Lee v Agents Licensing Board

Case •

[2009] NTMC 39

•

9 September 2009

No judgment structure available for this case.
CITATION: Lee v Agents Licensing Board [2009] NTMC 039

PARTIES: THONG SUM LEE

v

AGENTS LICENSING BOARD

TITLE OF COURT: LOCAL COURT

JURISDICTION: LOCAL COURT

FILE NO(s): 20907057

DELIVERED ON: 9 September 2009

DELIVERED AT: Darwin

HEARING DATE(s): 29 May, 5 June & 13 July 2009

JUDGMENT OF: Dr J A Lowndes

CATCHWORDS:

AGENTS LICENSING BOARD APPEAL – NATURE OF APPEAL AND PARTIES TO THE APPEAL – ROLE OF RESPONDENT – FIDUCIARY DUTIES – DUTY OF LOYALTY – DENIAL OF NATURAL JUSTICE – FAILURE TO ACT IN GOOD FAITH – APPEAL DISMISSED

Agents Licensing Act (NT) ss 4, 5, 33, 44, 44B, 65, 67, 85, Schedule 4 of the Regulations
Local Court Rules Rule 37.07

Brideson [No 2] (1990) 170 CLR 267 Applied
Coal & Allied Operations Co Pty Ltd v Australian Industrial Relations Commission & Ors (2000) 203 CLR 194 Applied
Turnbull v NSW Medical Board [1976] 2 NSWLR 281 Applied
Cryer v Agents Licensing Board (2001) NTMC 57 Considered
Shew v Agents Licensing Board (2003) NTMC 011 Considered
R v Australian Broadcasting Tribunal Exparte Hardiman (1980) 144 CLR 13 Considered
Attorney General v Lowndes and Anor [1993] 2 NTLR 206 Considered
Meinhard v Salmon (1928) 62 ALR 1 Applied
Equity 8 v Shaw Stockbroking Ltd [2007] NSWSC 413 Applied
Blyth Chemicals v Bushell (1933) 49 CLR 66 Followed
Hospital Products Ltd & United States Surgical Corporation & Ors [1984] 156 CLR 41 Applied
Attorney General v Blake [1998] ChD 439 Considered
Walker v Stones [2000] 4 ALL ER 412 Considered
SBAU v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 1076 Applied
Builders Licensing Board v Sperway Constructions Pty Ltd [1975] 2 NSWLR 174

M Aronson, B Dyer & M Groves “Judicial Review of Administrative Action” (Law Book Co 2009)
Bowstead & Reynolds on Agency (15th ed)
E Campbell “Appearance of Courts & Tribunals as Respondents to Applications for Judicial Review” (1982) 56 ALJ 293
C Sappideen, P O’Grady & G Warburton “Macken’s Law of Employment” (6th ed Law Book Co 2009)
AG Lang “Estate Agency Law & Practice in New South Wales” (Law Book Co 1994)
D C Pearce & R S Geddes “Statutory Interpretation in Australia” (6th ed)
A Stewart “Stewart’s Guide to Employment Law” (Federation Press 2009)

REPRESENTATION:

Counsel:
Appellant: Ms S Porter
Respondent: Mr M Johnson

Solicitors:
Appellant: TS Lee & Associates
Respondent: Solicitor for the Northern Territory

Judgment category classification: A
Judgment ID number: [2009] NTMC 039
Number of paragraphs: 196


IN THE LOCAL COURT
AT DARWIN IN THE NORTHERN
TERRITORY OF AUSTRALIA

No. 2090705

BETWEEN:

THONG SUM LEE
Appellant

AND:

AGENTS LICENSING BOARD
Respondent

REASONS FOR JUDGMENT

(Delivered 9 September 2009)

Dr J A LOWNDES SM:

