Masic v Commissioner for Fair Trading, NSW Office of Fair Trading

[2009] NSWADT 38

CITATION:	Masic v Commissioner for Fair Trading, NSW Office of Fair Trading [2009] NSWADT 38 This decision has been amended. Please see the end of the decision for a list of the amendments.
DIVISION:	General Division
PARTIES:	APPLICANT Senad Masic RESPONDENT Commissioner for Fair Trading, NSW Office of Fair Trading
FILE NUMBER:	083320
HEARING DATES:	29 January 2009
DATE OF DECISION:	24 February 2009
BEFORE:	Handley R - Deputy President
CATCHWORDS:	Real Estate Agent – cancellation of licence
LEGISLATION CITED:	Property, Stock and Business Agents Act 2002Property, Stock and Business Agents Regulation 2003Administrative Decisions Tribunal Act 1997
CASES CITED:	Stojanovic v Commissioner for Fair Trading, NSW Office of Fair Trading (GD) [2008] NSWADTAP 84 Davidson v Commissioner for Fair Trading [2008] NSWADT 269 Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127 Australian Broadcasting Commission v Bond (1990) 170 CLR 321 McBride v Walton (NSW Court of Appeal, unreported, 15 July 1994)
REPRESENTATION:	APPLICANT A Macri, barrister RESPONDENT S Sharma-Calderson, solicitor
ORDERS:	1. The first part of the Commissioner’s decision dated 14 October 2008 cancelling Mr Masic’s real estate agent’s licence under s 192(1)(g) of the Property, Stock and Business Agents Act 2002 is affirmed 2. The second part of the Commissioner’s decision declaring Mr Masic to be a disqualified person for a period of five years under s 192(1)(h) of the Act is set aside 3. The third part of the Commissioner’s decision disqualifying Mr Masic from being involved in the direction, management or conduct of the business of a licensee under s 192(1)(i) of the Act is varied by adding that the disqualification is for a period of five years 4. The matter is remitted to the Commissioner under s 63(2)(d) of the Administrative Decisions Tribunal Act 1997 with directions that should Mr Masic apply for a certificate of registration as a real estate salesperson in the immediate future, he be found to be eligible for the grant of such a certificate subject to the imposition of appropriate conditions.

REASONS FOR DECISION

1 This matter involves an application by Senad Masic for the review of a decision of the Commissioner for Fair Trading (‘the Commissioner’) to cancel Mr Masic’s licence as a real estate agent.

Background

2 Mr Masic was born in Bosnia in 1957 and is aged 51. He states that in Bosnia he served in the Yugoslav Army for 21 years, from the age of 15 to 36, qualifying as a chemistry teacher, and was reluctantly involved in the Balkan civil war. He attained the rank of Lieutenant Commander. He migrated to Australia with his wife and son in 1995.

3 On arrival in Australia, Mr Masic attended English classes full-time for 12 months and then, having completed a security guard course at Granville TAFE College, worked for Brambles as a security guard. In 2000, while continuing to work full-time for Brambles, he studied and successfully completed a (full-time) Diploma of Business (Real Estate Management) at Granville TAFE. On 17 January 2001, Mr Masic commenced employment as a real estate salesperson with Goldstar Partners Pty Ltd, trading as Goldstar Partners Real Estate at Fairfield.

4 On 28 March 2003, Mr Masic was granted a real estate agent’s licence. On about 22 April 2003, he ceased employment with Goldstar Partners Real Estate and commenced employment with Hurley (Real Estate) Pty Ltd trading as Starr Partners Fairfield, where Maria Lawrance, who was a director of Hurley (Real Estate) Pty Ltd, was the licensee in charge. In early July 2005, Ms Lawrance and her fellow director Dominic Lagudi asked Mr Masic for permission to use his real estate agent’s licence to run a business in Canley Heights, to which he agreed. He was therefore registered as the licensee of Goldace Investments Pty Ltd trading as Starr Partners Canley Heights, and continued in that role until 27 March 2007, during which time he was paid the sum of $250 per week but took no part in the running of that business.

5 Mr Masic inadvertently allowed his real estate agent’s licence to expire on 27 March 2007. On 15 July 2007, he was dismissed by Ms Lawrance. On 18 July 2007, he applied for a new licence, which was granted on 9 August 2007. After being dismissed by Ms Lawrance, Mr Masic worked for Century 21 Real Estate at Fairfield, initially in an administrative capacity. On 7 January 2008, he resumed working as a real estate salesperson for Goldstar Partners Real Estate at Fairfield, where he worked until his licence was cancelled in October 2008.

6 On 12 August 2008, following an investigation of Goldace Investments Pty Ltd by the Office of Fair Trading (‘OFT’) which revealed that approximately $498,000 had been misappropriated from its trust accounts by an employee of that company, Mr Masic was issued with a ‘show cause notice’ inviting submissions within 14 days on why disciplinary action should not be taken against him concerning the matters referred to in the notice. On 18 August 2008, Mr Masic, who had previously assisted the OFT in their investigation, made a verbal response.

