John Wagstaff Constructions Pty Ltd v Chase Commercial Pty Ltd
[2014] QCAT 324
| CITATION: | John Wagstaff Constructions Pty Ltd v Chase Commercial Pty Ltd & Ors [2014] QCAT 324 |
| PARTIES: | John Wagstaff Pty Ltd (Applicant) |
| v | |
| Chase Commercial Pty Ltd (First Respondent) Dominic Condon (Second Respondent) Rodney Brown (Third Respondent) JRLT Pty Ltd (Fourth Respondent) James Lyons Realty Pty Ltd (Fifth Respondent) James Lyons (Sixth Respondent) |
| APPLICATION NUMBER: | GAR450-13 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Dr J R Forbes, Member |
| DELIVERED ON: | 7 July 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Pursuant to section 488 of the Property Agents and Motor Dealers Act 2000 the claim of John Wagstaff Pty Ltd against the claims fund established under that Act is allowed in the amount of two hundred thousand dollars ($200,000). 2. At the expiration of the time for appeal the Chief Executive, Department of Justice and Attorney-General, shall pay out of said fund the amount of $200,000 to John Wagstaff Pty Ltd. 3. In the event of an appeal that amount shall not be paid until the appeal is determined. 4. Upon payment of the said amount to John Wagstaff Pty Ltd, Chase Commercial Pty Ltd , Dominic Condon, Rodney Brown, JLRT Pty Ltd, James Lyons Realty Pty Ltd, and James Lyons shall be jointly and severally liable to reimburse the claim fund by paying the said sum to the Chief Executive, Department of Justice and Attorney-General. 5. A copy of these reasons and orders shall be served forthwith upon the parties and the Chief Executive, Department of Justice and Attorney-General. |
| CATCHWORDS: | GENERAL ADMINISTRATIVE REVIEW – Property Agents and Motor Dealers Act 2000 – where real estate agent leasehold manager – where failure to account for rents collected – where claim upon statutory claims fund – whether claim established – whether respondents or any of them responsible for applicant’s loss – whether executive officers of responsible corporation similarly responsible – whether third and fourth respondents the ostensible agent of first respondent – where claim exceeds maximum allowed by legislation Property Agents and Motor Dealers Act 2000 (Qld) ss 133, 379, 386, 408, 470, 476, 488, 492, 512, 530, 573 Adamson v Queensland Law Society Inc [1990] 1 Qd R 498 Rejfek v McElroy (1965) 112 CLR 517 Underwood (A L) Ltd v Bank of Liverpool [1924] 1 KB 775 |
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).[1]
REASONS FOR DECISION
Nature of application
[1]An application by Chase Commercial Pty Ltd for an oral hearing (letter Colwell Wright to Registrar 10 February 2014) was subsequently withdrawn: notation of Senior Member O’Callaghan 14 March 2014.
This is an application by John Wagstaff Pty Ltd (“Wagstaff”) for reimbursement out of the Claim Fund (“the Fund”) established by the Property Agents and Motor Dealers Act 2000 (“PAMDA”).[2] Jurisdiction to determine such claims, in excess of $10,000, is vested in this Tribunal.[3]
[2]PAMDA s 408.
[3]Ibid ss 476(3)(b), 488, 530.
Wagstaff’s original claim was for the sum of $571,297.41, later increased to $634,822.47. However, a payment out of the Fund is limited to $200,000.[4]
[4]PAMDA Act s 492(2); Property Agents and Motor Dealers Regulation 2001 reg 55.
The applicant’s complaint
Wagstaff is registered proprietor of realty situated at 102 Gosport Street, Hemmant, Brisbane (“the property”). Its claim is for rent paid by its tenant, Gateway Containers Pty Ltd (“the tenant”) to a registered estate agent, James Lyon Realty Pty Ltd (“the Lyons company),[5] and misapplied by the latter to its own use and benefit.
[5]Latterly renamed JLRT Pty Ltd.
