Settlement Agents Supervisory Board v Property Settlement Services Pty Ltd - [2009] WASCA 143

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: SETTLEMENT AGENTS SUPERVISORY BOARD -v- PROPERTY SETTLEMENT SERVICES PTY LTD [2009] WASCA 143

CORAM: OWEN JA
McLURE JA
NEWNES JA

HEARD: 3 FEBRUARY 2009

DELIVERED : 11 AUGUST 2009

FILE NO/S: CACV 32 of 2008

BETWEEN: SETTLEMENT AGENTS SUPERVISORY BOARD
Appellant
AND
PROPERTY SETTLEMENT SERVICES PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction : STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA
Coram :JUDGE J ECKERT (DEPUTY PRESIDENT)

MR J MANSVELD (MEMBER)
MS C WINSOR (SESSIONAL MEMBER)

Citation :SETTLEMENT AGENTS SUPERVISORY BOARD and PROPERTY SETTLEMENT SERVICES PTY LTD [2008] WASAT 57
File No :VR 166 of 2006

Catchwords:

Conflict of interest and duty - Settlement Agents' Code of Conduct - Sale of villa in retirement village - Settlement agent acted for buyer and seller - Directors of settlement agent also partners of law firm - Law firm acted for company that managed retirement village in dispute with sellers - Whether settlement agent owed duty to company that managed retirement village - Whether conflict between duty owed to company that managed retirement village and duty owed to buyer and seller - Whether conscious awareness of conflict required - Whether tribunal's finding that settlement agent ceased to act for sellers in certain periods unreasonable in the Wednesbury sense

Legislation:

Settlement Agents' Code of Conduct 1982 (WA), r 4, r 5, r 6, r 7, r 8, r 9
Settlement Agents Act 1981 (WA), s 46(3), s 82, s 84

Result:

Leave to appeal granted
Appeal upheld

Category: A

Representation:

Counsel:

Appellant: Ms G A Archer SC & Ms R J Lee
Respondent: Mr C G Colvin SC

Solicitors:

Appellant: Settlement Agents Supervisory Board
Respondent: Pynt & Partners

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

Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Australian Commercial Research & Development Ltd v Hampson [1991] 1 Qd R 508
Boardman v Phipps [1967] 2 AC 46
Chan v Zacharia (1983) 154 CLR 178
Clay v Clay (2001) 202 CLR 410
Health Department v Prosser [2004] WASCA 83
HIH Insurance Ltd and HIH Casualty and General Insurance Ltd, Re; Australian Securities and Investments Commission v Adler (2002) 168 FLR 253; [2002] NSWSC 171
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Maguire v Makaronis (1997) 188 CLR 449
Mills v Mills (1938) 60 CLR 150
Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187
Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165
Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165
Re Thomson; Thomson v Allen [1930] 1 Ch 203
Regal (Hastings) Ltd v Gulliver [1967] AC 134
Settlement Agents Supervisory Board and Crozet Pty Ltd (2006) WASAT 65
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1977) 17 WAR 98
Walden Properties Ltd v Beaver Properties Pty Ltd [1973] 2 NSWLR 815

