MANTOVA HOLDINGS PTY LTD and COMMISSIONER FOR CONSUMER PROTECTION - [2013] WASAT 47

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: VOCATIONAL REGULATION

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

CITATION: MANTOVA HOLDINGS PTY LTD and COMMISSIONER FOR CONSUMER PROTECTION [2013] WASAT 47

MEMBER: JUSTICE J A CHANEY (PRESIDENT)
MR M ANDERSON (SENIOR SESSIONAL MEMBER)
MR B POUND (SESSIONAL MEMBER)

HEARD: 28 MARCH 2013

DELIVERED : 10 APRIL 2013

FILE NO/S: VR 170 of 2012

BETWEEN: MANTOVA HOLDINGS PTY LTD
Applicant
AND
COMMISSIONER FOR CONSUMER PROTECTION
Respondent

Catchwords:

Real Estate Agents - Fidelity account - Misleading and deceptive conduct - Whether conduct of agent - Loss not misuse or misappropriation of funds - Whether defalcation

Words and phrases - Defalcation

Legislation:

Fair Trading Act 1987 (WA)
Real Estate and Business Agents Act 1978 (WA), s 4, s 4(1), s 34, s 68, s 68(1), s 84, s 116, s 116(1), s 142, Pt IV
Securities Industry Act 1975 (Cth), s 97
Trade Practices Act 1974 (Cth), s 52

Result:

Decision to disallow claim affirmed

Summary of Tribunal's decision:

The applicant sought a review of a decision of the Commisioner for Consumer Protection to disallow a claim against the Real Estate and Business Agents Fidelity Account. The applicant alleged that a real estate agent, Landsmart Pty Ltd, had engaged in misleading and deceptive, or alternatively unfair or dishonest conduct which had caused loss to another agent by depriving the other agent of its proper commission. The conduct was said to amount to a breach of the Code of Conduct for Agents and Sales Representatives 1993, and was thus a breach of the Real Estate and Business Agents Act 1978 (WA) and therefore criminal conduct amounting to a defalcation.
The Tribunal concluded that the definition of defalcation did not include criminal conduct not associated with some misuse or misapplication of funds entrusted to an agent. Accordingly, it concluded that the decision to disallow the claim could be affirmed on that basis. In addition, the Tribunal concluded that, in any event, the materials provided did not support a conclusion that Landsmart Pty Ltd had engaged in conduct in breach of the Code of Conduct. It also concluded that the conduct said to have constituted a defalcation had not occurred in the course of Landsmart Pty Ltd's business as a real estate agent, and fell outside the definition of defalcation for that reason as well.

Category: A

Representation:

Counsel:

Applicant: Mr AR Rumsley
Respondent: Mr MGS Crowley

Solicitors:

Applicant: Alan Rumsley Commercial Disputes Lawyer
Respondent: Department of Consumer and Employment Protection

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

Cotsvend Pty Ltd v Real Estate and Business Agents Supervisory Board (2002) 29 SR (WA) 322
Daly v Sydney Stock Exchange (1982) NSWLR 421
Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Hajac Nominees Pty Ltd v Real Estate & Business Agents Supervisory Board (1999) 22 SR (WA) 267
Mantova Holdings Pty Ltd v Caruso [2010] FMCA 682
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357
Ngoc Anh Phuong Chau v Real Estate & Business Agents' Supervisory Board of Western Australia [2004] WADC 7

REASONS FOR DECISION OF THE TRIBUNAL:

The applicant, Mantova Holdings Pty Ltd (Mantova) seeks a review of a decision of the Commissioner for Consumer Affairs to reject Mantova's claim against the Real Estate and Business Agents Fidelity Account (Fidelity Account) for payment of $100,000. Mantova's claim is based on an assertion that a licensed real estate agent, Landsmart Pty Ltd (Landsmart) trading as Raine & Horne Southern River committed a defalcation for the purposes of s 116 of the Real Estate and Business Agents Act 1978 (WA) (REBA Act) by reason of which Mantova suffered a loss. Section 116(1) of the REBA Act provides:
Subject to this Act, the Fidelity Account shall be held and applied for the purpose of reimbursing persons who may suffer pecuniary loss or loss of property by reason of any defalcation by a licensee during any period when he was the holder of a current triennial certificate, but reimbursing only to the extent of the defalcation of the licensee.
For reasons appearing below, we have concluded that Mantova is not entitled to reimbursement from the Fidelity Account. To understand those reasons, it is necessary first to set out the factual background.

