Justice and Attorney General v Cowan

[2013] QCAT 190

CITATION:

The Chief Executive, Department of

Justice and Attorney General v Cowan
 [2013] QCAT 190

PARTIES:

The Chief Executive, Department of

Justice and Attorney General
(Applicant)

v

Simon John Cowan
(Respondent)

APPLICATION NUMBER: OCR076-12

MATTER TYPE: Occupational Regulation matters

HEARING DATE: 18 September 2012

HEARD AT: Brisbane

DECISION OF: Fiona FitzPatrick, Member

DELIVERED ON: 27 March 2013

DELIVERED AT: Brisbane

ORDERS MADE:

1.   Simon John Cowan is reprimanded.

2.   Simon John Cowan must provide the Chief Executive with evidence that he has completed and passed courses of study in:

a)     PRDRE 28A or equivalent (Maintain trust accounts); and

b)     PRDRE 37A or equivalent (Perform and record property management activities and transactions);

by 30 September 2013.

3.   Simon John Cowan must pay a fine of $3,000 to the Chief Executive Department of Justice and Attorney General by 30 May 2013.

4.   Simon John Cowan must pay the Chief Executive’s costs fixed in the amount of $450, by 30 April 2013.

CATCHWORDS:

REAL ESTATE AGENT – DISCIPLINARY PROCEEDINGS – where agent filed trust account audit reports late for three consecutive years, licensee had already been infringed for the same conduct in three earlier audit periods; appropriate penalty

Property Agents and Motor Dealers Act 2000 (Qld), s 10, s 402, s 496

Chief Executive, Dept of Tourism, Fair Trading, and Wine Industry Development v Cumerford [2005] QCCTPAMD 14, cited
Chief Executive, Department of Justice and Attorney General v Sheppard [2012] QCAT 164, cited
Chief Executive Department of Justice and Attorney General v Leach (No 2) [2012] QCAT 427, cited
Keyte v Chief Executive, Department of Justice and Attorney General [2012] QCATA 238, cited Department of Employment, Economic Development & Innovation v Baldwin [2012] QCAT 161, cited
Chief Executive, Department of Justice and Attorney General v Smart Real Estate (Qld) Pty Ltd and Anor [2013] QCAT 58, considered

APPEARANCES and REPRESENTATION (if any):

APPLICANT: The Chief Executive, Department of Justice and Attorney General was represented by Mr Danen, in house legal officer.

RESPONDENT: Mr Cowan represented himself.

REASONS FOR DECISION

[1]    Mr Cowan has held a Real Estate Principal’s licence under the Property Agents and MotorDealers Act 2000 since 2003, apart from a short interlude between October 2009 and January 2010.  He has a decade of experience in running his real estate agency at Surfer’s Paradise, including managing the agency’s trust account, which was opened in December 2003.

[2]    Mr Cowan has a history of filing the agency’s trust account audit reports late, in contravention of the PAMDA.  For example, Mr Cowan filed audit reports for 2004, 2005 and 2006 in November 2006.  It appears that these reports were 2 years and 8 months; 1 year and 8 months; and 8 months late respectively.  As the audit reports did not identify any serious irregularities in either the management of the account or the trust funds, on 13 March 2007 the Department elected to issue an infringement notice to Mr Cowan rather than commence disciplinary proceedings in the Tribunal.

[3]    Despite receiving the infringement notice, Mr Cowan continued to file his trust account audit reports after the legislative deadline.  The Department says that for four further audit periods, from 2007-2010, Mr Cowan was late in filing his reports, in contravention of the PAMDA.[1] The Department says that the reports were 2 years and 3 months; 1 year and 3 months; 4 months; and 7 months late respectively. 

[1] PAMDA s 402(2).

[4]    After the hearing the Chief Executive wrote to the Tribunal advising that it was not pursuing the fourth audit report which had been due on 11 March 2011.  The Tribunal has been asked to impose a penalty in relation to the remaining 3 breaches of the PAMDA.

[5]    The Department acknowledges that again, the audit reports do not identify any serious irregularities in either the management of the account or the trust funds.  It usually regards late reports as a lower level contravention of the PAMDA not warranting disciplinary proceedings in the Tribunal.  However it argues that as the infringement notice has not been effective in securing Mr Cowan’s compliance, more substantial penalties should be imposed.

[6]    Mr Cowan does not contest the Department’s application, so the matter was set down for a hearing on the limited question of the appropriate penalty.  After considering the evidence filed by the Department I am satisfied that Mr Cowan’s decision not to contest the application is appropriate and that there are grounds for taking disciplinary action against him for contravening the PAMDA on the three occasions identified above.[2]

[2] Ibid s 496(1)(b)(i).

[7]    Mr Cowan says in mitigation that he thought he only needed to file reports every 3 years as he had been issued a licence with a three year expiry period.  He said that when he was alerted to his error and belatedly engaged auditors to prepare the outstanding reports, they took 5 months to complete the audits for 2007-2010.  He provides diary entries recording phone calls to the auditors and copies of emails. 

[8]    The Department filed written submissions about the appropriate sanction.  It says that the Tribunal should not give any weight to Mr Cowan’s submission that he thought he only needed to file reports every 3 years as he had been issued a licence with a three year expiry period.  It says these claims are not credible because Mr Cowan is an experienced licensee.  The Department points to the unequivocal and “notorious” legislative requirement to file yearly audit reports.[3] 

[3] Ibid s 402.