7 On 14 October 2008, a delegate of the Commissioner determined to take the following disciplinary action against Mr Masic: (1) to cancel his real estate agent’s licence, (2) to declare him a disqualified person for a period of five years, and (3) to disqualify him from being involved in the direction, management or conduct of the business of a licensee.

8 On 24 October 2008, Mr Masic applied for a review of this decision and an urgent stay. On 28 October 2008, Deputy President Hennessy refused a stay. However, she decided that despite there having been no internal review, it was necessary to deal with Mr Masic’s application in order to protect his interests (s 55(2)(c) of the Administrative Decisions Tribunal Act 1997 (‘the ADT Act’), then in effect) and set the matter down for hearing on 1 December 2008. At the parties’ request, the hearing was subsequently postponed until 30 January 2009.

9 At the conclusion of the hearing on 30 January 2009, I made directions permitting the parties to make further submissions to the Tribunal by 9 February 2009 on (1) the Forensic Accountants’ report on the misappropriation of funds from Starr Partners Canley Heights office prepared by Chris Wykes of Lawler Partners, dated 9 October 2008, and (2) the Appeal Panel decision in Stojanovic v Commissioner for Fair Trading, NSW Office of Fair Trading (GD) [2008] NSWADTAP 84 (‘Stojanovic’), published on 24 December 2008.

The Relevant Legislation

10 Section 8(1) of the Property, Stock and Business Agents Act 2002 (‘the Act’) states that a person must not carry on the business of a real estate agent unless the person is the holder of a real estate agent’s license. Section 31 requires that there must be a licensee in charge of each place at which an individual or corporation carries on business. Section 32 states that a licensee in charge of a place of business must properly supervise the business, including the employees engaged in the business, must establish procedures designed to ensure that the provisions of the Act and any other laws relevant to the conduct of that business are complied with, and must monitor the conduct of the business in a manner that will ensure as far as practicable that those procedures are complied with.

11 Section 13 of the Act prohibits the lending of a licence or certificate of registration:

(1) The holder of a licence or certificate of registration must not let out, hire or lend the licence or certificate of registration to any other person or permit any other person to use the licence or certificate of registration.
Maximum penalty: 100 penalty units.
(2) A court that convicts a person for an offence under this section is to order the cancellation of the licence or certificate of registration concerned. The licence or certificate of registration is cancelled on the making of the order.

12 Part 12 of the Act provides the grounds for disciplinary action in s 191, including, relevantly, where:

(a) the person has contravened a provision of this Act or any other Act administered by the Minister, or the regulations under any such Act, whether or not the person has been prosecuted or convicted of an offence in respect of the contravention, ...
(c) the person has, in the course of carrying on business or exercising functions under the licence or certificate of registration, acted unlawfully, improperly, unfairly or incompetently, ...
(e) the person is not a fit and proper person to be involved in the direction, management or conduct of the business of a licensee, ...

13 Pursuant to section 192(2) of the Act, the Commissioner is empowered to take one or more of the forms of disciplinary action set out in section 192(1) against a person. These forms of disciplinary action range from a caution or reprimand to disqualification. The relevant disciplinary action in Mr Masic’s case is that provided in section 192(1)(g), (h) and (i), empowering the Commissioner to:

(g) cancel the person’s licence or certificate of registration,
(h) declare the person to be a disqualified person for the purposes of this Act, either permanently or for a specified period,
(i) disqualify the person from being involved in the direction, management or conduct of the business of a licensee.

14 Pursuant to s 10(1) of the Act, a person must not be a real estate salesperson unless the person is the holder of a certificate of registration. The distinction between a ‘real estate agent’ and a ‘real estate salesperson’ is revealed by the definitions for these terms that appear in s 3 of the Act:

‘real estate agent’ means a person (whether or not the person carries on any other business) who, for reward (whether monetary or otherwise), carries on business as an auctioneer of land or as an agent:
(a) for a real estate transaction, or
(b) for inducing or attempting to induce or negotiating with a view to inducing any person to enter into, or to make or accept an offer to enter into, a real estate transaction or a contract for a real estate transaction, or
(c) for the introduction, or arranging for the introduction, of a prospective purchaser, lessee or licensee of land to another licensed agent or to the owner, or the agent of the owner, of land, or
(d) collecting rents payable in respect of any lease of land and otherwise providing property management services in respect of the leasing of any land, or
(e) for any other activity in connection with land that is prescribed by the regulations for the purposes of this definition.
but does not include a person who carries on business as an auctioneer or agent in respect of any parcel of rural land unless the regulations otherwise provide.

Note: This definition is not limited to the selling of land and extends to an agent acting on behalf of the buyer of land (a buyer’s agent).
As noted in section 168 of the Retirement Villages Act 1999, a selling agent acting on the sale of residential premises in a retirement village must be licensed as a real estate agent under this Act.