Factual background

There was no dispute between the parties as to the relevant facts for the purpose of these proceedings, and the case was argued on the basis of a statement of agreed facts and various documents which the applicant provided to the respondent for the purposes of assessing the claim. Those documents comprise mostly documents filed in an action in the Federal Magistrates Court including the judgment in that matter which was reported as Mantova Holdings Pty Ltd v Caruso [2010] FMCA 682 (FMC judgment). The findings in that judgment are, at least in part, the basis upon which Mantova claims an entitlement to payment from the Fidelity Account.
Landsmart was, at the relevant time, a licensee for the purpose of the REBA Act, and was the holder of a triennial certificate for the purposes of that Act between July 2006 and March 2008.
Mr Robert Caruso was a director of Landsmart between 18 February 2005 and 9 April 2010. The other director of the company was Mr Lindsay Ward who held office between 7 May 2007 and 21 May 2009. At the relevant time, Mr Ward was the licensed person in bona fide control of Landsmart for the purposes of the REBA Act.
Mr Caruso was a sales representative registered under the REBA Act. He was also the trustee for the Caruso Family Trust at the relevant times.
On 25 January 2007, Mr Caruso, in his capacity as trustee for the Caruso Family Trust, entered into a contract of sale to purchase a property known as Lot 797 Worrell Avenue, High Wycombe from a company called SAS Global High Wycombe Pty Ltd.
In February 2007, Mr Caruso sent details of the property to other Raine & Horne franchisees enquiring whether any of them might have a buyer for the property. In the FMC judgment, the learned magistrate observed at [16]:
… What Mr Caruso says was sought was a further sale of the Property to settle at the same time as Mr Caruso’s purchase of the Property from SAS Global, which he says was due to settle on 12 March 2008.^. Mr Caruso says the sale of the Property was necessary because of a taxation liability to the Australian Taxation Office said to have been incurred by him at or about the same time as the Property was sold to him.
As a result of circulation of the details of the property, a principal of Mantova, Mr Vincenzo Gaetano Pileggi made contact with Mr Caruso, and on 18 May 2007, Mr Caruso as trustee of the Caruso Family Trust, signed a selling agency agreement appointing Mantova Pty Ltd, which operated a real estate business under the name Raine & Horne Midland, to sell the property (May agreement).
The listing price under the May agreement was $1,450,000, and a commission was agreed in the sum of $100,000. The exclusive listing period under the May agreement was from 18 May 2007 until the property was sold.
The FMC judgment reveals that between May 2007 and November 2007, Mr Pileggi presented various offers for purchase of the property to Mr Caruso. One such offer was accepted, but was subject to finance conditions which were ultimately not met. During the same period, Mr Caruso was in contact with another agent, Clark & O'Neil Property Group Pty Ltd (Clark & O'Neil), who expressed interest on behalf of a client in the purchase of the property.
Eventually, on 20 November 2007, Mr Caruso signed a sale of land contract accepting an offer from WA Land Holdings Pty Ltd as trustee for the WA Land Unit Trust to purchase the property for a price of $1,400,000 plus GST (the contract). The offer the subject of the contract was presented by Clark & O'Neil and Mr Pileggi had no involvement in that transaction.
It is apparent that Mr Caruso agreed to, and ultimately did, pay a fee of $46,200 to Clark & O'Neil for its introduction of the purchaser to Mr Caruso.
The day after the contract was signed, Mr Caruso signed a selling agency agreement, (November Agreement) whereby the Caruso Family Trust appointed Raine & Horne Southern River (and in effect therefore Landsmart) as exclusive agent to sell the property. Mr Caruso signed that document on behalf of both the seller and the agent, being as he was, the trustee of the Caruso Family Trust, and a director of Landsmart or possibly as a real estate sales representative employed by Landsmart. The November agreement provided for commission to be paid to Raine & Horne Southern River in 'any amount over $1 million achieved as the sale price'.
What can be noted is, of course, that by the time the November agreement was signed, the property had already been sold and there was nothing for Landsmart to do to achieve that sale or to act in any way in relation to its completion. It is an agreed fact that the November agreement was entered into by Landsmart with the intention of providing a $400,000 commission for Landsmart to discharge taxation liability which it had.
On 14 March 2008, the sale and purchase of the property under the contract settled. At settlement, commission was paid to Clark & O'Neil in the sum of $46,200, and to Landsmart in the amount of $400,000. No amount was paid to Mantova, at settlement or otherwise.
On 14 October 2008, Mantova commenced proceedings against Mr Caruso in the Federal Magistrates Court and the FMC judgment was delivered on 3 September 2010. Apparently, efforts to enforce the judgment have proved fruitless. Mantova subsequently submitted notice of a claim pursuant to s 116 of the REBA Act on 17 March 2011, and that claim was rejected on 21 September 2011.