Wagstaff’s allegations against the Lyons company and its sole director are set out in its statement of claim against the Fund, lodged on 1 July 2013. In particular, it is alleged that in or about May 2013 James Lyons admitted to the claimant that he had diverted a substantial portion of the rents received by him from the tenant to his or his company’s own use and benefit,[6] in breach of their fiduciary and statutory duties to Wagstaff.
[6]Statement of claim lodged 1 July 2013 page 6.
Neither Lyons nor the Lyons company has tendered any material in answer to Wagstaff’s allegations. With respect to those parties I accept the evidence of the claimant. I am satisfied that the abovementioned conduct of Lyons and his company is in breach of the PAMDA.[7]
[7]PAMDA ss 379, 386, 573.
Access to the Fund
PAMDA[8] provides that a person who suffers financial loss in consequence of a contravention of any of sections 379, 386,[9] 470(1)(e) or 573 may make a claim against the Fund.
[8]PAMDA s 470(1).
[9]Section 470(1) includes a contravention of Chapter 12 part 1, which contains ss 379 and 386.
In the premises I am satisfied that Wagstaff is entitled to make a claim of $200,000 against the Fund, and there will be an order for the payment out to Wagstaff of that amount from the Fund.[10] While I consider that Wagstaff did not exercise due diligence in safeguarding its own interests[11] in this case, I do not consider that its neglect or default should reduce its claim upon the Fund to less than $200,000.
[10]PAMDA s 530(a).
[11]I.e., through tardiness in pursuing apparent arrears of rent due to Lyons and his company’s misconduct: PAMDA s 488(3)(a)(i).
Liability for applicant’s loss - Lyons
I am required by the legislation to name the person or persons liable for the claimant's financial loss.[12] Clearly the Lyons company is such a person, as is James Lyons, the executive officer of that company at all material times.[13]
[12]PAMDA s 488(3)(c).
[13]PAMDA s 490(2)(b); Darroch v O’Neill Holdings Group Pty Ltd [2010] QCAT 307; Brown & Anor v Wilen Pty Ltd & Ors [2012] QCAT 324 at [16].
The position of Chase
It is also desirable, in the unusual circumstances of this case, to consider the position of Chase Commercial Pty Ltd.
The Chief Executive, although not formally a party, is entitled to make submissions,[14] and has done so. He seeks a finding that James Lyons and JLRT Pty Ltd (formerly James Lyons Realty Pty Ltd) are liable for Wagstaff’s financial loss.[15] He makes no such submission with respect to the first, second or third respondents, namely Chase, Dominic Joseph Condon and Rodney Edwin Brown. But that does not absolve the Tribunal from its statutory duty to consider whether any liability attaches to them.
[14]PAMDA Act s 512.
[15]Submissions of Chief Executive 16 December 2013 paragraph 8.
In effect, Wagstaff alleges that Chase Commercial shares responsibility for its loss:
The Claimant is not a sophisticated property oriented company ... With respect to its property acquisition and property leasing ... the principal of the Claimant, John Wagstaff, relied heavily upon the advice and assistance of Chase Commercial and James Lyons. ... From the outset of its relationship with James Lyons, the Claimant was not aware that James Lyons was not a principal or employee of Chase Commercial. Lyons’ business card is branded Chase Commercial and [his] office address and telephone number is the same as Chase Commercial. The signs placed upon properties being marketed for sale or leasing were branded “Chase Commercial” and did not identify that James Lyons was acting in any capacity other than as principal or employee of Chase Commercial. ... The Claimant gave [management and [leasing] instructions to James Lyons in the belief that Chase Commercial would be acting as the property manager/leasing agent. ... [16]
We are informed by the principals of Chase Commercial (Rod Brown and Dominic Condon)[17] that James sat at a desk next to Ms Ken Muscat, Chase Commercial’s property manager.[18]
... It appears from Chase Commercial’s bank records ... that James Lyons began transferring funds he had received into his own account to Chase Commercial’s trust account [particulars follow].[19] At all times the Claimant was of the understanding that Chase Commercial was the letting agent and property manager.[20]
[16]Claimant’s Statement of Claim page 1, paragraph 1.
[17]The third and second respondents, respectively.
[18]Claimant’s Statement of Claim page 2, paragraph 3.