[9]    In light of his decade of industry experience and particularly because of the previous compliance action against him, Mr Cowan knew or should have known he had to file annual reports.  Delay by the auditors does not excuse his non-compliance.  In relation to at least two of the years in question, Mr Cowan had already missed the deadline before he briefed the auditors. Licensees must ensure that auditors are briefed in time to enable reports to be filed by the due date.  They cannot transfer this legislative responsibility to someone else.

[10]  The Department says that in light of Mr Cowan’s “antecedents” and the earlier compliance action for an identical breach of the PAMDA, his conduct since he was infringed should be regarded as serious.

[11]  While these breaches may be at the lower level of seriousness when viewed individually, over the past decade Mr Cowan has honoured his obligations more in the breach than the observance.  Due to his history of non-compliance, these latest breaches can no longer be regarded as minor or technical.

[12]  I have nevertheless taken into account that Mr Cowan did not contest the breaches, that he has (although belatedly) recognised his ongoing obligation to comply with the audit timeframes, and that he was prepared to consent to the orders in relation to training and to pay the Chief Executive’s costs.  Most importantly, the audit reports did not identify any trust account irregularities.

[13]  Licensees who fail to file trust account audits as required by PAMDA commit an offence which can attract a maximum penalty of 200 penalty units or 2 years imprisonment.[4]

[4] Ibid s 402(2).

[14]  In its written submissions on penalty Chief Executive has stated that Mr Cowan be:

a)    reprimanded[5]; and

b)    ordered to complete further training[6]; and

c)    ordered to pay a fine of 60 penalty units ($6,000) to the Chief Executive[7]; and

d)    that he pay the Chief Executive’s legal costs of $450.

[5] Ibid s 529(1)(a).

[6] Ibid s 529(1)(g).

[7] Ibid s 529(1)(b).

[15]  When considering the appropriate penalty for a breach, the Tribunal should have regard to two important objects of disciplinary proceedings under PAMDA.  The first is the protection of consumers in their dealings with licensees.[8]  Without regular and independent trust account audits the Department cannot fulfil its responsibility to monitor licensees’ compliance with the legislation and to ensure the integrity of trust funds.  The second is the maintenance of standards in the industry.[9]  Persistent breaches of a licensee’s legislative obligations in relation to trust accounts undermine these standards.

[8] Ibid s 10(3)(b)(i).

[9]        DTRFT v Ross Dummett (2003) CCT X006 at 23.

[16]  I am satisfied that Mr Cowan should be reprimanded and that he should undertake further training in the management of trust accounts.  A fine is an appropriate additional sanction because lower level compliance activity has been ineffective in preventing ongoing contraventions.  The amount of the fine should act as a deterrent and reflect the seriousness of Mr Cowan’s failure to meet his reporting obligations.

[17]   The Department’s legal officer referred the Tribunal to Chief Executive, Dept of Tourism, Fair Trading, and Wine Industry Development v Cumerford [2005] QCCTPAMD 14.  The licensee in that case had filed one audit report 10 months late.  He was also found to have breached the Residential Tenancies Act 1994 because he failed to file rental bonds with the Authority and because he had told a client that he had made a claim to the Authority for bond money, which was false. The licensee had an unblemished record up to that point and had also saved the Chief Executive the expense of a full hearing in the Magistrate’s Court by pleading guilty to the charges. The licensee was reprimanded and fined $1,500.

[18]  Mr Cowan has filed audit reports late on more than one occasion however there are no RTA breaches. 

[19]  While I cannot locate any further cases that are on all fours with this one, I have considered a range of cases which impose a combination of sanctions on licensees, including a mix of disqualification and fines.[10]  I have taken into account that some of the licensees in those cases have received substantial periods of disqualification in addition to a fine.  Nevertheless, consideration of the penalties imposed in those cases has led me to conclude that the fine of $6,000 proposed by the Chief Executive in his written submissions is out of proportion to the offences. 

[10]        Chief Executive, Department of Justice and Attorney General v Sheppard [2012] QCAT164; Chief Executive Department of Justice and Attorney General v Leach (No 2) [2012] QCAT 427; Keyte v Chief Executive, Department of Justice and Attorney General [2012] QCATA 238; Department of Employment, Economic Development & Innovation v Baldwin [2012] QCAT 161; Chief Executive, Department of Justice and Attorney General v Smart Real Estate (Qld) Pty Ltd and Anor [2013] QCAT 58

[20]  The Department’s legal representative agreed at the hearing that there were no cases directly on point to assist the Tribunal, and that the penalty sought may have to be moderated, particularly if the fourth breach was not pursued.

[21]   I find that a fine of $1,000 for each of the three breaches is appropriate.

Orders

1. Simon John Cowan is reprimanded.
2. Simon John Cowan must provide the Chief Executive with evidence that he has completed and passed courses of study in:
1. PRDRE 28A or equivalent (Maintain trust accounts); and
2. PRDRE 37A or equivalent (Perform and record property management activities and transactions;

by 30 September 2013.

3. Simon John Cowan must pay a fine of $3,000 to the Chief Executive Department of Justice and Attorney General by 30 May 2013.
4. Simon John Cowan must pay the Chief Executive’s costs fixed in the amount of $450 by 30 April 2013.