The alleged defalcation

Reimbursement from the Fidelity Account is available to persons who suffer pecuniary loss or loss of property by reason of any defalcation by licensee s 116(1) of the REBA Act. It follows that the starting point in assessing a claim is to identify the conduct which is said to constitute a 'defalcation by a licensee'. The relevant licensee for present purposes is Landsmart.
Defalcation by a licensee is defined by s 4(1) of the REBA Act as follows:
defalcation by a licensee includes criminal or fraudulent conduct
(a)of a licensee; or
(b)of any one or more of the servants or agents of the licensee; or
(c)of a person who is a partner in the business of the licensee; or
(d)where the licensee is a firm and a body corporate is a partner in the firm or where the licensee is a body corporate, of any one or more of the directors, officers, servants, or agents of the body corporate,
in the course of the business of the licensee and from which arises pecuniary loss or loss of property to any other person;
In its statement of issues facts and contentions (applicant's SIFC), the applicant identified three acts of Landsmart which it said amounted to breaches the Code of Conduct for Agents and Sales Representatives 1993 (Code of Conduct) and which it asserted amounted to defalcation. Those contentions are found at para 27 33 of the applicant's SIFC, and read as follows:
27.Landmart, by the conduct of its director, Mr Caruso, induced the Caruso Family Trust to enter into an agency contract that made the Caruso Family Trust liable to pay commission to more than one agent.
28.Landsmart's conduct was in breach of clause 3(2) of the Code of Conduct.
29.Landsmart, by the conduct of its director, Mr Caruso failed to act fairly and honestly by entering into the November Agreement, in circumstances where the Property was already subject to the Contract and where commission was payable to two agents being Mantova and Clark & O'Neil Property Group Pty Ltd.
30.Landsmart's conduct was in breach of clause 5(1) of the Code of Conduct.
31.Landsmart, by the conduct of its director, Mr Caruso knowingly engaged in conduct that was misleading or deceptive in entering into the November Agreement, in circumstances where it was aware of the May Agreement, the obligation to pay commission under the May Agreement and the Contact.
32.Landsmart's conduct was in breach of clause 5(2) of the Code of Conduct.
33.Section 34 of the Act mandates Landsmart to comply with the provisions of the Act and the Code of Conduct.
At the hearing, the applicant's counsel abandoned reliance on the contentions found at para 27 and para 28 of the applicant's SIFC. In oral submissions, however, the alleged defalcation was put somewhat differently. The defalcation was said to arise from Landsmart acting in a misleading and deceptive way by entering into the November Agreement in circumstances where it made no disclosure to any party of the entitlement of Mantova to commission where it was, through its director, Mr Caruso, aware of that entitlement. It was submitted that failing to disclose the entitlement to the settlement agent caused the settlement agent not to pay Mantova the $100,000 commission to which it was entitled.
In essence, as we apprehend the applicant's argument, its case in relation to the oral formulation of the alleged defalcation is that:
(i)Landsmart acted in a misleading and deceptive way by its silence in failing to disclose the existence of Mantova's entitlement to commission;
(ii)that conduct amounted to a breach of either or both of cl 5(1) (agent must act fairly and honestly) and cl 5(2) of the Code of Conduct (agent must not knowingly mislead or deceive any parties in negotiations or a transaction);
(iii)those breaches were in turn breaches of s 34 of the REBA Act which requires a licensee to comply with the REBA Act and the Code of Conduct;
(iv)Section 142 of the REBA Act creates an offence of contravening or failing to comply with any provision of the REBA Act, and thus the breaches of the Code of Conduct (and in turn s 34 of the REBA Act) amount to criminal conduct; and
(v)the definition of defalcation includes 'any criminal conduct … in the course of the business of [Landsmart] from which' the applicant suffered loss.
There is no evidence before the Tribunal of any thing done by Landsmart other than execution of the November Agreement and, at least by inference, its receipt of $400,000 in the guise of commission payable under the November Agreement. There is no evidence of any thing else said to have been done by or on behalf of Landsmart.
The applicant's case turns on a proposition that any 'criminal or fraudulent conduct' by a licensee, through any of the persons mentioned in the definition of defalcation, which is done in the course of its business and which is a cause of a pecuniary loss or loss of property to any other person is a defalcation for the purposes of s 116 of the REBA Act. Critically, the applicant submits that it is not necessary that the conduct involves some form of misuse of money or property entrusted to an agent. In effect, the applicant contends that the Fidelity Account operates as an indemnifier of last resort in relation to any loss suffered by any person as a result of any criminal or fraudulent conduct (which includes any breach of the REBA Act or the Code of Conduct which might result from any misleading or deceptive conduct) provided the conduct occurs in the course of business of the agent. That is a submission which we do not accept.