[19]Ibid page 3.
[20]Ibid page 4.
Ostensible Agency of Lyons for Chase?
The implicit allegation is that the Lyons company was, for present purposes, the ostensible agent (or sub-agent) of Chase in managing the lease of the subject property.
Where “A”, by words or conduct, represents or permits to be represented that “B” has authority to act on “A’s” behalf, “A” is bound by the acts of “B” with respect to anyone dealing with him as “A’s” agent on the faith of that representation, to the same extent as if “B” actually had “A’s” authority to do the act in question.[21] Thus, in Freeman & Lockyer[22] it was held that a director named Kapoor, who assumed the powers of managing director of the defendant company, with its concurrence, when in fact he had not been appointed to that office, bound the company by entering into a contract on its behalf with the plaintiff. The transaction was within the ordinary scope of the authority of a managing director[23] of the defendant.[24]
[21]Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 503.
[22][1964] 2 QB 480.
[23]Or, here, the servant or agent of a realtor.
[24]See also Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at [21]; Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising and Addressing Co. Pty Ltd (1975) 133 CLR 72 at 78; Australia and New Zealand Banking Group Ltd v Frenmast Pty Ltd [2013] NSWCA 459; Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd & Ors [2013] QSC 243 at [56].
An act of an ostensible agent within the scope of his apparent authority does not cease to bind his principal merely because the agent was acting fraudulently.[25] It is unnecessary to show that the principal benefited from acts of the apparent agent. There is no suggestion of dishonesty on Chase’s part; nevertheless Chase may have the misfortune of being saddled with a dishonest agent.
[25]Bryant, Powis & Bryant v Quebec Bank [1893] AC 170 at 179; Lloyd v Grace Smith & Co [1912] AC 716 (cited in Northside Developments Pty Ltd v Registrar-General (above); Underwood (A L) Ltd v Bank of Liverpool [1924] 1 KB 775 at 791; NIML Ltd v MAN Financial Australia Ltd (formerly Ord Minnett Jardine Fleming Futures Ltd) [2006] VSCA 128 at [19]; Uxbridge Permanent Benefit Building Society [1939] 2 KB 248; Crouch and Lyndon (a Firm) v IPG Finance Australia Pty Ltd & Anor [2013] QCA 220.
In considering a question of ostensible agency one must bear in mind, of course, that the representations relied on must be those of the putative principal; an ostensible agent cannot acquire that status by tugging his own bootlaces. One must identify, if possible, features of the case in hand that support a finding of ostensible authority;[26] a legal decision, in practice, depends ultimately upon the facts.
[26]Larkden Pty Ltd v Lloyd Energy Systems Pty Limited [2011] NSWSC 1567 at [56] - [57].
The cases pro and con
Chase and its executive officers deny liability:
The money apparently lost by the claimant ... was misappropriated by James Lyons or James Lyons Realty Pty Ltd after having been paid by [Gateway] ... directly into a bank account maintained by James Lyons Realty Pty Ltd. As [Chase and its executives] never received the [missing] money they did not contravene section 379, which required [the Lyons company] ... to pay [it] ... to [that company’s] general trust account.
Similarly, section 573(2) ... applie[s] where a licensee ... receive[s] an amount belonging to someone else. My client[s] never received the relevant monies ... and so cannot have converted them.[27]
[27]Letter Colwell Wright to Claims and Recoveries Officer, 25 September 2013. See also letter Colwell Wright to Wagstaff’s solicitors 24 September 2013.
The Chase defence proceeds:
By a “Franchise Deed”[28] dated 30 June 2009, Chase Franchisor Pty Ltd granted a franchise to James Lyons Realty Pty Ltd ... [giving] James Lyons Realty the right to make use of “Chase Commercial” branding, trademarks and advertising material in carrying on its business as a real estate agent. It was also given the ability to use [Chase Commercial’s] email addresses. Further, it granted to James Lyons Realty a non-exclusive licence to use part of Chase Commercial Pty Ltd’s premises to carry on its business.[29]
However, in so doing [the Lyons company] was not an employee, partner or agent of Chase Franchisor Pty Ltd and was required to display and include in all of its public records an “Independent Operator Notice ... in the following terms: This Chase Commercial franchise is independently owned and operated by James Lyons Realty Pty Ltd ... under licence from Chase Franchisor Pty Ltd.[30]
[28]A copy is exhibited to Chase’s defence.