OWEN JA: I have seen the reasons that McLure JA proposes to publish. I agree with her Honour's reasons and with the conclusion that leave to appeal should be granted and the appeal allowed. I wish to add a few short comments limited to one aspect of the appeal; namely, the scope and operation of the conflict of interest rule in the context of the Settlement Agent' Code of Conduct 1982 (WA).
It seems to be accepted that a settlement agent is a fiduciary and owes fiduciary obligations to the person making the appointment. The touchstone of a fiduciary relationship is the obligation to serve the interests of another. The principal is entitled to expect that the fiduciary will act in the principal's interests or in their joint interest to the exclusion of the fiduciary's separate interests. What equity demands of a person who is a fiduciary can be described in a single word, loyalty; or, perhaps two words, loyalty and fidelity. Equity insists that fiduciaries give undivided loyalty to the persons whom they serve.
The obligation to serve the interest of another requires in a practical sense that the fiduciary avoid placing himself in a position where there is a conflict between the fiduciary's own interests and the interests of the person to whom the fiduciary duty is owed or in a position where there is a conflict between the interests of the person to whom the fiduciary duty is owed and the interests of another person to whom the fiduciary also owes obligations.
In furtherance of this end equity has developed a number of rules that are sometimes called 'counsels of prudence'. Among them are the conflict of interest rule and the conflict of duties rule. Both rules operate in relation to activities within the scope of a fiduciary's office and are subject to an exception where the beneficiary has given fully informed consent. Broadly speaking the conflict of interest rule decrees that a fiduciary must not have an interest that conflicts or may possibly conflict with his or her duty to the principal. In summary the conflict of duties rule involves the proposition that a fiduciary must not have an inconsistent engagement with a third party. These general rules overlap extensively with each other and are sometimes conflated into a single conflict rule. Nonetheless, some separate considerations apply to each of them. The question posed by the rules is not whether the fiduciary has in fact preferred his or her interest to duty engaged in inconsistent duties, but whether there is a risk of doing so. This explains use of the expression 'may or may possibly' in the formulation of the rule.
The courts have developed a pragmatic approach to the scope of the conflict of interest rule by requiring a real sensible possibility of conflict before finding that a conflict of interest exists. In Boardman v Phipps [1967] 2 AC 46 at 124 Lord Upjohn said:
In my view it means that the reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict; not that you can imagine some situation arising which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in a conflict.
It follows, therefore, that the test for ascertaining a possible conflict is objective. It is not necessary to establish fraud, dishonesty or bad faith: Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134, 137. However, the 'relevant facts and circumstances' to indicate 'a real sensible possibility of conflict' may include evidence that shows that a conflict was actually perceived as this would reveal a recognition of the conflict. In the case of company directors, for example, a director may act with a personal interest even though the director has not freed his or her mind of that personal interest when so acting, provided that his personal interest was not the actuating motive: Re: HIH Insurance Ltd and HIH Casualty and General Insurance Ltd, Australian Securities and Investments Commission v Adler (2002) 168 FLR 253; [2002] NSWSC 171 [735] (Santow J).
The same principles apply where what is in issue is a breach of the conflict of duties rule. There must be an actual conflict or a real sensible (described as 'real or substantial') possibility of conflict: Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 [78]. Again, the test of whether there is a conflict or possibility of conflict is primarily objective but would permit of similar enquiries as outlined in relation to the conflict of interest rule.
After analysing the scheme of the Code McLure JA has concluded that r 5 and r 9 apply both to conflicts of duty and interest and conflicts of duty and duty. I agree both with the analysis and the conclusion and there is nothing I can usefully add. The next question is whether there was a conflict or a real or substantial possibility of conflict in the circumstances of the transaction in which the respondent had been appointed to act.
The Tribunal appears to have proceeded on the basis that a breach of the conflict rule could only arise if the guiding mind of the fiduciary entity (Mr McCallum) was aware of the conflict or, at least, aware of all relevant

circumstances leading to the conflict. In my view this approach is wrong in law. As I have already said, the test is primarily objective and I have not been able to discern from the reasons how, or if at all, the Tribunal addressed those more objective considerations. Mr McCallum's state of knowledge was a matter to which the Tribunal was entitled to have regard but they ought to have done so in the context of an objective consideration of the type envisaged in Boardman v Phipps. It seems to me that the Tribunal went straight to that issue and regarded it as determinative. Therein lies the error.

McLURE JA: The Settlement Agents Supervisory Board (appellant) seeks leave to appeal and to appeal from the decision of the State Administrative Tribunal (Tribunal) dismissing its application for disciplinary orders against Property Settlement Services Pty Ltd (the respondent) for its alleged breach of r 5 and r 9 of the Settlement Agents' Code of Conduct 1982 (WA) (the Code).
The appellant alleged the breaches occurred as a result of the respondent
[C]ontinuing to act in the settlement of the sale of [a villa in a retirement village managed by Fini Villages Pty Ltd] from Mr and Mrs Mews (sellers) to Mr Watt (buyer), when a conflict of interest arose or … foreseeably could have arisen between any two of:
(i)the settlement agent's duty of loyalty to the sellers;
(ii)Mr Ross McCallum's duty of loyalty to Fini Villages Pty Ltd (Fini Villages) or alternatively his interest in retaining Fini Villages as a client of his legal firm, McCallum Donovan Sweeney (the [law] firm); and
(iii)the settlement agent's duty of loyalty to the buyer [10].
The Tribunal found that there was no reasonable and sensible possibility that the respondent had a conflict of interest. It also found that the respondent ceased to act for the sellers on 28 September 2004 and did not resume acting until 3 November 2004.