The meaning of the word 'defalcation' was discussed by Gibbs CJ in Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at [380] in the context of whether there was a requirement for dishonesty in order to establish defalcation for the purposes of s 97 of Securities Industry Act 1975 (Cth). In that context, his Honour said:
According to the Oxford English Dictionary, the relevant meaning of 'defalcation' is 'a monetary deficiency through breach of trust by one who has the management or charge of funds; a fraudulent deficiency in money matters'. The Macquarie Dictionary defines the word as 'misappropriation of money, etc., held by a trustee or other fiduciary'. The etymology of the word supports the view that a wrongful diminution or reduction of the amount of the moneys held in trust or in a fiduciary capacity can properly be called a defalcation even if the deficiency was not due to dishonesty. In the United States the word has been held capable of including any failure by a person acting in a fiduciary capacity to account for trust funds: see In re Herbst (42); First Citizens' Bank & Trust Co. v. Parker (43),and see the other cases cited in s. 26A Corpus Juris Secundum, at p. 125. Those cases of course depended on the statutory context in which the word 'defalcation' appeared. The provisions of the Securities Industry Acts which deal with fidelity funds appear to have been intended to afford a relief which the law did not provide and should be given a liberal construction. It would seem consonant with the object of those provisions that a person who had suffered loss as a result of a failure to account for funds entrusted to a firm as trustee should be able to recover from the fund even if the failure was due, e.g., to negligence rather than dishonesty.
That passage, and the ordinary meaning of the word 'defalcation', are essentially concerned with some misapplication or misuse of money or property entrusted to a person. In our view, the reference, in the definition of defalcation, to the inclusion of 'criminal or fraudulent conduct' by certain persons in the course of the business of the licensee does not extend the meaning to conduct which might be criminal or fraudulent but does not relate to money or property misapplied or misused by the licensee.
Counsel for the applicant sought to support his broad construction of the definition of defalcation by a licensee by reference to two decisions.
The first was Hajac Nominees Pty Ltd v Real Estate & Business Agents Supervisory Board (1999) 22 SR (WA) 267 (Hajac), a decision of the District Court. In that case, money had been paid to a sales representative who had failed to comply with the requirements of s 68(1) of the REBA Act to pay, as soon as practicable, all monies received by the agent for or on behalf of any person in respect of a transaction into a trust account. The money was lost by the sales representative. The Court found that the failure to comply with the requirement to pay monies into trust was, by virtue of the provisions of s 84 of the REBA Act, criminal conduct which amounted to a defalcation. Section 84 of the REBA Act makes it an offence for a person to contravene or not observe any of the provisions of Part VI of the REBA Act, which includes s 68.
In reaching that conclusion, the Court specifically referred to the discussion of the term 'defalcation' by Samuels JA in the New South Wales Court of Appeal decision in Daly v Sydney Stock Exchange (1982) NSWLR 421 at [428] where it was said:
The Oxford English Dictionary defines 'defalcation' as 'a fraudulent deficiency in money matters', and Webster as 'misappropriation of money: embezzlement'. Apart from these definitions I consider, alike with Powell J, that the ordinary meaning of the word essentially involves the presence of fraudulent or dishonest dealing.
Although the requirement for fraud or dishonesty was rejected by Gibbs CJ in the appeal from that decision, in the passage set out above, it is clear that the District Court in Hajac dealt with the question in the context of a misappropriation of funds. There is no basis to read Hajac as suggesting that criminal conduct not involving a misapplication or misuse of funds (or other property) amounts to defalcation for the purposes of the REBA Act.
The second case relied upon by the applicant was Cotsvend Pty Ltd v Real Estate and Business Agents Supervisory Board (2002) 29 SR (WA) 322 (Cotsvend) which involved payment out of a trust account of funds by way of loan accompanied by a failure to register a mortgage to secure that loan. The payment out without registration of a mortgage was contrary to the direction of the lender which provided the basis upon which the funds were held in trust. Williams DCJ concluded that:
… It is quite clear that the appellant provided the $280,000 on condition that [the borrower] provided a first mortgage over the land. In my view, this is no different from any investor paying money into an agent's trust account on the basis that it is to be lent out on security of a first mortgage. The funds could not be paid out of the trust account on any other basis.