‘real estate salesperson’ means a person (other than the holder of a real estate agent’s licence) who, as an employee of a real estate agent or a corporation that carries on the business of a real estate agent:
(a) exercises any of the functions of a real estate agent, or
(b) engages in any other activity that is prescribed by the regulations for the purposes of this definition.

15 It is apparent from these definitions that a real estate salesperson can only ever be an employee of a real estate agent or corporation carrying on the business of a real estate agent. Pursuant to section 17(1) of the Act, the Commissioner may grant licenses to real estate agents and certificates of registration to real estate salespersons. Section 14(3) states that a person is eligible to hold a certificate of registration only if the Commissioner is satisfied that the person:

(a) is an individual who is at least 16 years of age, and
(b) is a fit and proper person to hold a certificate of registration, and
(c) has the qualifications required for the issue of a certificate of registration of the class concerned, and
(d) is not a disqualified person.

16 Section 16(1) states relevantly that a person is a ‘disqualified person’ if the person:

(j) is for the time being declared to be a disqualified person under Part 12 (Complaints and disciplinary action), ...

Mr Masic’s Evidence

17 Mr Masic said he has been married for 29 years and he and his wife have one son now aged 26. He has no convictions and said he does not want to hide anything. In July 2005, Ms Lawrance and Mr Lagudi asked for permission to use his real estate agent’s licence to run a business at Canley Heights. He had worked for them for two years, they had been in the real estate business for many years and he had no concerns about their honesty: he trusted them. When he expressed some concern over the proposal, they assured him that they would run the business properly, and he genuinely believed they would do so. Nevertheless, Mr Masic said he knew it was wrong for him to allow them to use his licence and he should not have done so. He expressed his regret and remorse on many occasions during the course of the hearing. He said there is no excuse for his conduct, which was absolutely wrong. He is embarrassed and ashamed of his conduct and apologises sincerely.

18 Mr Masic said he discussed the proposal with his wife but, at the time, she did not understand: she was sick, having been diagnosed with cervical cancer, and was undergoing chemotherapy treatment. Their son had also then left home. As a result of all this, Mr Masic was suffering emotional stress and, additionally, felt financially stressed by a mortgage of $626,000, at a time (2005) when the real estate market was hard and he was working entirely on commission. When Ms Lawrance offered him $250 per week for use of his licence (he never asked for payment), he thought this would help financially, albeit not significantly. However, the use of his licence at the Canley Heights office became his nightmare. He thought of ending the arrangement, but his situation was very difficult at the time and he concluded that Ms Lawrance and Mr Lagudi were very experienced, that no harm would be caused to anybody, and that everything would be OK.

19 Mr Masic learned of the misappropriation of funds by an employee of the Canley Heights office from Ms Lawrance on 10 July 2007. He had absolutely nothing to do with the misappropriation and until that time was unaware of it. In late July 2007, Mr Masic was contacted by John Mildwater, an investigation officer with the OFT. Mr Masic said he co-operated fully in providing information to Mr Mildwater. Mr Masic consulted his solicitor but then decided to participate in an interview with Mr Mildwater without his solicitor being present because he did not want to hide anything. Mr Masic also provided Mr Mildwater with documents to show that he had never worked at the Canley Heights office. Indeed, he rarely went there and took no part in the running of the business.

20 Mr Masic said that when the OFT asked him to contribute to the Property Services Compensation Fund (a fund set up to compensate persons who have claims against licensed real estate agents), which had at that time paid out approximately $14,000 in claims arising from the misappropriation of funds from the Canley Heights office, he did so willingly, and paid $3,733 to the Fund. (The Fund’s project officer asked both Mr Masic, as the former licensee, and the directors of Hurley (Real Estate) Pty Ltd to contribute.)

21 Mr Masic was asked about his references. With the exception of one referee, a solicitor M Capolupo, who had been away and who Mr Masic had been unable to locate, Mr Masic gave all his referees a copy of the OFT’s notice of determination concerning his licence. Mr Masic said he wants to continue working as a real estate salesperson because this is the only work he knows that he can do. He is also passionate about it, enjoys it and has a good network of contacts. He would no longer be able to work as a security guard because of his age and health: he has had surgery for varicose veins on both legs and would be unable to stand for the long periods required of a security guard.

22 Mr Masic said he has no desire to be a real estate licensee – he just wants to work as a salesperson, who would be required to be supervised by a licensee. Apart from the Canley Heights incident, he has an unblemished record as a real estate agent and has sold about 400 properties and listed 700 without a single complaint from either vendors or purchasers. He would be willing to be subject to additional supervision and do additional courses. He is willing to do a Certificate of Registration course (5 days full-time) at the Real Estate Institute of NSW, a course on the Act and regulations, professional development programs and courses on line.

