Schwass v Ralacom Pty Ltd

[2011] QCAT 204

CITATION: Schwass and Anor v Ralacom Pty Ltd and Anor [2011] QCAT 204

PARTIES:	Mr Melvyn Schwass Mrs Rina Schwass
v
Ralacom Pty Ltd ATF The Ralacom (No.2) Unit Trust (Under External Administration) trading as Paradise Island Resort Ms Yvonne Raschilla

APPLICATION NUMBER:   OCL182-10  

MATTER TYPE: Other civil dispute matters

HEARING DATE:     On the papers

HEARD AT:  Brisbane

DECISION OF: Ms Barbara Bayne, Member

DELIVERED ON: 9 May 2011

DELIVERED AT:      Brisbane

ORDERS MADE:

1. Pursuant to section 530 of the Property Agents and Motor Dealers Act 2000, the Chief Executive of the Department of Employment, Economic Development and Innovation pay to the applicants Mr Melvyn and Mrs Rina Schwass the sum of $9,786.15.

2. Pursuant to section 489 of the Property Agents and Motor Dealers Act 2000, the Chief Executive shall not pay the amount until the end of the period allowed for appeal, and if there is an appeal, until the appeal is finally decided.

3. Pursuant to section 488(3)(c) the respondents Ralacom Pty Ltd ATF the Ralacom (No. 2) Unit Trust (under external administration) T/A Paradise Island Resort and Ms Yvonne Raschilla are the persons who misapplied in terms of section 470(1)(e) the rental payments and who are liable for the financial loss of the applicant.

4.     Upon payment of the sum of $9,786.15 from the Claim Fund to the applicant, the respondents Ralacom Pty Ltd ATF the Ralacom (No. 2) Unit Trust (under external administration) T/A Paradise Island Resort and Ms Yvonne Raschilla are liable jointly and severally to reimburse the Claim Fund by paying the sum of $9,786.15 to the Chief Executive of Employment, Economic Development and Innovation.

CATCHWORDS: 

Claim against fund for misuse of trust funds – rental income guarantee – claim partially allowed – company and real estate agent named as persons responsible

Property Agents and Motor Dealers Act 2000, s 470

APPEARANCES and REPRESENTATION (if any):

This matter was heard on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009.

REASONS FOR DECISION

1. On 17 June 2010 the Department of Employment, Economic Development and Innovation appointed Ms Julie Ann Williams of the firm Insolvency & Turnaround Solutions as receiver over the Trust Account/s of Ralacom Pty Ltd trading as Paradise Island Resort[1].

   [1] See sections 417-433 of the Property Agents and Motor Dealers Act 2000.

1. The Director of Ralacom Pty Ltd was Ms Yvonne Raschilla, a holder of a resident letting agent licence, who conducted a permanent and holiday letting pool with various units at the premises.

1. At the time, Ms Raschilla was also a Director of Raschilla & Wilson Property Group Pty Ltd trading as Take it Easy.  This entity had a common directorship, but no relationship, with Ralacom.

1. Mr Melvyn and Mrs Rina Schwass are the owners of two investment units (102 and 128) in the Paradise Island Resort.

1. On 26 July 2010, Mr and Mrs Schwass made a claim of $10,361.50 against the claim fund established with the Department under the Property Agents and Motor Dealers Act 2000.  The respondents were named as Ralacom Pty Ltd and Ms Yvonne Raschilla.

1. On 1 December 2010, the Department referred the claim to the Queensland Civil and Administrative Tribunal for determination; section 476 of the Act refers.

The Legislation

1. The Tribunal may allow a claim for compensation only if it is satisfied, on the balance of probabilities, in terms of section 488 of the Act.

1. Section 530 of the Act provides the orders the Tribunal may make on the hearing of the claim.

The Claim

1. Mr and Mrs Schwass’ claim was made under section 470 of the Act and alleged that rent payments collected and deposited in the Ralacom trust account were never received by them.

1. Mr and Mrs Schwass’ estimation of their loss can be tabulated as:

Element	Description	Amount owed
Unit 102	May rent (less cost)	$2,295.33
Unit 128	May rent	$2,383.33
Unit 128A	Rent in advance 1 June – 25 September 2010	$5,682.84
Total	$10,361.50

The Evidence

1. The Tribunal was provided with a copy of a report dated 30 September 2010 compiled by Ms Williams for the Department.

1. The report included several reconciliations of the Ralacom trust account and supporting documents.  These evidenced that various rental and letting income relating to Mr and Mrs Schwass’ units had been received into that account.

1. Ms Williams identified an overall shortfall in the account of $116,670.89 (which she describes as “defalcation of owner’s funds to that value”) and advised that there were insufficient funds in the Ralacom trust account to meet the payments due to Mr and Mrs Schwass.

1. Although at the Directions hearing on 21 February 2011, Ms Raschilla confirmed that she had received copies of the appropriate documents, she has raised, in various communications available to the Tribunal, a number of concerns.  The majority of these are not, however, of any relevance to the Tribunal’s determination of this claim; a few indicate some lack of understanding of the legislation[2].