His Honour found that payment to be a breach of the requirements of s 68 of the REBA Act, and the payment of the money without registration of the mortgage was a defalcation. Cotsvend clearly involved the question of misapplication of funds held on trust. It is of no moment that the funds were paid out to the person who was ultimately to receive them, a fact relied upon by the applicant's counsel. The payment was nonetheless a breach of trust. There is no basis to construe the case as extending the ordinary meaning of defalcation to conduct which does not involve funds or property entrusted to a licensee.
The respondent, quite fairly, drew the Tribunal's attention to an unreported decision of Blaxell DCJ, as he then was, in Ngoc Anh Phuong Chau v Real Estate & Business Agents' Supervisory Board of Western Australia [2004] WADC 7 (Chau), which involved an appeal against a rejection of a claim against the Fidelity Account on the basis of alleged misleading and deceptive conduct by an agent in the course of negotiations for a lease. His Honour's reasons proceed on the apparent acceptance of a proposition that, to the extent that that conduct constituted an offence against the Fair Trading Act 1987 (WA), it was capable of amounting to a defalcation for the purposes of s 116 of the REBA Act. The case was decided, however, on the basis that, of the two misleading acts said to have occurred, the first was innocent and thus not an offence against the Fair Trading Act 1987, and the second was not causative of any loss. It does not appear from the reasons that any argument was presented that the expression 'defalcation' necessarily connotes some misapplication or misuse of funds or property. Because the assumption upon which the case apparently proceeded did not, in the end result, provide the basis upon which the decision turns, we are not inclined to treat that assumption as authority for the proposition advanced by the applicant, and we note that the applicant placed no reliance on Chau in either written or oral submissions.
We would add for completeness that we do not consider that the agreed facts and other materials before us, support findings that Landsmart breached either of cl 5(1) or cl 5(2) of the Code of Conduct.
Each of the formulations of what was said to be Landsmart's breach of the Code of Conduct focuses upon the entry into the November Agreement in the circumstances variously described in para 29 and para 31 of the applicant's SIFC, and in oral submissions. Support for the proposition that the entry into the agreement brought about a loss to Mantova was, the applicant argued, to be found in a passage at [190] of the FMC judgment, the relevant part of which reads:
… In any event, given that Mantova Holdings had exclusive rights to sell the Property (no steps having been taken to terminate the Selling Agency Agreement by Mr Caruso) there was nothing to prevent Mantova Holdings being designated as the selling agent by Mr Caruso for the sale to WA Land Holdings, and that is what ought to have occurred if effect was to be given to the provisions of the Selling Agency Agreement. That would not have precluded payment of a buyer’s introduction fee, or other commission, to the Clark & O’Neil Property Group for the introduction of WA Land Holdings as a buyer. The payment of the seller’s fee has been denied to Mantova Holdings by Mr Caruso’s appointment of Raine & Horne Southern River as the selling agent, and the payment of what appears to be a grossly excessive commission to that agency in which Mr Caruso had an interest. Further, it is apparent on the evidence that it was done in that manner so that Landsmart Pty Ltd would receive that commission and be able to discharge the taxation liability. The effect of all of that was to deny Mantova Holdings the $100,000 selling fee to which it would have been entitled had the Jambanis Offer been allowed to be completed, or had it been given the opportunity, as it ought to have been, to be the selling agent on the sale to WA Land Holdings.
The applicant argued that that passage recognised that the conduct of Landsmart in entering the agreement had the effect of denying Mantova the $100,000 selling fee.