THE NOTICE OF APPEAL
1. On the 19 February 2009 the appellant lodged a notice of appeal in relation to the following decision of the Agents Licensing Board, which was given on 30 January 2009:
That the conduct of the appellant in wrongfully arranging for the 30% sales commission to be paid to himself from the proceeds of the settlement of the sale of the property and that the appellant thereby placed his interests ahead of the vendor and his principal, amounts to a reasonable ground which is sufficient to warrant disciplinary action being taken against the appellant under s 44(1)(e) of the Agents Licensing Act.
2. By way of an amended Notice of Appeal lodged on 26 March 2009 the appellant appealed the Board’s decision on penalty, which was given on 27 February 2009. On the latter date the Board ordered pursuant to s 44B(1) (c) of the Agents Licensing Act that the appellant’s registration as an agent’s representative be suspended until such time as he declares that he will be bound by a written undertaking to the Board to the effect that he shall refuse to act as a solicitor/conveyancer in respect of the settlement of a contract to sell a property for any vendor for whom he has been the agent’s representative employed by a real estate agent engaged for the purpose of the sale of that property. In addition, the Board imposed a fine of five penalty units pursuant to s 44B(1)(b) of the Act.
3. During the course of the hearing of the appeal leave was given to the appellant to file a further amended notice of appeal. That further amended notice of appeal set out 14 grounds of appeal, eleven of those in respect of the substantive decision and three in relation to penalty.
4. The grounds of appeal in relation to the substantive decision are paraphrased as follows:
Alleged errors of law:
1. The Board erred as a matter of law in finding that the appellant, as an independent contractor, would likely be subject to duties similar to that owed by an employee to an employer and those duties would include duties of loyalty and confidentiality. As a matter of law, the underlying independent contractor relationship between the appellant and Litchfield Realty was not one in which such duties would be implied or imposed.
2. The Board erred in law in finding that the duties referred to in the preceding paragraph would continue as long as there was a relationship between the appellant and Litchfield Realty. Even if such duties were implied or imposed, as a matter of law, those duties ceased when the underlying relationship that gave rise to those duties terminated on 7 November 2007.
3. The Board made an error of law in finding that regardless of the appellant’s resignation from Litchfield Realty, the appellant’s obligations to Litchfield Realty (which obligations were not specified) would continue until settlement of the contract. As a matter of law, the appellant’s resignation from Litchfield Realty ended the appellant’s relationship with Litchfield Realty which gave rise to any obligations owed by the appellant to Litchfield Realty and thereby determined those obligations.
4. The Board erred as a matter of law in finding that fiduciary duties arose from the contractual relationship between the appellant and Litchfield Realty. The appellant’s relationship of independent contractor did not give rise to a fiduciary relationship or fiduciary duties.
5. The Board erred in law in finding that the contractual relationship of independent contractor between the appellant and Litchfield Realty continued to have effect until the settlement date, as that relationship was, as a matter of law, determined upon the appellant’s resignation from Litchfield Realty on 7 November 2007.
6. The Board erred as a matter of law in finding that the appellant owed a fiduciary duty to the vendors, without identifying that duty and stating at what time it was owed. Any duty owed by the appellant to the vendors was determined upon the appellant’s resignation from Litchfield Realty.
7. The Board erred in law by finding that the appellant acted dishonestly (or could not have held an honest belief) because no other similarly qualified person could have objectively held the view that he was entitled to the 30% commission. For the appellant to be found to have been dishonest the appellant had to have a dishonest state of mind and be aware that what he was doing would offend the normal accepted standards of conduct; and there was no evidence before the Board that the appellant had a dishonest state of mind or was aware that what he was doing would offend the normal accepted standards of conduct.
Alleged denial of natural justice:
8. The Board acted contrary to the principles of natural justice in that the appellant was not notified of the allegation that he acted dishonestly (or without honest belief).
Alleged failure to act in good faith or without bias:
9. The Board did not act in good faith or was biased as evidenced by the Board:
• not treating the letters from Litchfield Realty dated 9 January 2008 and 25 March 2008 as written notice for disciplinary action under s 44(4) of the Agents Licensing Act and thereby rendering s 44(7) of the Act inapplicable;
• further to the above, proceeding with an inquiry as if it were initiated by the Board;
• proceeding in the face of legal advice that no offence had been committed that could be construed as a breach of the Agents Licensing Act and against the recommendation of the Registrar;
• purporting to deal with the appellant in his capacity as a solicitor contrary to s 4(1)(c) of the Agents Licensing Act;
• upon objection to the above, proceeding in the face of known facts so as to try and find jurisdiction once the evidence was heard;
• failing in the first instance to properly particularise the conduct alleged to give rise to the reasonable ground upon which the Board could find that it would be sufficient to warrant taking disciplinary action against the appellant;
• by placing a higher standard of conduct on the appellant than an ordinary agent’s representative due to the fact that he is also a solicitor;
• failing to consider the appellant’s submissions as to the law in Attorney General v Blake [1998] ChD 439 at 453 to 454;
• illogically reasoning that the appellant owed a fiduciary duty to the vendor not to prefer his own interests above those of the vendor;
• illogically reasoning that the appellant owed a fiduciary duty to Litchfield Realty not to prefer his own interests above those of Litchfield Realty;
• making a finding of dishonesty against the appellant in the absence of any allegation of dishonesty and against the legal principles of making such a finding;
• imposing more than one penalty when the Agents Licensing Act provides only for one penalty to be imposed upon an adverse finding against the appellant.
Allegation that the decision was against the weight of evidence:
10. The Board reached its decision against the weight of evidence in finding that the appellant’s conduct was dishonest to the extent that he did not act in good faith and that he could not have held an honest belief that he was entitled to the funds in dispute;
11. The Board reached its decision against the weight of the evidence in finding that the evidence given by the appellant at the hearing demonstrated his lack of understanding of the responsibilities of his role as a sales representative to the vendor and as an agent retained by Litchfield Realty.
5. In relation to penalty the appellant relied upon the following three grounds of appeal:
12. The Board acted ultra vires by imposing more than one penalty on the appellant;
13. The Board acted ultra vires by imposing a condition on the appellant with respect to his conduct as a solicitor/conveyancer;
14. The Board improperly exercised its discretion by imposing a manifestly excessive penalty on the appellant.
6. In the further amended notice of appeal the appellant sought orders that :
1. The appeal be allowed.
2. The decision of the Board made 30 January 2009 and the decision given 27 February 2009 be set aside.
3. There are no reasonable grounds under s 44(1)(3) of the Agents Licensing Act in the appellant’s conduct in arranging the payment of the extra 30% commission to himself that is sufficient to warrant the taking of disciplinary action against the appellant;
4. In the event that the appeal against the decision 30 January 2009 is not allowed, then the penalty imposed on the appellant be a reprimand or a caution.
5. The respondent pay the appellant’s costs of the appeal and of the hearings before the Board.
THE NATURE OF THE APPEAL
