HS & Y Pty Ltd v Horizon Property Management Pty Ltd
[2010] QCAT 255
•28 May 2010
| CITATION: | HS & Y Pty Ltd v Horizon Property Management Pty Ltd [2010] QCAT 255 |
| PARTIES: | HS & Y Pty Ltd |
| v | |
| Horizon Property Management Pty Ltd (Under External Administration) t/a Horizon Property Management (1st Respondent) Mr James Kassolos (2nd Respondent) |
| APPLICATION NUMBER: | PC033-09 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | 28 May 2010 |
| HEARD AT: | BRISBANE |
| DECISION OF: | M Howard, Member |
| DELIVERED ON: | 28 May 2010 |
| DELIVERED AT: | BRISBANE |
ORDERS MADE: | 1. The claim is allowed in part in the sum of $16657.99; 2. James Kassolos is named as the person liable for the Claimant’s financial loss. |
| CATCHWORDS : | Claim against the claim fund- misapplication of bond monies- Property Agents and Motor Dealers Act 2000, sections 469, 470, 488, 489, 530, 573. |
APPEARANCES and REPRESENTATION (if any):
This matter was heard on the papers in the absence of the parties.
REASONS FOR DECISION
History of proceeding
This is a tale of missing rental bonds. The claimant made a claim against the Claim Fund established under the Property Agents and Motor Dealers Act 2000 for financial loss totalling $16,659.99 for rental bond money as a result of dealings with Horizon Property Management Pty Ltd (Under External Administration) trading as Horizon Property Management (the first respondent) and Mr James Kassolos (the second respondent).
The first respondent, a property management company under administration, and the second respondent, an executive officer of the first respondent at the time of the alleged event, are parties whose actions are alleged to give rise to the claim. The first respondent held a property dealer corporation licence and the second respondent held a real estate agent licence at all relevant times. Both respondents had notice of the claim from the Office of Fair Trading and Queensland Civil and Administrative Tribunal (QCAT) but did not respond to it.
The claimant engaged Horizon Property Management to manage a shopping centre for a period of time. The claimant asserts that during that period bonds from several of the claimant’s tenants were held in the first respondent’s trust account in the amount of $16659.99. Subsequently efforts were made to recover those funds from the respondents without success. As a result, a claim was made against the claim fund.
The receiver appointed for Horizon Property Management Pty Ltd, Ms Julie Williams, provided a report (the Receiver’s Report) pursuant to section 477 of the Property Agents and Motor Dealers Act 2000 (PAMDA) to the Chief Executive, Department of Employment, Economic Development and Innovation dated 7 October 2009.
The claim was referred by the Office of Fair Trading to the Commercial and Consumer Tribunal (CCT) for determination in October 2009.
Applicable Law
Effective from 1 December 2009, the CCT was abolished and the Queensland Civil and Administrative Tribunal (QCAT) became responsible for dealing with the proceeding.
Section 470 of PAMDA provides for a person to make a claim against the Claim Fund if the person suffers loss resulting from events including, under subsection 470(1)(a), a relevant person contravenes section 573; and under subsection 470(1)(e) stealing, misappropriation or misapplication by a relevant person of property which is entrusted to the person as agent for someone else in the person’s capacity as a relevant person. A relevant person is defined in section 469 to include a licencee or a licencee’s employee or agent. Section 573 of PAMDA provides that it is an offence for a licencee who receives money belonging to someone else to dishonestly convert the amount to the licencee’s own or someone else’s use.
Section 488 of PAMDA provides as follows:
488 Deciding claims other than minor claims
(1)The tribunal may allow the claim, wholly or partly, or reject the claim.
(2)However, the tribunal may allow the claim only if satisfied, on the balance of probabilities, that—
(a) an event mentioned in section 470(1) happened; and
(b) the claimant suffered financial loss because of the happening of the event.
(3)If the tribunal allows the claim, wholly or partly, the tribunal must
(a) take into account—
i.any amount the claimant might reasonably have received or recovered if not for the claimant's neglect or default; and
ii.any amount ordered to be paid to the claimant as compensation under section 530A, 572D or 592A; and
(b) decide the amount of the claimant's financial loss; and
(c) name the person who is liable for the claimant's financial loss.
Section 530 of PAMDA provides as follows:
530 Orders tribunal may make on claim hearing
The tribunal may make the following orders in relation to a claim against the fund—
(a)an order allowing the claim, wholly or partly, or rejecting the claim;
(b)an order stating that a named person is liable for a claimant's financial loss and the amount of the loss;
(c)an order about recovery of an amount payable in relation to a claim;
(d)an order that no amount is recoverable in relation to a claim.
The Evidence
10. The claimant made a formal claim against the Claim Fund for ‘Tenants Bond held in trust-see list attached’ and nominating a total claim of $16659.99. The list nominates rental bonds as follows:
- Shop 7, 957 Beenleigh Road, Runcorn $ 7307.99
- Shop 9, 957 Beenleigh Road, Runcorn $ 2250.00
- Shop 10, 957 Beenleigh Road, Runcorn $ 7100.00
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which are stated to total $ 16659.99
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11. The claimant states that its agent requested a return of the bond moneys upon terminating the services of the respondent: however, the moneys were not received.