23 In cross-examination, Mr Masic was asked about his application for renewal of his licence filed on 8 March 2005. At question 14, he answered ‘yes’ to the question “Have you complied with all the conditions specified on your licence?” He said he understands what answering this question required - he was aware of the Act and Regulations - and acknowledges his misconduct. He trusted Ms Lawrance and Mr Lagudi to run the business properly.

24 Mr Masic said three agents have offered to employ him as a salesperson and would be willing to supervise his work and report on this to the OFT. One of these, Sivan Huynh, the owner of Goldstar Partners Real Estate in Fairfield, has confirmed this in the reference he has provided (dated 1 December 2008). Mr Masic said what has happened has been a hard lesson. He has learned a great deal more about the statutory requirements and would be much more vigilant in future. He said that while he had obtained the necessary TAFE qualifications, life has taught him things he would never have learned at TAFE. He would never again be involved in such misconduct.

25 Mr Masic said his emotional and financial situation is now much better than it was in 2005. His wife’s illness is in remission, she has survived three years, and is now working part-time. He is also reconciled with their son, who has now purchased the unit Mr and Mrs Masic first owned in Parramatta, thereby enabling them to reduce the mortgage on their present home to $414,000.

The Applicant’s Submissions

26 Mr Macri said Mr Masic had given evidence honestly and truthfully, without embellishment and without hiding anything. Although not personally involved in the misappropriation, he accepts responsibility for his actions and has expressed remorse and contrition. He has supplied evidence of his good character and of his being a good salesperson, in which, apart from the Canley Heights incident, he has an unblemished record. Mr Macri noted that Mr Masic was co-operative and compliant and assisted the OFT with their investigation, including conducting a taped interview. He willingly made a payment to the Property Services Compensation Fund.

27 Mr Macri said Mr Masic has never been provided with particulars of what sum of money was misappropriated while he was licensee of the Canley Heights office. However, it appears that the misappropriation of some of the funds occurred after he had ceased to be licensee.

28 Mr Macri said Mr Masic’s referees speak highly of him and it is clear that Mr Masic is viewed in the community as being someone who is honest, reliable and, despite the Canley Heights incident, of high moral integrity. Three referees are current licensees and owners of real estate businesses, and at least one, Mr Huynh, for whom Mr Masic has worked previously, has confirmed that he would employ Mr Masic. Of the other referees, four are currently real estate salespersons or experienced solicitors with conveyancing practices.

29 Mr Macri submitted that Mr Masic’s conduct in lending his licence in 2005 was clearly out of character and an aberration. Nevertheless, Mr Masic recognises that such serious misconduct, involving a breach of ss 13 and 32 of the Act, requires an outcome in terms of disciplinary action. He therefore only asks for a finding that he is a fit and proper person to hold a certificate of registration as a real estate salesperson, which would enable him to obtain employment, and that such registration should be subject to stringent conditions. Mr Masic accepts that he should not be granted a real estate agent’s licence. Mr Masic is likely to suffer significant financial hardship if he is unable to work as a real estate salesperson.

30 Mr Macri submitted that there is a significant and material difference between the role of a real estate agent and the role of a real estate salesperson, both in terms of the definition in s 3 of the Act and in practice. In particular, as a real estate salesperson Mr Masic would not be involved in the direction or management of a business. As a salesperson, he would be an employee and would be supervised by the licensee. Given Mr Masic’s unblemished record as a salesperson, and noting that stringent conditions could be imposed on his registration, there would be no risk to the public.

31 Mr Macri submitted that to impose a disqualification of five years would be an unreasonable and improper exercise of the Director General’s discretion: such a disqualification period would be harsh, unjust and disproportionate. The object of the legislation is to protect the public rather than to punish the person in question. Mr Macri submitted that the public would be protected in circumstances where Mr Masic was employed as a real estate salesperson subject to stringent conditions. Mr Macri referred to the decision in Davidson v Commissioner for Fair Trading [2008] NSWADT 269, where, in circumstances where trust account funds were misappropriated by an employee of a real estate agent who failed to properly supervise the business, the Tribunal reduced a disqualification period from five years to 18 months.

32 In further submissions filed on 11 February 2009, Mr Macri said that Mr Masic accepts that a substantial sum was misappropriated from Goldace Partners Pty Ltd’s trust accounts during the time that he was the licensee of the Canley Heights office. However, the OFT have never alleged that Mr Masic was involved in the misappropriation. With regard to the decision in Stojanovic, Mr Macri submitted that the actions of Mr Stojanovic were of “greater objective severity” than those of Mr Masic and involved a greater degree of planning and financial reward.

33 Mr Macri noted that almost two years have passed since the offending conduct ended in March 2007. Since then, Mr Masic has suffered “severe embarrassment, humiliation and public shaming”. Mr Masic’s evidence also shows that he has undergone significant rehabilitation and has significant insight into the ramifications of his actions. Mr Masic has been co-operative, has accepted responsibility for his actions without seeking to minimise or excuse his behaviour, and has demonstrated honesty in how he has reacted to what happened. Mr Masic made a critical error of judgement – however, this was an aberration in an otherwise successful career. To allow him to be employed as a real estate salesperson, subject to stringent conditions, would not be incongruent with the public interest.