7. Prior to the hearing of the appeal, the Court received submissions from both the appellant and the respondent as to the nature of the present appeal. On 8 May 2009 I gave a ruling that the appeal was in the nature of a rehearing based on the evidence and material that was before the Board when it made its decision, with a discretion to receive further evidence – such discretion to be exercised according to considerations of fairness, reasonableness and justice. I indicated at the time I gave the ruling that I would publish my reasons for decision at the conclusion of the hearing. I now publish my reasons.
8. The starting point is s 85(1) of the Agents Licensing Act which creates the right of appeal against a decision of the Agents Licensing Board:
A person aggrieved by a decision of the Board may, within 21 days after the decision was given, appeal to the Local Court against the decision of the Board on one or more of the following grounds:
(a) the decision was wrong in law;
(b) the decision was against the weight of the evidence;
(c) the Board had improperly exercised its discretion or otherwise acted unlawfully;
(d) the Board had not acted in good faith; or
(e) the Board had acted contrary to the principles of natural justice.
9. Section 85 (2) of the Act obliges the Board to supply to the Local Court, for the purposes of the appeal, a copy of a record of any proceedings before the Board, a statement of the reasons for the decision appealed against and any information or thing in connection with the decision that is in the possession or control of the Board and that the Court requires.
10. In relation to the appeal the Local Court may –
(a) affirm, set aside or vary a decision of the Board;
(b) give such judgment which to the Court seems proper; and
(c) make such other order as justice requires.
11. The nature of the present appeal is to be determined by examining the relevant provisions, and hence is a matter of statutory interpretation. In that context it is necessary to take into account three matters when determining the nature and scope of a statutory appeal:
The first is the nature of the function discharged by the board, and hence the nature of the decision from which the appeal lies; the second is the form of expression used by the legislature in its description of the appeal and of the powers of the court on the appeal; and the third is the particular field of considerations and powers open to the board in the discharge by it of its function.
12. Applying the first consideration, the function of the Agents Licensing Board and its decision were not merely administrative or ministerial in character, but quasi-judicial. The Board is an entity which has powers resembling that of a court of law and which is able to impose penalties on a person. The fact that the proceedings before the Board are not of a purely administrative or ministerial character tends to militate against the present appeal being in the nature of a rehearing de novo: see Builders Licensing Board v Sperway Constructions Pty Ltd [1975] 2 NSWLR 174 at 179. However, as stated in that case, “the classification of the character of the proceedings does not inevitably and finally resolve the character of the appeal”.
13. Turning to the second consideration, the relevant provisions of the Agents Licensing Act do not employ any form of expression to describe the nature of the appeal. For example, the appeal is not classified as a rehearing or a rehearing de novo. However, the absence of any such description does not necessarily mean that the present appeal is an appeal stricto sensu.
14. The powers of the Court on appeal indicate that an appeal instituted under s85(1) of the Act goes beyond being an appeal stricto sensu. It is open to the Court to vary a decision of the Board. The existence of such a power indicates that the present appeal is not an appeal stricto sensu. Had the legislature intended the appeal to be an appeal in the strict sense then it would not given the Court the power to vary a decision of the Board.
15. As pointed out in the appellant’s written submissions, “the critical distinction, for the present purposes, between an appeal by way of re-hearing and an appeal in the strict sense is that, unless the matter is remitted for re-hearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at the first instance, whereas, on an appeal by way of re-hearing, an appellate court can substitute its own decision based on the facts and the law as they then stand”. The power given to the Local Court hearing an appeal brought under s 85(1) of the Act to vary a decision of the Board in effect empowers the Court to substitute its own decision.
16. According to s 85(5) of the Act the Court may also give such judgment which to the Court seems proper and make such other orders as justice requires. The conferral of such powers indicates that the present appeal is not an appeal in the strict sense.
17. It is noted that there is no power under s 85(5) to remit a matter for rehearing by the Board. The absence of such a power militates against the present appeal being an appeal in the strict sense.
18. With reference to the third consideration, s 44(1) of the Act provides that the Board may take disciplinary action against an agent’s representative on one or more of the grounds specified in that section. Section 44(5) makes it clear that the proceedings before the Board are in the nature of an inquiry. Section 44B provides that where, at the conclusion of an inquiry, the Board is satisfied that it is authorised to take disciplinary action against an agent’s representative, the Board may take one of the disciplinary measures provided for in that section. In my opinion, the nature and scope of the proceedings before the Board and the powers open to the Board in the discharge of its function do not point to the present appeal being in the nature of a rehearing de novo: see Turnbull v NSW Medical Board ([1976)] 2 NSWLR 281 at 286.
19. Taking into account the relevant considerations, I do not consider that the present appeal is in the nature of a rehearing de novo. It is therefore either an appeal in the strict sense or a rehearing.
20. Both the Agents Licensing Act and the Local Court Act are silent as to whether the appellate court has power to permit further evidence to be presented and considered at the hearing of the appeal. Section 85(3) of the Agents Licensing Act merely obliges the Board to provide the Court with the material specified therein. While it is implicit in that section that the Court must consider that material in discharging its appellate jurisdiction, there is nothing in either statute that precludes the Court from taking into account other material or evidence.
21. In Cryer v Agents Licensing Board (2001) NTMC 57 Mr Luppino SM stated:
The hearing before me is not a hearing de novo and was not conducted as such. In my view, the hearing is in the nature of an appeal stricto sensu. It involves a review of the material available to the Board and any fresh evidence with leave and on application. It is clear that that is how the parties have conducted the appeal before me. That is consistent also with section 85(3) of the Act which sets out the material that the Board is required to supply to the court in relation to an appeal.
22. This passage indicates that the Court does have power to receive and consider fresh evidence or material. However, with due respect the contents of the passage are somewhat contradictory. If an appellate court has a discretion to allow fresh or further evidence, then the appeal is not in the nature of an appeal stricto sensu, but an appeal in the nature of a rehearing. Such a rehearing is not a rehearing in the fullest sense – it does not “involve a completely fresh hearing by the appellate court of all the evidence”: Fox v Percy (2003) 197 ALR 201 at 207. The rehearing proceeds on the basis of the material that was before the original decision maker and any fresh or further evidence permitted to be presented at the hearing of the appeal: Fox v Percy (supra) at 207. What Mr Luppino purported to describe was an appeal by way of rehearing in the narrower sense (not a rehearing de novo) rather than an appeal strict sensu. An appeal stricto sensu is concerned solely with whether the decision under appeal was right on the material or evidence before the decision maker: Fox v Percy (supra) at 206. Such an appeal does not involve the consideration of material or evidence that was not before the decision maker.
23. In Shew v Agents Licensing Board (2003) NTMC 011 Mr Loadman SM reached the following conclusion concerning the nature of an appeal brought pursuant to s 85(1) of the Agents Licensing Act:


It was the decision of this Court to reject the contention made by the respondent that the appeal was an appeal stricto sensu. The Court decided that the appeal was to proceed by way of re-hearing. The function it was therefore to discharge in the circumstances was to correct errors of law, facts in the court below, the court will try the case again on the evidence at first instance together with any additional evidence it thinks fit to receive.
The Court decreed that the power to receive new evidence was implied, as a consequence of the fact that in law the appeal was to be decided on the basis of such additional additions or changes as were permitted together with any changes in the law.
24. Although the two decisions referred to above appear at first glance to be in conflict, both decisions recognise that on an appeal instituted pursuant to s 85(1) of the Act the Court has power to receive and to consider fresh evidence or material, which is characteristic of an appeal in the nature of a re-hearing.
25. In my opinion, an appeal instituted under s 85(1) of the Act is not an appeal stricto sensu. The appeal is in the nature of a rehearing based on the evidence and the material that was considered by the Board along with any additional evidence that the Court, in the exercise of its discretion, considers fit to receive. In my opinion the exercise of that discretion is to be governed by considerations of fairness, reasonableness and justice.
THE PROPER RESPONDENT
26. A consent order was made by the Judicial Registrar on 18 March 2009 to the effect that the Registrar of the Lands Business and Conveyancing Agents be joined as the second respondent in the present proceedings. The Court expressed some concern over the joinder of the Registrar, and invited the parties to make submissions in that regard. After hearing submissions I ruled on 8 May 2009 that the Registrar had been improperly joined, and should be removed as a party to the present appeal. I indicated that I would subsequently publish my reasons for decision. I now publish my reasons.
27. In my opinion the proper respondent to these proceedings is the Agents Licensing Board. That is by reason of s 85(3) of the Agents Licensing Act which provides that “the Board is the respondent to an appeal under this section”.
28. It is arguable that s 85(3) establishes the Board as the sole and exclusive respondent in proceedings instituted under s 85(1) of the Act. But even if it does not have that effect I can see no proper basis for making the Registrar of the Agents Licensing Board a co-respondent.
29. It is helpful to begin by looking at the role played by the Registrar in the present matter. A useful summation is to be found in the respondent’s written submissions dated 3 April 2009:
The Registrar holds his position by virtue of a statutory appointment.
In the course of its statutory role, staff from the office of the Registrar commenced an investigation into specific activities conducted by the appellant. This followed upon a complaint which had been filed with the Registrar. Following the completion of this investigation, the Registrar referred the matter to the Board. The Registrar recommended that no action be taken against the appellant. However, contrary to his recommendation, the Board exercised its discretion to conduct an enquiry as to whether or not disciplinary action should be taken against the appellant.
Even though it was the Board which made the decision to conduct an enquiry, it was actually the staff of the office of the Registrar who were involved in the preparation of the enquiry, including preparation of the documents for the enquiry, liaison and summonsing of witnesses and liaison with the Solicitor for the NT to arrange for the engagement of counsel to appear as counsel assisting the Board in the enquiry hearing.
30. Counsel for the respondent Board submitted that the Registrar had been properly joined as a co-respondent because he had conducted the investigation and “clearly had a statutory interest in the decision”.
31. I am not convinced that by reason of his involvement in the inquiry the Registrar has a sufficient interest in the decision, which is the subject of the appeal, to warrant his joinder as a respondent.
32. It was the Board which initiated the disciplinary proceedings. Indeed the Registrar recommended that no action be taken against Mr Lee. The Registrar could not be seen as proposing the action taken by the Board. Nor could he be seen as proposing the decision that the Board ultimately made.
33. It is usual to join as parties both the impugned decision maker and the decision’s proponents. It is necessary to join the latter because “the proponent’s interests are vitally affected by the outcome of any judicial review challenge”. However, as the interests of the Registrar could not be seen to be vitally affected by the outcome of the appeal he cannot be considered to be an “impugned decision proponent”.
34. Although the Registrar might have had a personal interest in the Board’s decision – bearing in that it was his recommendation that no action be taken against Mr Lee – he did not have “an interest in defending the decision or action” that would warrant his joinder as a co-respondent.
35. In my opinion, the Registrar’s involvement in preparations for the inquiry does not provide a proper basis for his joinder.
36. Finally, the fact there will be no contradictor in the event of the Board being the sole respondent to the proceedings does not support the joinder of the Registrar. A proper contradictor needs to be a proper party to proceedings. In my view the Registrar cannot properly be considered to be a party to the proceedings for the reasons given above.
THE ROLE OF THE RESPONDENT IN THESE PROCEEDINGS
37. It is generally accepted that where the decision maker is a court, tribunal or board (as is the case here) it usually enters a submitting appearance as a respondent to the proceedings. Such bodies should not take an active role (ie become a protagonist) in such appeals by attempting to defend its decision, which is under review, but should generally submit to such orders as the court might consider appropriate.
38. However, in the present case I was prepared to allow Mr Johnson, counsel instructed by the respondent, to assume a more active role in relation to the appeal than would perhaps be normally permitted in proceedings of this type. Basically, the Court was content to have Mr Johnson act as a type of amicus curiae, assisting the Court by providing information on points of law, and other aspects raised by the grounds of appeal, in an impartial and neutral manner.
39. In R v Australian Broadcasting Tribunal; ex parte Hardiman (supra) the High Court said that in some circumstances it may be appropriate for a decision maker to make submissions going to its powers and procedures. In my opinion, it was appropriate in the present case to allow the respondent that latitude.
40. Furthermore, I considered that it was appropriate in the circumstances of the present case to permit Mr Johnson to make submissions on points of law and to respond, where appropriate, to the grounds of appeal relied upon and argued by the appellant.
41. In allowing Mr Johnson to perform an amicus curiae type of role I do not believe that the impartiality of the Board was in any way compromised.
42. In allowing counsel to perform such a role I was influenced by two considerations. The first was the current trend towards the relaxation of the Hardiman principle. The second was the rationale behind the Hardiman principle. There is a direct link between the principle and the need for the administrative decision maker to maintain its impartiality. If the decision maker plays too active a role in proceedings challenging its decision – if it attempts to defend its decision on appeal or review - it runs the risk of compromising its impartiality and risks disqualifying itself from deciding the matter if it is remitted to it for a further hearing. However, no such risk arises in the present case because the Court has no power to remit the matter to the Board for a further hearing.
THE MATERIAL THAT WAS BEFORE THE BOARD AND ADDITIONAL EVIDENCE
43. All the material that was made available to the Board was provided to the Court and comprised Exhibit 2 in these proceedings.
44. Consequent upon my finding as to the nature of the appeal, counsel for the appellant sought to call Mr Peter Shew, a licensed agent and principal of Palmerston Real Estate, to give evidence as to what constitutes a sale with respect to a sales representative or an agent selling a property. Counsel indicated that the evidence was to go to the issue of Mr Lee’s belief or honest belief that he was legally entitled to arrange payment of the commission to himself, and therefore relevant to the seventh ground of appeal.
45. Although counsel for the respondent could not see how the proposed evidence would assist the court in determining the appeal, he had no objection to the additional evidence being adduced. The Court decided in all the circumstances that it was preferable to receive the additional evidence and accordingly the appellant was given leave to call Mr Shew.
46. Mr Shew’s evidence is to be found at pages 7 – 13 of the transcript of the proceedings on 29 May 2009. In essence, Mr Shew gave evidence as to the arrangements between Palmerston Real Estate and its agent’s representatives with respect to the payment of commission, and as to the manner in which it was split between the agency and the agent’s representatives. The witness also gave evidence as to what constitutes a listing and a sale. A sales agency agreement was tendered during the course of Mr Shew’s evidence and became Exhibit 1 in these proceedings.
THE FACTUAL BACKGROUND