[29]Submissions of Chase 14 March 2014, paragraphs 5 and 6.
[30]Ibid paragraph 7, referring to Clause 17 of the franchise deed.
But a difficulty here is that there is no evidence that the franchise deed was a public document comparable, in that respect, to a company’s memorandum and articles, or to a registered mortgage of land, so as to give actual or at least constructive notice of its contents to Wagstaff. Indeed, Chase concedes that ‘it is unclear’ whether the Lyons company complied with the “independence” covenant in dealing with Wagstaff.[31] I am not prepared to assume that a person of the character and loose business practices[32] of Lyons actually did so.
[31]Ibid paragraph 55.
[32]Despite s 133(1)(a) of the Act Lyons’ appointment was not documented: Chase’s monthly report dated 23 December 2011 (and subsequent reports) page 1, Item “Critical Dates” – “No documents on file”; submissions of Chief Executive paragraph 1.
No doubt franchising is common in the real estate industry,[33] but it is surely much less common for an allegedly independent franchisee to be allowed to use the same office premises, and the same email address as the franchisor, and to work cheek by jowl, so to speak, with the franchisor’s financial officer, using ‘the brand name Chase Commercial’.[34] But that is the admitted position.[35] As Wagstaff puts it:
James operated his business ... from the same business premises as Chase Commercial at Level 2, 88 Commercial Road, Newstead Qld 4066. We are informed by the principals of Chase Commercial (Rod Brown and Dominic Condon) that James sat at a desk next to Ms Karen Muscat, Chase Commercial’s business manager.[36]
[33]Statement of Dominic Condon filed 17 March 2014 paragraph 14.
[34]Ibid paragraph 3.
[35]Submissions of first, second and third respondents 14 March 2014, paragraph 6.
[36]Wagstaff’s statement of claim, page 2, paragraph (3).
Wagstaff says that it appointed Chase ‘to act as leasing agent and property manager in relation to the property immediately following settlement of [the purchase of] the property in June 2011’.[37] There is no formal appointment[38] in evidence,[39] but according to Wagstaff it appointed Chase by ‘instructions to James Lyons in the belief that Chase commercial would be acting as the property manager/leasing agent’ as ‘an employee/principal of Chase Commercial’.[40]
[37]Wagstaff’s statement of claim page 1, paragraph 1.
[38]Compare PAMDA Act s 133(1), requiring authority in writing to act as a client’s real estate agent.
[39]See Chase’s monthly report dated 23 December 2011 (and subsequent reports) page 1, Item “Critical Dates” – “No documents on file”.
[40]Wagstaff’s statement of claim page 1, paragraph 1.
There is support for those assertions in the evidence of Dominic Condon, an executive officer of Chase:
Chase commenced managing [the subject property] in about December 2011. Chase continued to manage the property at all material times from December 2011. Generally speaking, the property management services involved invoicing tenants, collecting rent to pass on to the owner, and monitoring and reporting to the owner on any arrears.[41]
Whilst we were performing the “back room” tasks of invoicing, receiving funds to trust and paying them out, preparing reports and the like the Franchisee and Lyons dealt with the applicant and its tenant ... on a day to day basis.[42]
[41]Statement of Dominic Condon filed 17 March 2014 paragraph 9.
[42]Ibid paragraph 12.
Lyons’ dealing with Wagstaff ‘on a day to day basis’ would be consistent with the conduct of client who has dealt with a particular functionary of an estate agent with whom the client is acquainted. According to Dominic Condon, Lyons ‘had a very close personal relationship’ with John Wagstaff.[43]
[43]Ibid paragraph 11.
