COMMISSIONER FOR CONSUMER PROTECTION and AUSTPRIDE PTY LTD

Case •

[2016] WASAT 13

•

22 FEBRUARY 2016

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

ACT: REAL ESTATE AND BUSINESS AGENTS ACT 1978 (WA)

CITATION:   COMMISSIONER FOR CONSUMER PROTECTION and AUSTPRIDE PTY LTD [2016] WASAT 13

MEMBER:   JUSTICE J C CURTHOYS (PRESIDENT)

MS C WALLACE (MEMBER)
MR R ADAMS (SESSIONAL MEMBER)

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   22 FEBRUARY 2016

FILE NO/S:   VR 216 of 2015

BETWEEN:   COMMISSIONER FOR CONSUMER PROTECTION

Applicant

AND

AUSTPRIDE PTY LTD
Respondent

Catchwords:

Licensed director - Person in bona fide control - Appointment of supervisor

Legislation:

Corporations Act 2001 (Cth)
Real Estate and Business Agents Act 1978 (WA), s 29, s 30, s 68, s 93, Pt VI

Result:

Respondent suspended from carrying on business
Respondent and its servants or agent restrained from dealing in all of the respondent's bank accounts
Supervisor appointed to the business of the respondent

Summary of Tribunal's decision:

The Commissioner for Consumer Protection made application to the Tribunal under s 93 of the Real Estate and Business Agents Act 1978 (WA) in relation to Austpride Pty Ltd which was carrying on a business as a real estate agent in Western Australia.

The Tribunal was satisfied that Austpride Pty Ltd was not conducting its business in accordance with the Act.

The Tribunal made orders that Austpride Pty Ltd be suspended from carrying on business; the company's servants and/or agents be restrained from dealing with all of its bank accounts; and that a supervisor be appointed under s 93 of the Act.

Category:    B

Representation:

Counsel:

Applicant:     K La

Respondent:     Mr B Taylor

Solicitors:

Applicant:     Department of Commerce

Respondent:     Taylor Olivier Lawyers

Case(s) referred to in decision(s):

Nil

REASONS FOR DECISION OF THE TRIBUNAL: 

Introduction

  1. On 23 December 2015, the Commissioner for Consumer Protection (the Commissioner) made application to the Tribunal under s 93 of the Real Estate and Business Agents Act 1978 (WA) (the Act) for the Tribunal to determine:

    1.1whether by reason of the respondent not being qualified in terms of s 29(c) and s 29(d) of the Act and/or not having any director, the respondent is not conducting its business in accordance with the Act; or

    1.2whether, by operating the respondent's trust accounts in breach of s 68(4) and s 68(6)(d) of the Act, the respondent is not conducting its business in accordance with the Act; and

    1.3whether in those circumstances the Tribunal should make orders pursuant to s 93 of the Act:

    1.3.1suspending the respondent from carrying on business until further notice from the Tribunal;

    1.3.2restraining the respondent (whether by its servants or agents) from dealing in all of the bank accounts related to or for the purpose of the respondent's practice as an agent until further notice from the Tribunal;

    1.3.3for the appointment of a supervisor to the business of the respondent.

Background

  1. The matters set out below are verified by the affidavit of Ms Jodie Fay Davenport, sworn 23 December 2015, filed in support of the application.  References appearing below to Ms Davenport's affidavit are prefixed by her initials followed by the relevant paragraph number of the affidavit.  To a lesser extent, some facts set out below are sourced from the affidavit of Mr Luciano Augusto Franco Vecchio, sworn 3 February 2016, filed in response to the application.  References below to facts verified by Mr Vecchio's affidavit are prefixed by his initials followed by the relevant paragraph number of his affidavit.  Given that the facts set out by the Commissioner are not disputed and the orders sought by the Commissioner are unopposed, we have substantively adopted the Commissioner's submissions in these reasons.

  2. At all material times the respondent, Austpride Pty Ltd, a company incorporated pursuant to the Corporations Act 2001 (Cth), carried on business as a real estate agent in Western Australia under the business name 'Real Estate Masters' (JFD9).

Relevant facts

  1. On 22 January 1982, Mr Brian Ward was granted a personal real estate and business agent's licence and triennial certificate (Number 2008) (JFD11).