47. The facts and circumstances giving rise to the Board’s inquiry are conveniently set out in the Board’s reasons for decision. The conflicting evidence that was presented to the Board and the Board’s analysis and evaluation of that body of evidence are also set out in those reasons for decision.
THE FIRST GROUND OF APPEAL
48. The appellant argued that the Board made an error of law in finding that, as an independent contractor vis a vis Litchfield Realty, Mr Lee would likely be subject to duties of loyalty and confidentiality. The appellant submitted that the underlying independent contractor relationship between the appellant and Litchfield Realty did not give rise to such duties.
49. It is helpful to set out the reasoning that led the Board to reach its conclusion.
50. At [19] of its reasons for decision the Board described the relationship between the vendors, Litchfield Realty and the appellant in the following terms:
There is no doubt that the relationship between the vendors and Litchfield Realty is one of principal and agent as that is the effect of the contract entered into between the two. From that contractual obligations flow and it is generally accepted that, in addition to any contractual obligations owed to the principal, a real estate agent usually owes a fiduciary duty to his principal and must act in the interests of the principal and not against them. As Cardozo J said in Meinhard v Salmon “the rule of undivided loyalty is relentless and supreme”. Similar duties are often contained in regulatory statutes such as the relevant Act here (section 65). As far as the contractual relationship is concerned, there is an obligation to follow instructions (Ireland v Livingstone ), an implied term as to competency (Varden v Parker ; Ballieu Sharp Musgrave Ltd v Cunningham McKerrell Developments P/L ) and an obligation to obtain the best price (How v Carmen ).
The duties owed by Lee to the vendor and Lichfield Realty are ones that must derive from their principal/agent relationship and the employment or service arrangement between he and Litchfield Realty. It must be noted that, as far as the Act is concerned, Lee’s entitlement to sell real estate derives from his registration as an “agent’s representative” and that defines his relationship vis a vis the principal and the agency for which he works. As far as the vendors were concerned, Lee was an employee or was otherwise in the service of Litchfield Realty…
Lee had power to bind Litchfield Realty, as the agency agreement demonstrates. The question is whether this resulted in a sub-agency or was a more simple relationship. The relationship between Lee and Litchfield is probably not an employer/employee relationship where the employee is subject to the employers control as regards what employees should do and how it should be done. It is more in the nature of an independent contractor who is retained to perform a service and may determine the method and the time for doing it. This proposition is supported by the fact that no wage is paid by Litchfield Realty to Lee and in fact the remuneration which Lee is entitled was a portion of the commission to which Litchfield Realty was entitled under the agency agreement and is more in the nature of a fee for the service performed. For instance listing a property or selling a property elicits a certain percentage of commission due to Litchfield Realty, but in either case the balance of the commission goes to the agency. There was no corresponding arrangement between the vendor and Litchfield Realty as the whole of the commission was to be paid to Litchfield Realty. Whilst Lee may be an independent contractor retained by Litchfield Realty, he also had the powers of an agent of Litchfield Realty in the sense that he was able to bind them in relation to the agency agreement between the vendors and Litchfield Realty.
It was submitted to the Board that Lee was a sub-agent to Litchfield Realty. There is no power in an agent to delegate the performance of the duties of the agency unless there is an express or implied power to do so. This is said to be founded upon the confidential nature of the contract of agency. “Whenever authority is coupled with a discretion or confidence it must, as a rule, be exercised by the agent in person”. However, an agent may arrange for the performance of purely ministerial or ancillary acts arising from the agency but this is probably not the creation of a sub-agency. This position is supported by the Act in s 112 where it is directed that a licensed agent shall not share with another person, other than a licensed agent, partner of a licensed agent or a registered agent’s representative employed by the licensed agent, any fee, commission or other gain in respect of a transaction in the agent’s capacity as agent. If Lee is to be considered as a sub agent outside his arrangement with Litchfield Realty then he would have to be a licensed agent and the evidence demonstrates that he does hold that qualification…
Even though Lee was an independent contractor, he would likely be subject to similar duties that an employee might owe to his employer. Those duties would include duties of “loyalty” and “confidentiality”. Those duties would continue as long as there was a relationship between Lee and Litchfield Realty. As the evidence demonstrates, Lee resigned from his position as agent’s representative with Litchfield Realty on 29 October 2007. At that time the offer to purchase had been accepted by the vendor but the contract was subject to formal approval of a loan within seven days of the exchange of contracts. The contract proceeded to settlement in early January 2008 indicating that finance must have been approved in accordance with the contract.
Litchfield Realty had an obligation under the terms of its contract with Lee to pay to Lee the portion of the commission payable to Litchfield Realty to which Lee was entitled. That obligation continued regardless of Lee’s resignation from the contract with Litchfield Realty. Similarly, Lee’s obligation to Litchfield Realty would continue until the settlement of the contract. In addition, the agency between Litchfield Realty and the vendors would also continue after the exchange of contracts. Absent any other direction in the contract, the agency between the vendors and Litchfield Realty would continue until payment which would occur at the time of settlement…..
Consequently the agency between the vendors and Litchfield Realty would continue until the settlement date and so would that part of the contract between Litchfield Realty and Lee that related to payment of the commission to which Lee was entitled. As the contractual relationships continue to have effect so too would the fiduciary duties that arose from those contractual relationships.
As an agent’s representative Lee would be aware of the obligations of Litchfield Realty to the vendors arising both from contract and equity. His relationship with Litchfield Realty included, impliedly, the assumption of the same duties to Litchfield Realty that mirrored the obligations that Litchfield might have had to its customers in the course of its agency with those customers. Particularly, Lee carried out his functions as an agent’s representative for and on behalf of Litchfield Realty as he is required to do pursuant to s 33 of the Act and could not do so without assuming those same obligations that Litchfield Realty owed to the vendors. It could not be the case that the licensed agent might owe fiduciary duties to the principal and the agent’s representative not also owe those duties.
51. It is well established that in the case of employer and employee there is an implied duty of fidelity and good faith, which includes confidentiality, based on contract. In Blyth Chemicals v Bushell (1933) 49 CLR 66 Dixon and McTiernan JJ explained the nature of the duty thus:
Conduct which in respect of important matters is incompatible with the fulfilment of an employee’s duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal…But the conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to future conduct arises.
52. However, are similar duties owed by an independent contractor to his or her principal?
53. In concluding that the independent contractor relationship between the appellant and Lichfield Realty gave rise to duties of loyalty and confidentiality the Board relied on Equity 8 v Shaw Stockbroking Ltd [2007] NSWSC 413 at [32]-[34]. The appellant submitted that the facts in that case are readily distinguishable from the facts in the present case; and therefore the principles enunciated in Equity 8 v Shaw Stockbroking Ltd (supra) do not apply to Mr Lee.
54. As acknowledged by counsel for the appellant, Equity 8 v Shaw Stockbroking Ltd (supra) essentially dealt with the situation of an independent contractor. In that case the Court was satisfied that “having regard to the express terms contained in the documents in evidence, the ‘Team’ individuals whose services were made available by E8 to Shaw Corporate were intended to occupy, in relation to Shaw Corporate, a position akin to that occupied by an employee in relation to his or her employer”. The Court went on to conclude that “the required standards of conduct were such that each individual was expected to act qua Shaw Corporate in the same way as an employee owing a duty of fidelity and good faith to his or her employer would act towards that employer”. The Court ultimately found that “just as such a duty is implied in an employment contract so as to be binding upon the employee (see Russell v Trustee of the Roman Catholic Church for the Archdiocese of Sydney [2007] NSWSC 104), so, in the present context, E8 was subject to an implied term which required it to see that the individuals whose services it provided to Shaw Corporate acted in the same way”.