34 Mr Macri noted that while it has never been alleged that Mr Masic misappropriated trust funds, nevertheless, a condition could be imposed on his certificate of registration that any funds received by him should be passed to his supervising employer on the same day. Noting the Appeal Panel’s discussion of appropriate conditions in Stojanovic, Mr Macri submitted that Mr Masic be granted a certificate of registration as a real estate salesperson subject to the following conditions:

(a) that Mr Masic notify the Commissioner within three business days of any cessation or change in his employment:
(b) that he undergo such education and training as may reasonably be required by the Commissioner;
(c) that he not be a signatory to or otherwise have access to any accounts in which the money of the clients of his employer is deposited;
(d) that he not have access in any other way to moneys of the clients of his employer held by the employer;
(e) that he and his supervising employer report to the Commissioner on a quarterly basis canvassing the activities of Mr Masic, including the number of sales and listings he has made;
(f) that he be restrained from being employed in any supervisory or managerial capacity; and
(g) that he meet with his employer on a fortnightly basis and provide him with a log of his activities.

35 Mr Macri recognised that there might be other suitable conditions that could be imposed. He said Mr Masic would welcome the opportunity to formulate an appropriate set of restrictions and conditions in collaboration with his prospective employer and the OFT.

The Respondent’s Submissions

36 Ms Sharma-Calderson noted that the Property, Stock and Business Agents Regulation 2003 (‘the Regulation’) details the procedures required for the handling of trust moneys. Section 32(4) of the Act authorises the Director General to issue Guidelines from time to time “as to what constitutes the proper supervision of the business of a licensee”. The Guidelines issued, which reinforce the statutory duties and obligations of a licensee in charge, took effect on 1 March 2005.

37 Ms Sharma-Calderson said Mr Masic should have been aware of his duties and obligations as licensee in charge of the Canley Heights office. Yet, as he acknowledged, he took no part in the management or supervision of that business. He also told Mr Mildwater that he was unaware of the responsibilities involved in being a licensee in charge. This is despite his affirmative answer in a questionnaire signed on 14 February 2003 when he said he had an understanding of the requirements of trust accounting and of his responsibilities under the Act.

38 Ms Sharma-Calderson noted that if Mr Masic had been prosecuted and convicted of an offence under s 13(1) of the Act in respect of the lending of his licence, s 13(2) required that the Court convicting him also ordered the cancellation of his licence. Ms Sharma-Calderson submitted that cancellation of Mr Masic’s licence and disqualification was required for the protection of the public. As a result of Mr Masic’s misconduct, there was a grave risk to consumers’ funds and an employee of the business misappropriated a large sum.

39 Ms Sharma-Calderson submitted that it is apparent from the references provided by Mr Masic that the majority of his referees have never been responsible for the supervision of a trust account in a real estate business and lack an adequate understanding of the relevant factual background and a clear appreciation of the issues raised in the determination.

40 Ms Sharma-Calderson submitted that it cannot be assumed that such misconduct by Mr Masic will not re-occur, his having shown a propensity for weakness in difficult circumstances. The emphasis of previous cases has been on the need to protect the consuming public rather than on punishing the offender.

41 Ms Sharma-Calderson contended that the activities of a real estate salesperson are almost identical to those of a real estate agent, except in relation to the supervision of employees. A high level of candour and honesty is required to maintain public confidence in the industry. She submitted that if Mr Masic were granted a certificate of registration as a real estate salesperson, the interests of the public might be adversely affected and it would not, therefore, be in the public interest.

42 In further submissions filed on 10 February 2009, Ms Sharma-Calderson noted that, contrary to the Act, regulations and other relevant law, Mr Masic had failed to supervise any of the bank accounts or employees of the Canley Heights office and had not been involved in the administration or procedures of that office. The forensic accountant’s report shows a total deficiency of $855,704.35 for the period 1 July 2007 to August 2007. The majority of those funds were misappropriated during the 20 months of this period when Mr Masic was the licensee in charge.

43 With regard to the decision in Stojanovic, Ms Sharma-Calderson noted that relevant matters are (a) the passage of time since the offending conduct occurred, (b) demonstration of insight into the offending conduct, (c) remorse, and (d) the impact on consumers. In Mr Masic’s case, there has been a significantly shorter time between when the offending conduct occurred and the present than in Stojanovic. With regard to insight, Ms Sharma-Calderson submitted that Mr Masic conveniently ignored his ethics, obligations and responsibilities and profited from his actions. He has not demonstrated that he has undergone sufficient retraining since the exposure of his misconduct, nor has he given any significant insight into the quality of supervision or safeguards that would be needed to ensure against future misconduct.