12. The Receiver’s Report refers to, among other things, the following information:
The Receiver conducted an investigation into the claim, and as a part of this process interviewed the Director, James Kassolos, and reviewed various financial reports.
Horizon Property Management Pty Ltd (the Company) operated a real estate agency which specialised in the management, leasing, refurbishment and sale of suburban shopping premises.
The Receiver reports that, according to the Director, the Company traded within appropriate guidelines until early 2008 when it commenced using trust funds to meet trading overheads. The Director confirmed that the bonds as claimed ought to have been held.
The Director advised the Receiver that the properties the subject of the claim were initially managed by another agency and he could not initially identify the bonds. He says that a reconciliation identified a shortfall in respect of the bonds and by agreement with the claimant upon commencement of his management, sufficient funds were withheld from rents received to make up the shortfall. However, the Director asserted that as the bonds had not been correctly identified, a staff member in his office had inadvertently applied these funds to trading expenses rather than holding them in trust. At the time of request for transfer of the bonds, the respondent held no funds from which the bonds could be paid.
The Receiver examined books of account and other records, which included full extracts from the trust account ledger maintained by the Company and bank statements against which the records were cross-matched. These records indicated that the funds which form the basis of the claim are clearly identified and marked ‘bond monies’.
In the Receiver’s opinion, the discussions with the Director revealed that he adopted a practice of calculating property management fees and expenses that would have been due at the end of the month and then transferring those funds from the trust account to the trading account during the month because of a shortfall in trading funds. Further, the Receiver considered that he failed to advise his property manager of his practice. Accordingly, the manager effected a second transfer of the same fees and expenses at the end of the month, resulting in the company being paid twice.
In the opinion of the Receiver, the claim is valid, but inaccurate in the sum of $2.00, making the correct quantum of the claim $16657.99.
She considered that both the Director and the Company were the relevant person for the purposes section 469 PAMDA as they both held licences at the relevant times. She did not hold and did not anticipate receiving any funds in the liquidation to meet the claim. She considered that the Director was the responsible person liable for the claimant’s financial loss on the basis of the evidence she had available to her.
13. The respondents did not respond to the claim or to QCAT’s correspondence to them. No evidence was provided by them.
14. In the circumstances, I accept, on the balance of probabilities, the uncontraverted evidence provided on behalf of the claimant and from the Receiver, except that I note a calculation error in the addition of the amounts claimed by the claimant in the amount of $2, as identified by the Receiver.
Discussion and Decision
15. The claim may be allowed, either partly or wholly, only if, on the balance of probabilities, an event described in section 470(1) happened, and the claimant suffered financial loss because of the happening of the event. Further, if the claim is allowed wholly or in part, the matters referred to in section 488(3) must be addressed/considered.
Has an event described in section 470(1) happened?
16. On the basis of the Receiver’s Report, I accept on the balance of probabilities that a system was set up by the Director, which facilitated a double transfer to the first respondent of fees and expenses due. I am satisfied on the balance of probabilities that the bond monies were dissipated through this process, and that the bond monies were accordingly misappropriated. This constitutes an event under section 470(1)(e).
17. Further, the monies to which the respondents were not entitled were monies belonging to ‘someone else’ namely the claimant and yet they were used to meet trading expenses of the first respondent. The system facilitating a double transfer of the amounts due was set up by the Second Respondent and then the funds used to meet trading expenses. He did not tell his property manager of the system he had established. It is reasonable to draw the inference that the Second Respondent deliberately and intentionally did so, in order that the funds obtained, but not owing, were available to meet trading expenses. I do draw this inference from the evidence I have accepted. Accordingly, I am satisfied that the fees which were misappropriated were dishonestly converted by the second respondent to satisfy trading expenses of the first respondent. This constitutes an event under section 470(1)(a), namely a contravention of section 573.
Has the claimant suffered financial loss because of the happening of the event?
18. The bond monies which are the subject of the claim were held by the first respondent as agent for the claimant. When the agreement between the agent and the claimant was terminated, the claimant’s agent requested the bonds. They have not been paid. Accordingly, the claimant has suffered financial loss in the amount of the bond monies because of the happening of the events.
Consideration of matters referred to in section 488(3)
19. Firstly, I must take into account any amount the claimant might reasonably have recovered if not for the claimant’s neglect or default and any amount ordered to be paid to the claimant as compensation under sections 530A, 572D or 592A. There has been no relevant neglect or default of the claimant identified and no amount has been ordered to be paid under sections 530A, 572D or 592A.
20. Secondly, I must decide the amount of the claimant’s financial loss. As referred to earlier, I accept that the amount of the three bonds is $16657.99 and I find that this is the amount of the claimant’s financial loss.
21. Lastly, I must name the person who is liable for the claimant’s financial loss. The Second Respondent and Director, James Kassolos, set up the system which facilitated a double transfer of fees and expenses due to the first respondent and facilitated the conversion of these funds to satisfy trading expenses. I find that he is liable for the claimant’s financial loss.
Conclusion
22. I will allow the claim against the fund in part in the amount of $16657.99.
Orders:
1. The claim is allowed in part in the sum of $16657.99;
2. James Kassolos is named as the person liable for the Claimant’s financial loss.
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