55. Although I accept that the facts in the present case are quite dissimilar to the facts in Equity 8 (supra) the real significance of that case, for the purposes of the present appeal, is that it is authority for the proposition that there may be an implied term that an independent contractor and its employees owe a duty of fidelity to the client. Whether such a term is implied in the case of an independent contractor relationship must, of course, depend upon the particular circumstances of the relationship.
56. As acknowledged by counsel for the appellant, Mr Lee had, as an agent’s representative for and on behalf of Litchfield Realty, the capacity to bind Litchfield Realty to an agency agreement with a vendor. During oral submissions made on 29 May 2009 counsel for the appellant stressed that notwithstanding the principal/agent relationship between the appellant and Litchfield Realty the appellant was not subject to the direction and control of his principal and was “basically a free agent in relation to the manner in which he conducted himself”. It was submitted that the appellant was truly an independent contractor and the relationship between him and Litchfield Realty was definitely not that of employer and employee.
57. In order to put the relationship between the appellant and Litchfield Realty in proper perspective account must taken of the meaning of an “agents’ representative”, which is defined in s (5)(1) of the Act as “a person who, in the service of, and on behalf of, a licensed agent negotiates or holds himself or herself out as being prepared to negotiate any transaction of a description referred to in subsection 2(a) or (b).
58. “Licensed agent” is also defined in 5 (1) to mean “an agent licensed to carry on business as an agent”. “Agent” is defined in the same subsection to mean “a real estate agent, business agent or conveyancing agent”.
59. Regard must also be had to s 33 of the Act in order to put the relationship between the appellant and Litchfield Realty in proper context, as the nature of the relationship is to be derived from the contextual circumstances. It is useful to set out the provisions of that section in full:
(1) A person other than a licensed agent shall not act as, or carry out any of the functions of, an agent’s representative unless he or she is a registered agent’s representative and he or she acts or carries out those functions for and on behalf of a licensed agent.
(2) A person other than a licensed agent shall not, unless he or she is a registered agent’s representative, hold himself or herself out by any means as an agent’s representative or as being in the employment of, or as acting for and on behalf of an agent as an agent’s representative.
(3) A registered agent’s representative shall not hold himself or herself out by any means as being in the employment of, or as acting for and on behalf of an agent, unless that agent is his or her employer, principal or partner.
60. The definition of “agent’s representative” in s 5(1) of the Act together with the provisions of s 33 define the nature of the relationship between an agent’s representative and a licensed agent.
61. The definition of “agent’s representative” makes it clear that an agent’s representative is a person who acts in the service of and on behalf of a licensed agent. Section 33(1) reinforces the notion that an agent’s representative is a person who acts or carries out the functions of an agent’s representative for and on behalf of a licensed agent. Section 33(2) contemplates that an agent’s representative is a person who is either in the employment of a licensed agent or acts for and on behalf of an agent. The nature of the relationship between an agent’s representative and a licensed agent is further amplified by s 33(3). The effect of that subsection is that for an agent’s representative to be in the employment of or acting for and on behalf of an agent that agent must vis a vis the agent’s representative be one of three things: his or her employer, principal or partner.
62. It can be gleaned from the statutory definition of “agent’s representative” and the provisions of s 33 that the relationship between an agent’s representative and a licensed agent is one whereby the former is in the service of and acts on behalf of the latter. The statutory scheme contemplates that that relationship may take different forms. The relationship may be one of employer and employee or principal or agent or be based on a partnership.
63. What was the precise nature of the relationship between the appellant and Litchfield Realty?
64. Based on the evidence that was before the Board, the relationship between the appellant and Litchfield Realty does not appear to have been that of master and servant or employer or employee. The Board concluded that the appellant’s relationship with Litchfield Realty was more in the nature of an independent contractor and determined the matter before it on that basis. The appellant maintains that he was an independent contractor.
65. In my opinion the statutory scheme countenances such a relationship. But was the appellant in fact an independent contractor? If so were there any added dimensions to that relationship?
66. The relationship between the appellant and Litchfield displayed the usual indicia of the situation of an independent contractor. The contract between the parties was a contract for the provision of services rather than a contract of service. The appellant was not subject to the control and direction of Litchfield Realty as regards the manner in which his services were to be performed. Furthermore the appellant was not paid a salary, but was to receive commission in return for services rendered. I therefore find that the Board reached the right decision in characterising Mr Lee as an independent contractor vis a vis Litchfield Realty.
67. However to describe the appellant merely as an independent contractor does not accurately reflect some additional and important characteristics of the relationship between Mr Lee and Litchfield Realty.
68. The Board briefly touched upon those characteristics in its reasons for decision. At [21] of its reasons for decision the Board observed that the appellant had the power to bind Litchfield Realty, as evidenced by the agency agreement. The Board also observed that the appellant had the powers of “an agent in the sense that he was able to bind them in relation to the agency agreement between the vendors and Litchfield Realty”. The Board was, in effect, saying that the relationship between the appellant - as an independent contractor – and Litchfield Realty was that of principal and agent.
69. With respect that reflects the true nature of the relationship between Mr Lee and Litchfield Realty. As an agent’s representative the appellant possessed the powers of a paradigm agent which enabled him to change the legal position of Litchfield Realty. There is nothing unusual about such a relationship, for many agents can be considered to be independent contractors, and vice versa. Contractors can be placed in positions of trust, such that they owe duties of loyalty and confidentiality comparable to those owed by an employee to an employer. As noted by Stewart “when faced by ‘disloyal’ conduct by contractors who have abused a trusted position, courts have been just as willing as with employees to identify conduct as breaching implied obligations”: Broadwater Taxation and Investment Services Pty Ltd v Hendriks (1993) 51 IR 221; Fortuity Pty Ltd v Barcza (1995) 32 IPR 517; Ashcoast Pty Ltd v Whillans [2000] 2 Qd R 1.
70. In my opinion, the power conferred upon the appellant to bind Litchfield Realty created a fiduciary relationship between the two and imposed on the appellant duties of a fiduciary nature towards Litchfield Realty, as is the case in any principal and agent relationship.
71. With respect, the Board’s finding that although the appellant was an independent contractor “he would likely be subject to similar duties that an employee might owe to his employer, including the duties of “loyalty” and “confidentiality” did not fully identify the basis for the duty owed by the appellant to Litchfield Realty. The existence of a principal and agent relationship between Mr Lee and Litchfield Realty formed the basis for imposing those duties on the appellant, which he owed to Litchfield Realty.
72. It is worth adding that if the relationship between the appellant and Litchfield Realty could be characterised as an employer/employee relationship, such a relationship would have placed Mr Lee in a position of trust by conferring upon him wide agency powers. Employees often have wide agency powers as in the case of a senior employee such as a manager, with the result that the employee owes a fiduciary duty to the employer. As an employee of Litchfield Realty, the appellant would have owed a fiduciary duty to his employer.
73. Whether Mr Lee was an independent contractor with agency powers or an employee with such powers, clearly he was obliged to act in the interests of Litchfield Realty and not to promote his personal interests when there was a real possibility of conflict between the two. The relationship between the
appellant and Litchfield Realty was therefore a fiduciary relationship. As stated by Creighton and Stewart “the archetypal fiduciary is a person who is under a strict duty not only to put another’s interests ahead of their own, but to avoid situations in which there is a possibility of conflict”.
74. In present case there was a possibility of conflict, which on the evidence before both the Board and the Court became an actuality.
75. The conclusion I have reached accords with the following commentary which appears in Stewart’s Guide to Employment Law:
It is less common to find the distinction between employees and contractors being drawn for the purpose of other common law rules or principles.
