McDonald v Director of Consumer Affairs Victoria

[2016] VSC 703

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S CI 2015 05850

AARON MCDONALD	Applicant
v
DIRECTOR OF CONSUMER AFFAIRS VICTORIA	Respondent

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JUDGE:	GARDE J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 November 2016
DATE OF JUDGMENT:	24 November 2016
CASE MAY BE CITED AS:	McDonald v Director of Consumer Affairs Victoria
MEDIUM NEUTRAL CITATION:	[2016] VSC 703

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ADMINISTRATIVE LAW – Application for leave to appeal from the Victorian Civil and Administrative Tribunal – Estate agent – Breaches of Estate Agents Act 1980 (Vic) and Estate Agents (Professional Conduct) Regulations 2008 (Vic) – Error of law affecting consideration of general deterrence – Tribunal order set aside by consent – Estate Agents Act 1980 (Vic) s 79(1); Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 148

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr I Hill QC	Gadens Lawyers
For the Defendant	Mr J Pizer QC and Ms J Watson	Consumer Affairs Victoria Enforcement and Legal Services Branch

HIS HONOUR:

Introduction

1. This is an application for leave to appeal, and if leave is granted, an appeal from a decision of the Victorian Civil and Administrative Tribunal (‘the Tribunal’) on a question of law under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘VCAT Act’). The parties have reached agreement on the disposition of the application and appeal, and seek orders of the Court by consent. It is necessary for the Court to be satisfied that there has been a vitiating error of law made by the Tribunal, and that the Tribunal’s decision should be set aside.

1. On or about 24 March 2014, the Director of Consumer Affairs (‘the Director’) sought orders from the Tribunal (’the proceeding’) for the holding of an inquiry under s 25 of the Estate Agents Act 1980 (Vic) (‘the Act’) to determine whether Aaron McDonald (‘the applicant’) and Aaron McDonald Real Estate Pty Ltd (‘the company’) had contravened, or failed to comply with the Act and the Estate Agents (Professional Conduct) Regulations 2008 (Vic), as well as other relief.[1]

   [1]Affidavit of Aaron McDonald sworn 11 November 2015, Exh AM-3.

1. There were three grounds relied on by the Director in the proceeding. The particulars given under the third ground were:

By continuing to trade post their respective suspensions, the [applicant and the company] have put numerous consumers at risk as they are not eligible to rely on the protections of the Victorian Property Fund as the [applicant and the company] remain unlicensed.[2]   

[2]Ibid.

Error of law

1. The Victorian Property Fund (‘the Fund’) is constituted by s 79(1) of the Act, which provides:

Subject to this Part, the Fund shall be held and applied for the purpose of compensating persons who suffer pecuniary loss by reason of a defalcation committed by an estate agent who at any time has held an estate agent's licence under this Act … or by an employee or servant of that estate agent in respect of any money or other property which, in the course of or in connexion with any business in respect of which the estate agent is or was required to be licensed pursuant to this Act, was entrusted to or received by the estate agent, or an employee or servant of the estate agent, for or on behalf of another person.[3]

[3]Estate Agents Act 1980 (Vic) s 79 (1).

1. It is plain from the express language of s 79(1) that the Fund is available to compensate persons who suffer pecuniary loss by reason of a defalcation committed ‘by an estate agent who at any time has held an estate agent’s licence …’ Thus, the Fund was available to meet claims for pecuniary loss suffered while the applicant’s licence was suspended. The result is that the particulars under the third ground relied on in the proceeding were erroneous in law. This was not in dispute before me.

1. When the proceeding came on for hearing before the Tribunal, the error of law was not identified or corrected. Both legal representatives who appeared before the Tribunal proceeded on the basis of a misunderstanding as to the effect of the Act.

1. In its reasons, the Tribunal also proceeded on the basis that the particulars given under the third ground were correct and had been made out.[4]

   [4]Director of Consumer Affairs Victoria v McDonald [2015] VCAT 1625.

1. The Tribunal held:

Because Mr McDonald and the company were unlicensed for that trading period, their clients lost the protection of the Victorian Property Fund …[5]

[5]Ibid [6].

1. The Tribunal also held:

In cross-examination Mr McDonald agreed that there were risks of trading while unlicensed. He said that the risks included insurance issues, public liability issues, and when prompted by counsel for the Director, the loss of Victorian Property Fund protection for his client.[6]

[6]Ibid [47].

1. It is apparent from this passage that the misconception about the persons who were entitled to make claims against the Fund continued throughout the hearing before the Tribunal.

1. In reaching a determination, the Tribunal said:

In considering determination, I do so on the basis of the grounds of inquiry and the allegations made and proven.[7]

[7]Ibid [62].

1. In its reasons, the Tribunal gave significant weight to the need for general deterrence. The Tribunal said that general deterrence was:

even more important in relation to trading while suspended. There are immediate and serious consequences for any consumers who have financial dealings with the estate agent concerned, in particular the loss of the protection of the Victorian Property Fund.[8]

[8]Ibid [75].

1. The legal error made when the application to the Tribunal was made remained uncorrected throughout the hearing of the proceeding. It was taken into account when the Tribunal made its decision and pronounced final orders.

Conclusion

1. I am satisfied that there is a vitiating error of law and that the Tribunal’s decision must be set aside under s 148 of the VCAT Act. I will make orders in the form discussed with the parties. The orders will ensure that the proceeding is heard and determined again.