There is ample documentary evidence to support Condon’s statement that Chase ‘receiv[ed] [Wagstaff’s] funds to trust and [paid] them out’.[44] It is significant that the only rent Wagstaff ever received from the tenant was paid out of Chase’s Statutory Trust Account with Westpac Bank, after corresponding deposits thereto by Lyons.[45] There is no evidence that Chase ever told the Lyons company, in effect: “It is you, not Chase, who is the agent for Wagstaff with respect to this lease. So please save us unnecessary paper work by paying the rent you collect direct to Wagstaff.”
[44]See attachment 6 to Wagstaff’s statement of claim - “Monthly Report” Chase Commercial (per K Muscat) to Wagstaff 23 December 2011 and similar reports dated 30 January 2012, 29 June 2012, 31 July 2012 and 31 August 2012.
[45]See attachment 3 to Wagstaff’s statement of claim, recording at least 5 payments to Wagstaff in the period 5 December 2011 to 4 March 2013.
The separation of powers between the Lyons company and Chase was, to say the least, fuzzy. In the absence of evidence to the contrary, I do not consider that their relationship was typical, or indicative of, usual arrangements between franchisor and independent franchisee. Nor am I persuaded that Chase made it clear to Wagstaff that, in Chase’s view, Lyons and his company were independent operators.
I do not consider that the matters mentioned in paragraph 57 of the Chase submission outweigh, on the balance of probabilities, the indicia of ostensible agency noted above. In particular, the fact that the Lyons company was named as agent for Wagstaff when the subject land was purchased some six months does not dispose of the admission that Chase ‘commenced managing’ the lease of it in December 2011. The suggested similar fact that Lyons was named as agent in an unrelated lease in 2012 does not explain away the office-sharing arrangements noted above, or the channelling of rent for the subject property through Chase’s trust account. Mr Condon’s subjective ‘belief that ... the applicant knew that the franchisee and Lyons were independent operators’[46] is insufficient to negate the extraordinary association of Chase and Lyons in this case. It would, in the circumstances, be fanciful to treat Lyons as quite independent of Chase, or to expect Wagstaff to see him as independent.
[46]Statement of Dominic Condon filed 17 March 2014 paragraph 13.
Decision
On an issue of ostensible authority it is the third party’s reasonable perception of the words or conduct of the putative principal that matters. Here I find, on the balance of probabilities, that Wagstaff did perceive Lyons, so far as the subject lease is concerned, as the servant or agent of Chase, and that the perception was reasonable. Accordingly, I find that Chase is vicariously liable for the financial loss sustained by Wagstaff.
While I am conscious that these findings may have serious civil consequences for Chase,[47] no question of fraud or ‘grave moral delinquency’[48] on its part is involved. There is no suggestion of dishonesty or conscious wrongdoing by Chase. Indeed, even on issues of fraud[49] or serious professional misconduct[50] the standard of proof remains the civil standard.
[47]Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 per Dixon J; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) 110 ALR 449 at 450; Harvey v Attorney-General (Qld) [2014] QCA 146 at [26].
[48]Ibid.
[49]Rejfek v McElroy (1965) 112 CLR 517.
[50]Adamson v Queensland Law Society Inc [1990] 1 Qd R 498; Bannister v Walton (1993) 30 NSWLR 699 at 711, 712, 734.
ORDERS:
1. Pursuant to section 488 of the Property Agents and Motor Dealers Act 2000 the claim of John Wagstaff Pty Ltd against the claims fund established under that Act is allowed in the amount of two hundred thousand dollars ($200,000).
2. At the expiration of the time for appeal the Chief Executive, Department of Justice and Attorney-General, shall pay out of said fund the amount of $200,000 to John Wagstaff Pty Ltd.
3. In the event of an appeal that amount shall not be paid until the appeal is determined.
4. Upon payment of the said amount to John Wagstaff Pty Ltd, Chase Commercial Pty Ltd, Dominic Condon, Rodney Brown, JLRT Pty Ltd, James Lyons Realty Pty Ltd, and James Lyons shall be jointly and severally liable to reimburse the claim fund by paying the said sum to the Chief Executive, Department of Justice and Attorney-General.
5. A copy of these reasons and orders shall be served forthwith upon the parties and the Chief Executive, Department of Justice and Attorney-General.
1
15
0