For instance, while there are many terms that are implied by law into employment contracts, the courts will frequently imply similar terms into contracts for service. Hence, contractors have been found to be subject to duties of “loyalty” and “confidentiality’ that essentially mirror the obligations of employees: Fortuity v Barcza (1995); Equity 8 v Shaw Stockbroking (2007).
76. I have carefully considered the very comprehensive submissions made at [5.1] – [5.9] of the appellant’s written submissions dated 29 May 2009. There is nothing in those submissions that persuades me that the relationship between the appellant and Litchfield was not one of principal and agent, and therefore not a fiduciary relationship. A principal and agent relationship can be created without the existence of a contract if it is clear that the parties intended to act as principal and agent. The intent of the parties can be expressed by their words or implied by their conduct. In my opinion such an intent was evinced in the present case.
77. As stated by Bowstead and Reynolds:
Agency need not be contractual; and although there is much overlap with common law duties the notion of fiduciary obligation stems from equity and is independent of contract. It is submitted that the law’s control over the agent’s exercise of his powers of intervention is not to be derived from contract terms alone. As was said in a subsequent case: “The essence of a fiduciary obligation is that it creates obligations of a different character from those deriving from the contract itself”.
78. Furthermore, the fact that Mr Lee’s entitlement to sell real estate was derived from his registration as an “agent’s representative” defined his relationship with Litchfield Realty and created a principal and agent relationship between the two in Mr Lee’s capacity as either an independent contractor or employee of Litchfield Realty.
79. As stressed by Mason J in Hospital Products Limited and United States Surgical Corporation and Ors [1984] 156 CLR 41 at 96-97
The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions “for” and “on behalf of” and “in the interests of” signify that the fiduciary acts in a “representative” character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal.
80. It is highly relevant that s 33 of the Agents Licensing Act, which, in effect, establishes a statutory relationship between an “agent’s representative” and a “licensed agent” speaks of an “agent’s representative” acting or carrying out functions for and on behalf of a “licensed agent”. The section clearly indicates that an agent’s representative acts in a representative capacity. The relationship between an “agent’s representative” and a “licensed agent”, which has a statutory basis, creates fiduciary obligations of the type referred to by Mason J in Hospital Products Limited and United States Surgical Corporation and Ors (supra).
81. Finally, it was argued before the Board that Mr Lee was a sub agent to Litchfield Realty, and therefore presumably was not in a fiduciary relationship with Litchfield Realty. That point was not argued or forcefully argued on appeal. In my opinion, for the reasons set out in its decision, the Board rightly concluded that the appellant was not a sub agent.
82. In my opinion the first ground of appeal must fail. Accordingly, the ground is dismissed.
THE SECOND GROUND OF APPEAL
83. The appellant submitted that even if duties of loyalty and confidentiality were with respect to the relationship between the appellant and Lichfield Realty implied or imposed as a matter of law, those duties ceased when the relationship ended on 7 November 2007.
84. Counsel for the appellant submitted that if there was a duty of loyalty owed by Mr Lee to Litchfield Realty, that duty “only lasted as long as the relationship which gave rise to them lasted”. In advancing that argument counsel relied upon Attorney-General v Blake [1998] Ch 439 at 453 – 454.
85. Although where a fiduciary’s duty of loyalty arises out of the employment relationship it will end with the employment, the duty extends to transactions current at the time of leaving employment. To the extent that Mr Lee might be considered to have been an employee he would clearly continue to owe that duty vis a vis Litchfield Realty.
86. However, as the court has characterised the appellant’s relationship with Litchfield Realty as that of an independent contractor with wide agency powers, it is necessary to consider whether the fiduciary obligations owed by Mr Lee to Litchfield Realty as a consequence of the principal and agent relationship between the parties ceased on 7 November 2009.
87. My research has failed to discover any authority that deals directly with the situation where an “agent’s representative” resigns from the service of a “licensed agent” and whether fiduciary obligations survive the termination of such a relationship. However, Bowstead and Reynolds deal with a number of circumstances under which an agent may continue to owe fiduciary duties to his or her principal after the termination of a principal and agent relationship. It is made clear by the authors that whether or not an agent continues to be subject to fiduciary duties after he or she ceases to be an agent depends upon the circumstances of the case.
88. It bears noting that Attorney–General v Blake (supra) is only authority for the proposition that, as a general rule, fiduciary duties cease upon the termination of a fiduciary relationship. It is clear that a fiduciary relationship and its attendant duties may continue despite the termination of the relationship that gave rise to the fiduciary duties.
89. Notwithstanding Mr Lee’s resignation from the service of Litchfield Realty – thereby bringing an end to the agency relationship – in my opinion, Mr Lee continued to owe a duty of loyalty to Litchfield Realty with respect to the subsisting transaction involving the sale of 85 Dichondra Road Howard Springs, around which the present appeal revolves. The circumstances of the present case bear a degree of similarity to the cases referred to by Bowstead & Reynolds.
90. The following circumstances support the continuance of a fiduciary relationship between the appellant and Litchfield Realty:
• As at 7 November 2007 and thereafter the appellant considered that he still had an interest in the transaction and had an expectation that he would receive commission for his involvement in the transaction prior to 7 November 2007;
• The agency between the vendors and Litchfield Realty, which had come into existence as a result of the appellant’s conduct, continued following Mr Lee’s resignation and continued up until the date of settlement of the sale of the vendor’s property;
• Commission was payable on completion of the sale and that was the apparent understanding of both the appellant and Litchfield Realty;
• Prior to settlement the appellant, in his capacity as solicitor and conveyancer for the vendors, directed payment to himself, as a former agent’s representative of Litchfield Realty, of that part of the commission to which he considered himself to be entitled;
• The only rational inference that can be drawn from the circumstances is that the said direction was on instructions from Mr Lee, in his capacity as former agent’s representative of Litchfield Realty;
• The appellant directed payment of the commission to himself in circumstances where his entitlement to 50% of the commission was not conceded by Mr Jones and remained a live issue;
• At the time the appellant directed payment of the commission to himself he had the power, by reason of his role as the vendor’s solicitor and conveyancer, to control the disbursement of the purchase monies on settlement, and thereby enjoyed a personal ascendancy over Litchfield Realty.
91. As an independent contractor, in a principal and agent relationship with Litchfield Realty, the appellant owed a duty of loyalty to the latter such as to not put his own interest before that of Litchfield Realty. That duty survived Mr Lee’s resignation from Litchfield Realty due to his continuing involvement in an ongoing transaction, which was the subject of the original fiduciary relationship.
92. In my opinion to find otherwise defies both logic and common sense. If a person in Mr Lee’s position and circumstances were found not to owe a continuing fiduciary obligation to his or her former principal, then that would undermine the integrity of the notion of a fiduciary duty. A person in the appellant’s situation could simply circumvent his or her fiduciary duty by voluntarily resigning from the service of their principal and then, free of any fiduciary constraints, pursue their own personal interests with respect to a transaction to which a fiduciary duty hitherto attached. Under those circumstances the original fiduciary obligation would be rendered nugatory. In my opinion, equity intervenes to avoid that occurring; and it does that by continuing to impose on the agent the same fiduciary duty he or she owed to the principal prior to their resignation.
93. In my opinion the second ground of appeal cannot succeed. Accordingly, the ground is dismissed.
THE THIRD, FOURTH AND FIFTH GROUNDS OF APPEAL
94. These grounds of appeal have been addressed during the course of dealing with the first two grounds of appeal. For the reasons given earlier these further three grounds of appeal must fail and are dismissed.
THE SIXTH GROUND OF APPEAL
95. The appellant asserts that the Board erred as a matter of law in finding that the appellant owed a fiduciary duty to the vendors, without identifying that duty and stating at what time it was owed. The appellant says that in any event any duty owed by the appellant to the vendors was determined upon his resignation from Litchfield Realty.