  2. On 4 April 2008, Austpride Pty Ltd was granted a corporate licence and triennial certificate (Number 57795) under the Act (JFD10).

  3. Between 11 February 1997 and 15 December 2015, Mr Ward was the sole licenced director and the person effectively in bona fide control of Austpride Pty Ltd (JFD11; LAFV6).

  4. Mr Jason Vecchio was, for the most part, an employee of the respondent and only latterly appointed as a director on 11 December 2015.  Mr Vecchio had previously held a certificate of registration which expired on 20 August 2012 and thus he does not currently hold a licence or certificate of registration and is therefore not a licenced director of the respondent (JFD12; LAFV4).  Further, Mr Vecchio was declared bankrupt by the Federal Circuit Court of Australia on 5 May 2015 (JFD13).

  5. The respondent holds 24 trust accounts with Macquarie Bank Limited.  Mr Vecchio is the sole signatory for 23 of those accounts, being strata trust accounts.  In respect of the remaining trust account, in the name of Austpride Pty Ltd t/as Real Estate Masters ­ REBA Trust Account TC57795 (the REBA Trust Account), there are three authorised signatories being Mr Leon Larkins, Mr Casey Mitchell and Mr Remo Cafini (JFD14 and JFD15).

  6. In September 2015 one of the strata trust accounts of the respondent was caused to be overdrawn by $294.38 by a cheque drawn by Mr Vecchio (JFD16).

  7. On 14 December 2015 the REBA Trust Account was caused to be overdrawn following a cheque being made out to Challenge Developments on 25 November 2015 in the amount of $43,200 signed by Mr Cafini (JFD17).  In addition, the account appears to have a deficiency in the amount of $312,299.36 (JFD20 and JFD21).

  8. On 15 December 2015 Mr Ward resigned as a director of the respondent (LAFV66).

  9. On 16 December 2015 the Commissioner executed a search warrant at the respondent's place of business and seized a number of documents which suggested to the Commissioner that the respondent was not conducting its business in accordance with the Act (JFD18 and JFD19).

  10. In addition, documents seized following the execution by the Commission of the search warrant also revealed the following number of outstanding debts:

    a)a Statement of Claim dated 4 June 2015 filed on behalf of Fairfax Media Publications Pty Ltd claiming an amount owing of $9,265.32;

    b)an invoice dated 2 September 2015 from Debt Collection Services on behalf of Printforce Australia Pty Ltd alleging a debt owing of $2,172;

    c)a debt owing to the Australian Taxation Office in the amount of $115,576.62;

    d)an Advice of Summons dated 29 October 2015 from National Collections on behalf of Lighthouse Locksmiths alleging a debt of $2,453;

    e)a court order dated 24 November 2015 in the Magistrates Court of Western Australia awarding the claimant in the amount of $7,230.20;

    f)an invoice dated 4 December 2015 from Telstra Corporation Ltd claiming an overdue amount of $9,512.40; and

    g)a letter dated 11 December 2015 from NCI Commercial Collections on behalf of Pearl Recruitment Group (WA) Pty Ltd alleging a debt owing of $4,697.55.

    (JFD 22-28)

  11. On 16 December 2015 the Commissioner received a complaint from an owner of a strata property that had been previously managed by the respondent.  The complainant alleged that the respondent indicated on handover to the new property manager that the water bill was up to date, however, it was subsequently discovered that money was still owing to the Water Corporation.  The respondent has since paid some of the outstanding amount, however, there remains an amount owing of $3,000 (JFD29).

  12. The Commissioner received a similar complaint on 17 December 2015 from another strata complex currently being managed by the respondent also alleging outstanding amounts owing to the Water Corporation and asserting that the Water Corporation initiated legal action claiming an amount owing of $12,220.90 (JFD30).

Procedural background

  1. On 29 December 2015, the application was listed for interim orders.  Mr Taylor appeared on behalf of Austpride Pty Ltd.  He did not oppose the orders sought by the Commissioner.  The following orders were made:

    1.Pursuant to s 93(1)(a) of the Real Estate and Business Agents Act 1978 (Act) the respondent be suspended from carrying on its business, except and save that the respondent may negotiate and sell the rent roll and strata rolls, until further order of the Tribunal.

    2.Pursuant to s 93(1)(b) of the Act, the respondent and its servants and agents be restrained from dealing with all or any of the bank accounts of the respondent until further order of the Tribunal.