   [2]Ms Raschilla was, for example, concerned that Mr and Mrs Schwass had not served her with a copy of the application lodged with the Tribunal.  The legislation is clear in this regard; the Chief Executive of the Department must, under section 476 of the Act, refer the claim to the Tribunal.

1. The Tribunal considers that, although she disputes the claim, Mrs Raschilla does not provide any reliable evidence in support.

Reconciliation of the Loss

1. Ms Williams’ report informs that her investigations reveal that Mr and Mrs Schwass held rental guarantee income agreements with Take it Easy in which Take it Easy agreed to provide a minimum rental income to them of $2,383.33 per month for Unit 102 and for Unit 128.

1. The claim from Mr and Mrs Schwass indicates they consider that they are due disbursements under this agreement from the funds held in the Ralacom trust account.

1. This is clearly erroneous.  Take it Easy has no relationship with Ralacom and therefore no entitlement to any use of the funds held in the Ralacom trust account in respect of any agreement Take it Easy may have made.

1. Ms Williams also explains that Unit 128 is an “A and B unit”.  She states that the A side of the unit (referred to as Unit 128A) had been permanently tenanted since 26 March 2010; the other side (referred to as Unit 128) had been rented intermittently.

1. Ms Williams’ detailed reconciliation of the Ralacom trust account in regards to this claim can be summarised:

Total Rental Income	Less Expenses (inc GST)	Amount owed to claimant
Unit 102 Rental Income - May Deposit taken up in June	$3,488.25    $250.00 $3,738.25	$1,669.56	$2,068.69
Unit 128 Rental Income - May Deposit taken up in June	$1,081.00    $250.00 $1,331.00	$785.04	$545.96
Unit 128A Rent paid in advance Rental  due 1 May – 10 September 2010	$8,840.00	$6,460.00
Total	$9,074.65

1. With regards to Unit 102, Ms Williams’ calculations are accepted as provided; $2,068.69 represents the net disbursement due for May to Mr and Mrs Schwass.

1. With regards to Unit 128, the total income of $1,331.00 as deposited is accepted; it appears however that there are a few minor inaccuracies in Ms Williams’ calculations of the expenses.

1. Column (1) of the table below summarises Ms Williams’ calculations; column (2) is a parallel reconstruction using the relevant invoice.

Report        (1)	May Invoice                (2)
Rental Income		$1,081.00	$1,081.00
Deposit taken up June 2010			$250.00	$250.00
Total Income		$1,331.00	$1,331.00
Less Expenses
Commission fees		$159.72	$129.72
Advertising fees		$103.81	$84.31
Clean Linen		$453.00	$453.00
Rebate	$18.00
Total		$716.53	$685.03
GST	$68.51	$68.51
Total	Expenses	$785.04	$753.54
Amount Owed to Claimant			$545.96	$577.46

1. The figures in column (2) are preferred; they are better supported by the source document. 

1. With regards to Unit 128A, the Tribunal accepts that in March and April 2010 the Ralacom trust account received a total of $8,840 by way of advance rental income.  This, as per the contract between the tenant and Ralacom, represents payments from 26 March 2010 to 24 September 2010, namely 26 weeks at $340.

1. The Tribunal accepts Ms Williams’ advice that Mr and Mrs Schwass were paid (under the rental guarantee agreement) for this rental in March and April 2010.

1. Although the claim is for (unpaid) advance rent from 1 June 2010, the Tribunal also accepts Ms Williams’ opinion that the loss commenced on 1 May 2010.

1. Ms Williams calculates that the rent due to Mr and Mrs Schwass is $6,460.00, being 19 weeks from 1 May to 10 September 2010[3]; the period should be 1 May to 24 September 2010.  The balance of rent due to Mr and Mrs Schwass should therefore be $7,140.00, being 21 weeks at $340/week.

   [3]The entry in the last paragraph on page 10 of her report reads ‘10 September 2009’; this contradicts the date in the contract and in her rental income calculation box at the bottom of page 10 of her report.

1. The overall amount owing to Mr and Mrs Schwass is therefore:

Element	Amount owed
Unit 102	$2,068.69
Unit 128	$577.46
Unit 128A	$7,140.00
Total	$9,786.15

The Decision

1. The Tribunal is satisfied, on the balance of probabilities, that:

   a)   there was a contravention of section 573 of the Act;

   b) an event mentioned in section 470(1) happened; and

   c)   Mr and Mrs Schwass suffered financial loss because of the happening of the event.

2. The Tribunal partly allows the claim and determines that the amount of the financial loss is $9,786.15.

1. No relevant neglect or default by Mr and Mrs Schwass has been identified and no amounts of compensation ordered to be paid under sections 530A, 572D or 592A of the Act.

1. Ralacom Pty Ltd and Mrs Yvonne Raschilla are named as the persons liable for the financial loss.

1. Orders are made accordingly.