not considering the law as to the termination of fiduciary duties on the termination of the underlying relationship; and
making illogical findings as to the appellant owing a fiduciary duty of loyalty to the vendor and Litchfield Realty; and
making a finding of dishonesty in the absence of any such allegation as to same and against the legal principles for making such a finding.
All the above circumstances can only lead to the conclusion that the Board was determined to make a finding against the appellant despite the facts and the law. And on this ground alone the appeal ought to be upheld and the orders made as per the appellant’s Outline of Submissions dated 29 May 2009.
179. For the reasons that appear above I reject this submission.
180. The ninth ground of appeal should therefore be dismissed.
THE TENTH GROUND OF APPEAL
181. The allegation that the Board reached its decision against the weight of the evidence in finding that the appellant’s conduct was dishonest to the extent that he did not act in good faith and that he could not have held an honest belief that he was entitled to the commission has already been dealt with the context of the seventh ground of appeal.
182. This ground of appeal should be dismissed
THE ELEVENTH GROUND OF APPEAL
183. In its reasons for decision on penalty given on 27 February 2009 the Board stated that the evidence Mr Lee gave demonstrated his lack of understanding of the responsibilities of his roles as sales representative to the vendor and as an agent retained by Litchfield Realty.
184. The appellant alleged that that finding was against the weight of the evidence. In my opinion that finding was clearly open to the Board on the evidence before it.
185. Accordingly, the eleventh ground of appeal should be dismissed.
THE TWELFTH GROUND OF APPEAL
186. This ground of appeal, which asserted that the Board acted ultra vires by imposing more than one penalty on the appellant, was conceded on behalf of the respondent.
187. Section 44B (1), which deals with the powers of the Board after an inquiry, provides as follows:
Where, at the conclusion of an inquiry under section 44(5), the Board is satisfied that it is authorised to take disciplinary action against an agent’s representative, the Board may:
(a) reprimand or caution the agent’s representative;
(b) by notice in writing, impose a fine not exceeding 5 penalty units on the agent’s representative;
(c) by notice in writing, suspend the registration of the agent’s representative until the expiration of the period, or the fulfilment of a condition, specified in the notice;
(d) by notice in writing, cancel the registration of the agent’s representative and, if the Board thinks fit, specify a period that is to expire or impose a condition that is to be fulfilled before he or she may apply for registration as an agent’s representative again.
188. It is clear that paragraphs (a), (b), (c) and (d) are disjunctive as demonstrated by the presence of the word “or” between paragraphs (c) and (d). It is clear that the Board has power only to impose one of the penalties referred to in s44B(1). By imposing two penalties the Board failed to comply with the provisions of the section and therefore acted ultra vires.
189. This ground of appeal is allowed.
THE THIRTEENTH AND FOURTEENTH GROUNDS OF APPEAL
190. It is not necessary to deal with these two further grounds of appeal as the preceding ground of appeal disposes of the appeal with respect to penalty.
CONCLUSION
191. The appeal against the Board’s decision given on 30 January 2009 is dismissed and the Board’s decision is affirmed.
192. The appellant’s conduct in arranging for the 30% sales commission to be paid from the proceeds of sale to himself was wrongful because he could not have reasonably believed that he was entitled to the commission, and in any event the full commission was payable to his principal, Litchfield Realty, under the terms of the sales agency agreement. The appellant had no legal entitlement to arrange the payment of the commission to himself and take that commission.
193. The appellant owed a duty of loyalty to both the vendor and Litchfield Realty not to prefer his own interests above their interests. The appellant’s conduct in arranging for the 30% sales commission to be paid to himself from the proceeds of sale placed his own interests ahead of those of the vendor and Litchfield Realty. By reason of his conduct the appellant not only put his own interests, in relation to commission on the sale, ahead of those of Litchfield Realty, but left the vendor open to claims and litigation by Litchfield Realty as regards the payment of commission.
194. Although Mr Lee, in his capacity as solicitor/conveyancer, directed the disbursement of the purchase monies on settlement, he directed payment of the commission to himself, as agent’s representative. The overwhelming inference is that Mr Lee, as agent’s representative, instructed himself as solicitor/conveyancer to deal with the commission. As found by the Board, as a result of Mr Lee’s instructions as agent’s representative to himself as solicitor/conveyancer the commission was arranged to be paid to himself as agent’s representative. It is an unassailable conclusion that Mr Lee as agent’s representative arranged for the 30% sales commission to be paid to himself for services performed as an agent’s representative.
195. The Board correctly concluded that the appellant’s conduct fell within the purview of s 44(1) (3) of the Agents Licensing Act, namely that the conduct amounted to a reasonable ground which is sufficient to warrant the taking of disciplinary action. As found by the Board, Mr Lee’s conduct demonstrated a lack of understanding of the responsibilities of his roles as agent’s representative to the vendor and as an agent retained by Litchfield Realty. By placing his own interests ahead of those of the vendor and Litchfield Realty he breached a duty of loyalty.
196. The appeal against penalty is allowed for the reasons given above. I will hear submissions as to penalty in due course.

Dated this 9th day of September 2009

_________________________
Dr John Allan Lowndes
STIPENDIARY MAGISTRATE

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