    3.Pursuant to s 93(1)(c) of the Act, the Tribunal authorises the applicant to appoint a supervisor of the business of the respondent until further order of the Tribunal.

    4.On or before 29 January 2016 the respondent will file with the Tribunal and provide to the applicant:

    a)a responsive statement to the application;

    b)a bundle of documents the respondent intends to rely upon; and

    c)any affidavits the respondent wishes to rely upon.

    5.The parties have liberty to apply.

    6.The matter will be determined entirely on the documents.

Consideration

  1. Section 29(c) of the Act provides that a body corporate may continue to hold a licence provided that where there are not more than three directors of the body corporate, at least one director must be personally licenced under the Act.

  2. Section 29(d) of the Act provides that a body corporate may continue to hold a licence provided that the person in bona fide control of the business operated under the licence is personally licenced.

  3. Given that the respondent's sole licenced director resigned on 15 December 2015, it cannot comply with the requirement set out in s 29(c) and s 29(d) of the Act.

  4. Sections 29(a)(c) and (d) of the Act provide that a body corporate may hold a licence if the Commissioner is satisfied that:

    a)all of the directors of the body corporate, and all of the persons concerned in the management or conduct of the body corporate, are persons of good character and repute and are persons fit to be concerned as directors of, or in the management and control of, an agents business; and

    c)unless for good cause shown by the applicant the Commissioner otherwise determines, where there are not more than three directors of the body corporate at least one of them is licenced or where there are more than three directors of the body corporate at least two of them are licenced; and

    d)the person in bona fide control of the business operated under the licence is licensed.

  5. Section 30 of the Act provides that:

    …

    (2a)       A licencee ceases to be licenced if the licencee ­

    (a)does not hold a current triennial certificate in respect of the licence; and

    (b)does not pay to the Commissioner in accordance with the regulations the fee prescribed for the purposes of this subsection.

  6. Further, s 68(4) of the Act provides that monies received by an agent for or on behalf of another person in respect of a transaction should not be withdrawn from trust account except for the purposes of the transaction as authorised by the Act or as authorised by the person lawfully entitled to the monies.

  7. The Tribunal finds that the respondent has not been conducting its business in accordance with s 68(4) of the Act in that:

    a)one of its strata trust accounts was overdrawn in the amount of $294.38;

    b)by withdrawing monies from trust accounts for purposes not authorised by the Act nor authorised by the person lawfully entitled to the monies; and

    c)by operating a trust account with a significant deficiency and not correctly balanced as required by s 68(6)(d) of the Act.

  8. In the circumstances, the Tribunal is satisfied that the respondent is not conducting its business in accordance with the Act. 

  9. The Tribunal therefore accepts that it is necessary for the protection of the public that:

    •Austpride Pty Ltd be suspended from carrying on business;

    •Austpride Pty Ltd and its servants or agents be restrained from dealing with all of Austpride Pty Ltd's bank accounts; and

    •a supervisor be appointed pursuant to s 93 of the Act to ensure that the outstanding business of Austpride Pty Ltd, in particular, for the payment of monies owed to clients of the business and an audit of the trust account of the business, is completed in accordance with the requirements of Pt VI of the Act.

Orders

1.Pursuant to s 93(1)(a) of the Real Estate and Business Agent Act 1978 (WA), the respondent be suspended from carrying on its business until further order of the Tribunal.

2.Pursuant to s 93(1)(b) of the Real Estate and Business Agent Act 1978 (WA), the respondent (whether by its servants and agents) be restrained from dealing in all or any of the bank accounts of the respondent until further order of the Tribunal.

3.Pursuant to s 93(1)(c) of the Real Estate and Business Agent Act 1978 (WA), the Commissioner for Consumer Protection be authorised to appoint a supervisor to the business of the respondent.

4.Pursuant to s 93(3)(a) of the Real Estate and Business Agent Act 1978 (WA), any supervisor appointed under order 3 be empowered to withdraw any monies from any bank account of the respondent.

5.The supervisor shall cause a notice to be issued to each financial institution with which the respondent held an account, informing them of any appointment and the power to transact upon the accounts.

6.The parties have liberty to apply on three days' notice to vary or discharge these orders.

I certify that this and the preceding [25] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

JUSTICE J C CURTHOYS, PRESIDENT

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