44 Ms Sharma-Calderson submitted that Mr Masic has not shown sufficient remorse for the degree of damage that he has done. Because of his actions as a licensee, in excess of $500,000 of clients’ and company money was misappropriated. Consumers who relied upon him as licensee in charge to protect their interests, did not receive the service Mr Masic was legally obliged to give them. Ms Sharma-Calderson submitted that it is not in the public interest to allow Mr Masic to work in the real estate industry at this time.

45 Ms Sharma-Calderson also submitted that “there are no workable conditions that could be imposed in the public interest”. There would be great difficulties in policing any conditions imposed upon Mr Masic if he were granted a certificate of registration.

Discussion

46 Mr Masic has asked the Tribunal to review the Commissioner’s decision of 14 October 2008 on the basis, essentially, that the decision was too harsh. He seeks a decision that would enable him to work as a real estate salesperson, albeit recognising the need for there to be strict conditions on his certificate of registration. He does not specifically seek to overturn the determination to cancel his real estate agent’s licence, nor to disqualify him from being involved in the direction, management or conduct of the business of a licensee. The specific order he seeks is that the Commissioner grant Mr Masic a certificate of registration as a real estate salesperson subject to conditions. The Commissioner is empowered to grant such a certificate of registration pursuant to s 17(1) of the Act. Eligibility for such a certificate is set out in s 14(3), set out above. The person must (a) be an individual who is at least 16 years of age, (b) be a fit and proper person to hold a certificate of registration, (c) have the qualifications required for the issue of a certificate of registration of the class concerned, and (d) must not be a disqualified person.

47 I note that Mr Masic has not applied for a certificate of registration as a real estate salesperson. Nevertheless, he seeks an order granting him such a certificate in substitution for that part of the decision under review that would prevent him from obtaining such a certificate. The Tribunal’s powers under s 63 of the ADT Act include exercising all of the functions that are conferred on the administrator by any relevant enactment (s 63(2)), and affirming, varying or setting aside the reviewable decision and, when setting aside a reviewable decision, either making a decision in substitution for it or remitting the matter to administrator for reconsideration in accordance with any directions or recommendations (s 63(3)).

48 In Mr Masic’s case, as far as his eligibility to hold a certificate of registration as a real estate salesperson under s 14(3) of the Act is concerned, it is only whether he is a ‘fit and proper person’ (s 14(3)(b)), and whether he should be a ‘disqualified person’ (s 14(3)(d)), which appear to be in dispute. He is more than 16 years of age (s 14(3)(a)) and appears to have the necessary qualifications for the issue of a certificate of registration (s 14(3)(c)), having successfully completed a Diploma of Business (Real Estate Management), which I assume is the required qualification for the issue of a real estate licence under s 14(1) of the Act.

Is Mr Masic a fit and proper person to hold a certificate of registration as a real estate salesperson?

49 The meaning of the phrase ‘fit and proper person’ was discussed by the High Court in Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127, at [9], where Dixon CJ, McTiernan and Webb JJ said:

ÒThe expression ‘fit and proper person’ is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. ‘Fit’ (or ‘idoneus’) with respect to an office is said to involve three things, honesty knowledge and ability: ‘honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it’ - Coke.Ó

50 The meaning of the phrase was also discussed in Australian Broadcasting Commission v Bond (1990) 170 CLR 321, where Toohey and Gaudron JJ said at [36] of their judgment:

ÒThe expression ‘fit and proper person’, standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of ‘fit and proper’ cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur.Ó

51 As their Honours recognised, at [66], whether a person is a fit and proper person involves a value judgement to be made in the context of the particular activity to be licensed. In McBride v Walton (NSW Court of Appeal, unreported, 15 July 1994: see, in particular, the judgments of Kirby P, at [21] to [26], and Powell JA, at [59] to [73]), the Court said where there is evidence of misconduct, there should be consideration of any explanation for that misconduct, its seriousness to the particular activity, the motivation of the person, whether the misconduct is an isolated incident, the person’s underlying qualities of character, and the person’s conduct since the incident and whether this demonstrates recognition of the misconduct and subsequent reform.

52 I was impressed by Mr Masic’s evidence. He spoke openly and with candour and I found him a credible witness. I am satisfied from his evidence, which is supported by the references he provided, that he is an honest man and a person of integrity. He has acknowledged that he made a serious error of judgement in lending his real estate agent’s licence to Ms Lawrance and Mr Lagudi for the purpose of their running a business at Canley Heights, contrary to s 13(1) of the Act. I accept that Mr Masic lent his licence, having worked Ms Lawrance and Mr Lagudi for a period of two years, knowing of their long experience in the industry, and trusting them to properly manage that business. I also accept that Mr Masic was under emotional and financial pressure at the time, for the reasons outlined in his evidence, so that when Ms Lawrance offered him $250 per week for the loan of his licence, he was motivated to accept in order to ease the financial pressure. None of this, of course, excuses Mr Masic’s misconduct; rather it explains the particular circumstances in which this occurred.

