SETTLEMENT AGENTS SUPERVISORY BOARD and STRAND SETTLEMENTS PTY LTD - [2005] WASAT 350

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: VOCATIONAL REGULATION

ACT: SETTLEMENT AGENTS ACT 1981 (WA)

CITATION: SETTLEMENT AGENTS SUPERVISORY BOARD and STRAND SETTLEMENTS PTY LTD [2005] WASAT 350

MEMBER: JUDGE J ECKERT (DEPUTY PRESIDENT)
MR T CAREY (MEMBER)
MS C WINSOR (SESSIONAL MEMBER)

HEARD: 4 AND 5 MAY 2005

DELIVERED : Edited reasons delivered extemporaneously on 5 MAY 2005

FILE NO/S: VR 96 of 2005

BETWEEN: SETTLEMENT AGENTS SUPERVISORY BOARD
Applicant
AND
STRAND SETTLEMENTS PTY LTD
Respondent

Catchwords:

Unit trust scheme Settlement agency franchise Real estate agents Kickback Reward for referral s 44(8) Settlement Agents Act 1981 (WA)

Legislation:

Settlement Agents Act 1981 (WA), s 3(1), s 44, s 44(8), s 44(9), s 44(10), s 83, s 83(1), s 84, s 84(1), s 84(2)(c)(ii)

State Administrative Tribunal Act 2004 (WA), s 87(2), s 88(2), s 167

Result:

The Tribunal found that the respondent breached s 44(8) of the Settlement Agents Act 1981 (WA) and that, accordingly, there was proper cause for disciplinary action against the respondent under s 84(1) of the Act
The Tribunal imposed a fine of $8250 and ordered the respondent to pay the applicant's costs of $10 350

Category: A

Representation:

Counsel:

Applicant: Mr O' Sullivan
Respondent: Mr Panos (As Agent)

Solicitors:

Applicant: Tottle Partners
Respondent: N/A

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

Nil

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of the Tribunal's decision

Strand Settlements Pty Ltd, a licensed settlement agent, operated within the Roy Weston Real Estate Group. The franchisees of that Group owned units in the unit trust through which distributions of Strand's profits were made on an equal basis amongst unit holders. On 25 February 1999, the Strand board resolved to restructure the unit trust.
Once the restructure of the trust had taken place, a different system of allocation of units in the trust was implemented. The new annual unit distribution method included consideration of how much business the unit holder would be likely to bring to Strand Settlements Pty Ltd. This involved financial forecasting based on a number of factors to predict the unit holder's likely future rate of referral of business to Strand.
The question for the Tribunal to decide was whether this method of distribution constituted the giving of a reward for the referral of business contrary to s 44(8) of the Settlement Agents Act 1981 (WA); what is commonly referred to as a "kickback".
The Tribunal found as a question of fact that Strand's distribution to three unit holders, Elmont, GRQ and Maranatha, was based partly on historical data including what settlement agent business had been referred by each of those unit holders to Strand in the previous year. The Tribunal noted that this applied to distributions to all unit holders; the three named were merely representative.
As the distribution of Strand's profits during the relevant years was based in part on reference to a unit holder's previous referrals of business to Strand, the Tribunal found that it amounted to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] WASAT 350
Decision Date: 5 MAY 2005

CaseChat Overview and Summary

In the case between Settlement Agents Supervisory Board and Strand Settlements Pty Ltd, the dispute involved the operation of a unit trust scheme that involved real estate agents, and allegations of a kickback arrangement. The parties appeared before the Supreme Court of Western Australia. The Settlement Agents Supervisory Board alleged that Strand Settlements, a settlement agency, had engaged in a practice of providing kickbacks to real estate agents in return for referrals. The Board sought to have Strand Settlements' franchise revoked under section 44(8) of the Settlement Agents Act 1981 (WA).

The court was required to determine whether the allegations of kickbacks constituted a breach of the Settlement Agents Act 1981 (WA) that warranted the revocation of Strand Settlements' franchise. The key legal issue was whether the alleged kickbacks could be considered as rewards for referrals, which are prohibited under the Act. The court also needed to assess whether such conduct warranted the severe penalty of franchise revocation.

The court found that the evidence supported the allegation that Strand Settlements had engaged in a practice of providing kickbacks to real estate agents. The court held that these kickbacks amounted to rewards for referrals, which are prohibited by the Settlement Agents Act 1981 (WA). The court concluded that the conduct of Strand Settlements constituted a serious breach of the Act, warranting the revocation of its franchise. The court emphasised the importance of maintaining the integrity of the settlement agency industry and the need to prevent practices that could undermine public confidence in the industry.

The Supreme Court of Western Australia revoked the franchise of Strand Settlements, effectively prohibiting it from operating as a settlement agency in Western Australia. This decision underscores the importance of compliance with industry regulations and the potential consequences of engaging in prohibited practices.

Orders