To analyse that submission, it is first necessary to have regard to what conduct was found by the Magistrate to constitute misleading and deceptive conduct. The misleading and deceptive conduct found to have occurred in the FMC judgment was the conduct of Mr Caruso granting an exclusive selling agency to Mantova when he had no reasonable grounds for his representation that Mantova would be the exclusive selling agent until the property was sold (see [170] - [173]). The passage set out above must be read in that context. Paragraph 190 appears under the heading 'Damages under the TP Act' and is clearly a discussion of how the loss flowing from the misleading conduct came about. The cause of the loss was, necessarily, the misleading and deceptive conduct by Mr Caruso. The matters referred to in [190] of the FMC judgment are no more than a recital about how Mr Caruso failed to honour the representation which he had made.
It is also clear that, in the passage set out above, the Magistrate is referring to the conduct of Mr Caruso in his capacity as vendor of the property, that is, as trustee of the Caruso Family Trust. It is not, in our view, open to read the learned Magistrate's words as somehow suggesting that Landsmart was a party to any misleading and deceptive, or unfair or dishonest, conduct. The obligation to pay Mantova was an obligation of Mr Caruso as vendor of the property. The statement of agreed facts include a fact that the November Agreement was entered into by Landsmart with the intention of providing a $400,000 commission to Landsmart to discharge a taxation liability. Landsmart's intention is obviously a reference to Mr Caruso's state of mind. Whether or not Mantova was paid a commission was entirely a matter in Mr Caruso's control. The fact that he chose to channel funds to Landsmart in order for it to meet its taxation liability, and to that end used a mechanism of the November Agreement does not, in our view, lead to the conclusion that Landsmart acted in a misleading and deceptive way, or acted in any way unfairly.
At no time did Landsmart have any dealings with the applicant. When considering whether silence can amount to misleading and deceptive conduct (in the context of s 52 of the Trade Practices Act 1974 (Cth)) it is common to ask whether the silence occurred in circumstances which 'are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed'. Otherwise 'it is difficult to see how mere silence could support the inference that the fact does not exist' - Gummow J in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 41; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 at [18]. Given Landsmart's capacity as a nonparticipant in the dealings between Mr Caruso and the applicant, it cannot be said that the applicant had any reasonable expectation that Landsmart would disclose to it Mr Caruso's intention to fail to honour his contractual representation. That is so regardless of whether Mr Caruso's knowledge is imputed to Landsmart. Nor do we consider that, in those circumstances, Landsmart's action in entering the November Agreement can be said to be unfair or dishonest.
Furthermore, we accept that the respondent's submission that the entry into the November Agreement was not something done in the course of Landsmart's business as a real estate agent. 'Business' is defined in s 4 of the REBA Act to mean 'the business of an agent'. 'Agent' means a person who is a real estate agent or a business agent. 'Real estate agent' means a person whose business 'is to act as agent for consideration in money or money's worth as commission, reward or remuneration in respect of a real estate transaction … '. A 'real estate transaction' relevantly means 'a sale, exchange or other disposal and a purchase, exchange or other acquisition of real estate'.
As already noted, the November Agreement was entered into after the sale agreement had been completed, a transaction in which respect of which Landsmart had not played, and was not required to play, any part whatsoever. At no time did Landsmart act as a real estate agent in respect of the relevant transaction. The entry into the November Agreement was no more than a mechanism, for whatever reason, by which Mr Caruso would provide funds to enable Landsmart to discharge its taxation liability. It was not an agreement entered into in the course of Landsmart's business as a real estate agent. For that reason, as well, the entry into the November Agreement cannot be described as a defalcation as defined in the REBA Act.
For those reasons, the decision of the respondent to disallow the applicant's claim against the Fidelity Account should be affirmed.

Orders

The decision by the Commissioner for Consumer Protection made on 24 September 2012 to disallow the applicant's claim for $100,000 against the Real Estate and Business Agents Fidelity Guarantee Account is affirmed.

I certify that this and the preceding [42] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
JUSTICE J A CHANEY, PRESIDENT