53 Mr Masic has also acknowledged that he failed to undertake the responsibilities of a licensee in charge to supervise the management of the Canley Heights office as required by the Act and Regulation. He has expressed remorse and contrition for his misconduct and has felt ashamed and embarrassed in admitting the serious error he made. Mr Masic stated that he has learned a hard lesson and, as a result, has learned a great deal more about the statutory requirements and would be much more vigilant in future.

54 With regard to Mr Masic’s character references, I note his evidence that, with one exception, all his referees have been provided with a copy of the delegate’s determination dated 14 October 2008 to take disciplinary action against Mr Masic. Mr Masic said he had been unable to contact one of his referees, a solicitor M Capolupo, to provide him with a copy of the determination. Nevertheless, I note that in that reference, dated 26 November 2008, Mr Capolupo states that Mr Masic made him “aware of his conduct which culminated in disciplinary action being taken against him by the Office of Fair Trading and which resulted in his real estate agent’s licence being cancelled for five (5) years”.

55 Mr Masic’s referees, who comprise four solicitors, one migration agent, two accountants, three directors and licensees of real estate companies, and four former colleagues, all speak highly of Mr Masic and note his regret and remorse. I have paid particular regard to the reference dated 1 December 2008 provided by Mr Masic’s former employer Mr Huynh, director and licensee in charge of the Fairfield office of Goldstar Partners Real Estate, who employed Mr Masic from January 2001 to April 2003, and from January to October 2008. Mr Huynh states that Mr Masic “worked in my office for more than 3 years [sic] during that period he sold more than 150 properties with any single complaint from purchasers, vendors or any other clients or customers”. Mr Huynh said:

“I found Mr Masic thoroughly honest and reliable and he set himself the highest ethical standards. He is also very knowledgeable Real Estate Agent and held in the highest standing in the Fairfield community and he is probably the most respected and best known Real Estate Agent in Fairfield ...

I AM PREPARED TO EMPLOY HIM AGAIN AS A SALESPERSON IN MY OFFICE. I WOULD ALSO BE PREPARED TO SUPERVISE HIM CLOSELY AS A LICENSEE IN CHARGE AND I WILL BE PREPARED TO ORGANISE PROPER TRAINING FOR HIM AND PROVIDE REGULAR REPORTS AND INFORMATION FOR THE COMMISSIONER OF THE DEPARTMENT OF FAIR TRADING.” [Capitals in the original.]

56 In her further submissions, Ms Sharma-Calderson noted that relevant matters when considering present fitness include (a) the passage of time since the offending conduct occurred, (b) demonstration of insight into the offending conduct, (c) remorse, and (d) the impact on consumers. With regard to (a), the passage of time, I note that nearly two years have passed since Mr Masic’s misconduct came to an end in March 2007 on the expiry of his real estate agent’s licence. He continued to work as a real estate salesperson until his licence was cancelled on 14 October 2008. There were no other complaints against him during this period. Indeed, with the exception of the misconduct under consideration, there is no evidence of any other complaints against him in his career of six years and nine months in the real estate industry.

57 With regard to (b) demonstration of insight into the misconduct, I am satisfied from Mr Masic’s evidence that he fully understands the nature and seriousness of his misconduct and is aware of the need to be properly informed of the nature of his obligations both moral/ethical and legal. His evidence was that he is now familiar with his obligations and is prepared to undertake such further education and training as is deemed necessary to ensure he has a proper level of knowledge and understanding of these obligations.

58 As to (c) remorse, I note that Mr Masic was open and honest and co-operated fully with the investigation of the misappropriation of trust funds undertaken by Mr Mildwater for the OFT, and paid the sum of $3,733 to the Property Services Compensation Fund as his contribution to the funds paid out on claims. He expressed remorse at his misconduct on many occasions during the hearing, and I note his evidence that having agreed to lend his licence to Ms Lawrance and Mr Lagudi, it became his “nightmare”. Having heard Mr Masic give evidence at the hearing, I accept, as I have already noted, that he is an honest person and I believe his remorse is genuine.

59 With regard to (d) impact on consumers, Mr Masic’s misconduct undoubtedly had a significant impact on consumers in so far as an employee at the Canley Heights office whom Mr Masic should, as licensee in charge, have been supervising, misappropriated a very significant sum. There is no excuse for such misconduct. Although it appears that in excess of $500,000 was misappropriated during Mr Masic’s time as licensee, it is not clear how much of that amount has subsequently been recovered. Once again, however, such recovery is not pertinent to the fact of the misconduct. Mr Masic’s misconduct on this occasion is the only such misconduct during his career in the real estate industry. I am prepared to accept his evidence that he has learned his lesson and would never repeat such misconduct. I am not satisfied that he poses any risk to real estate consumers. Nevertheless, in my view, it would be prudent for Mr Masic’s conduct in the real estate industry to be monitored for the immediate future in the public interest.

