range of seriousness, the circumstances are such that the penalty must be an effective general deterrent and ensure that agents will act in accordance with the REBA Act.
It is not an appropriate case for cancellation or suspension of the licences.
Although the Board alleges a breach of the Code, the Tribunal does not accept that there is any substantive factual difference between the conduct said to constitute a breach of s 68 of the REBA Act and the Code. Only one penalty is appropriate and that should be imposed on the basis of the breach of s 68 of the REBA Act.
Aim and Mr Singh are different entities at law and each has separate obligations under the REBA Act. Therefore separate penalties have been imposed.
Orders
The Tribunal orders that:
1.AIM Investments Australia Pty Ltd be fined $8,000, pursuant to s 103(1)(b) of the Real Estate and Business Agents Act 1978 (WA).
2.Mr Aman Deep Singh be fined $8,000, pursuant to s 103(3)(1)(b) of the Real Estate and Business Agents Act 1978 (WA).
3.AIM Investments Australia Pty Ltd and Mr Aman DeepSingh both be reprimanded pursuant to s 103(1)(a) of the Real Estate and Business Agents Act 1978 (WA).
4.AIM Investments Australia Pty Ltd and Mr Aman Deep Singh pay the Commissioner's costs of the proceedings fixed at $9,000 pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA).
I certify that this and the preceding [112] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE J C CURTHOYS, PRESIDENT
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