60 With regard to the distinction between the definitions of ‘real estate agent’ and ‘real estate salesperson’ in s 3 of the Act, as I noted above, a real estate salesperson can only ever be an employee of a real estate agent or corporation carrying on the business of a real estate agent. As the Appeal Panel recognised in Stojanovic, at [26], while a real estate salesperson is entitled to exercise ‘all of the functions’ of a real estate agent, “the critical difference is that the salesperson answers to an employer, and is subject to the direction and supervision of the agent”.

61 Noting this and having regard to the evidence, I am satisfied that Mr Masic is a fit and proper person to hold a certificate of registration as a real estate salesperson.

Should Mr Masic be a disqualified person?

62 The second issue in relation to Mr Masic’s eligibility for a certificate of registration as a real estate salesperson is whether Mr Masic should be declared a ‘disqualified person’ for the purposes of the Act. It follows from the above discussion and it is my view that Mr Masic should not be disqualified from working as a real estate salesperson. Mr Masic has not challenged his disqualification as a real estate agent for a period of five years.

63 The disciplinary action in s 192(1)(h) of the Act of declaring a person “to be a disqualified person for the purposes of the Act, either permanently or for a specified period”, does not specifically draw a distinction between disqualification from holding a licence as a real estate agent and from holding a certificate of registration as a real estate salesperson. In my view, the inclusion of the words “for the purposes of the Act” could, at first glance, be read as enabling such a distinction to be drawn.

64 However, when subparagraph (h) is read in conjunction with subparagraph (i), pursuant to which a person can be disqualified “from being involved in the direction, management or conduct of the business of a licensee”, it seems probable that this latter form of disciplinary action is more specifically directed to real estate agent’s licenses rather than certificates of registration of real estate salespersons. Alternatively, it could be argued that subparagraph (i) is also directed at real estate salespersons who might be involved in such activities notwithstanding that they are employees and should be acting under the supervision and direction of a licensee.

65 In these circumstances, in my view, the correct and preferable decision is to (a) confirm the first part of the decision under review cancelling Mr Masic’s real estate agent’s licence, (b) set aside the second part of the decision declaring Mr Masic to be a disqualified person for a period of five years, and (c) vary the third part of the decision so that the disqualification from being involved in the direction, management or conduct of the business of a licensee is for a period of five years. The power to order a subparagraph (i) disqualification for a specific period is arguably implicit in the wording of the subparagraph in order to give effect to the disqualification power.

66 In my view, given that Mr Masic has not yet applied for a certificate of registration as a real estate salesperson, it is also appropriate for me to remit the matter to the Commissioner under s 63(2)(d) of the ADT Act with directions that should Mr Masic apply for a certificate of registration as a real estate salesperson in the immediate future, he not be treated as a disqualified person under s 192(1)(h) of the Act. Indeed, in my view he should be found to be eligible for the grant of such a certificate subject to the imposition of appropriate conditions.

67 In Stojanovic, at [55], the Appeal Panel said:

“The imposition of conditions is a familiar aspect of decisions to allow a person to re-enter a regulated occupation or profession, as many cases to do with the discipline of the legal profession and medical profession demonstrate.”

68 As Mr Masic recognises, his readmission to the real estate industry should be on strict conditions for the immediate period. Such conditions could include, as proposed by Mr Macri in his further submissions, the completion of further education and training, regular reporting to the Commissioner by Mr Masic’s supervising employer confirming Mr Masic’s satisfactory conduct (as Mr Huynh also suggested), and restrictions on access to trust accounts in which clients’ money is deposited. I do not accept Ms Sharma-Calderson’s submission that there are no workable conditions that can be imposed to protect the public interest. I am also not satisfied that the policing of properly thought out and drafted conditions will be overly difficult.

Decision

69 In conclusion, the Tribunal’s decision is as follows:

(1) The first part of the Commissioner’s decision dated 14 October 2008 cancelling Mr Masic’s real estate agent’s licence under s 192(1)(g) of the Property, Stock and Business Agents Act 2002 is affirmed.

(2) The second part of the Commissioner’s decision declaring Mr Masic to be a disqualified person for a period of five years under s 192(1)(h) of the Act is set aside.

(3) The third part of the Commissioner’s decision disqualifying Mr Masic from being involved in the direction, management or conduct of the business of a licensee under s 192(1)(i) of the Act is varied by adding that the disqualification is for a period of five years.

(4) The matter is remitted to the Commissioner under s 63(2)(d) of the Administrative Decisions Tribunal Act 1997 with directions that should Mr Masic apply for a certificate of registration as a real estate salesperson in the immediate future, he be found to be eligible for the grant of such a certificate subject to the imposition of appropriate conditions.

70 Should Mr Masic not agree with the Commissioner’s determination on his application for a certificate of registration as a real estate salesperson, including as to the conditions imposed by the Commissioner on such a certificate, Mr Masic will, of course, be entitled to exercise his right to a review of that determination in the usual way.

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