Leave to appeal

A party may, with the leave of this court, appeal from a decision of the Tribunal on a question of law: State Administrative Tribunal Act 2004 (WA) (SAT Act), s 105.

Both parties accept that the test applicable to the grant of leave from an interlocutory decision applies with necessary modification to the grant of leave under s 105 of the SAT Act. I will proceed on that basis. That test as modified requires the applicant to demonstrate that the Tribunal made a material error of law or the question whether it did make such an error is attended with sufficient doubt to justify the grant of leave and that a substantial injustice would be done if the decision remains unreversed.
The questions of law in this case raise important matters of public interest that require determination. It is not in the interests of settlement agents in general or the respondent in particular that the decision of the Tribunal be permitted to stand. Leave should be granted.

The issues and facts

In broad terms, the issues in the appeal raise the proper construction of the Code and the reasonableness of the Tribunal's findings as to when the respondent ceased to act and the absence of any conflict. In view of the challenge to the factual findings, a detailed statement of the facts is required.
At all material times the respondent held a settlement agents licence and a triennial certificate under the Settlement Agents Act 1981 (WA) (the Act). Mr Ross McCallum and Mr Paul Donovan, both partners of the law firm, were directors of the settlement agent. The person in bona fide control of the business operated by a licensed body corporate must also be licensed under the Act (s 29(1)(d)). Mr McCallum was the licensee and person in bona fide control of the respondent under the Act. The respondent carried on business from the same address as the law firm.
Fini Villages is part of the Fini group of companies (Fini Group). The Fini Group had been a client of the law firm on commercial and property matters for almost 20 years. Mr McCallum had acted for the Fini Group over that time and had acted for Fini Villages for the previous 10 years.
The sellers purchased the villa (the property) in May 2001. By letter of 21 October 2003 to Fini Villages, the sellers' solicitors (Minter Ellison) claimed that Fini Villages had misrepresented to the sellers the form of title to the property (strata when it was purple title) and had demanded too much from them by way of contribution to council rates for 2003/2004.
By letter of 25 November 2003, the law firm by Mr McCallum, wrote to Minter Ellison on behalf of Fini Villages denying the allegation of a misrepresentation and denying that too much had been demanded as a contribution to council rates. The letter also stated that the law firm was instructed to issue proceedings against the sellers if the rates notices issued by Fini Villages were not paid within seven days. Fini Villages had paid the council rates and sought reimbursement from the owners of units in the retirement village.
The sellers did not pay the full amount demanded by Fini Villages for council rates for 2003/2004. By letter of 3 May 2004 to the law firm, the sellers requested Fini Villages to issue proceedings for the claimed council rates, advising that they believed they had paid their fair and appropriate share.
By letter of 21 May 2004 Fini Villages advised the sellers that pursuant to the Residency Deed signed by them, they had to pay a Deferred Facilities Fee (DFF) on the resale of their property and they also had to pay GST on the DFF. The letter also advised that the balance due for council rates for 2003/2004 had to be paid either before or at settlement of the resale.
On 30 July 2004 the law firm, by Mr McCallum, wrote to Mr Mews on behalf of Fini Villages inviting the sellers to pay the amount outstanding to avoid possible legal action. On 13 August 2004 the sellers paid only part of the amount claimed for council rates for 2004/2005.
By a contract of sale dated 2 September 2004 the sellers agreed to sell the property to the buyer. Settlement was due on 14 October 2004. The sellers and the buyer nominated the respondent to act on their behalf on the settlement.
On 13 September 2004 Fini Villages instructed the respondent to act for the sellers and buyer on the settlement of the sale of the property. On 14 September 2004 Fini Villages faxed to the respondent a form showing an outstanding levy amount of $103.90 owed by the sellers.
By letter of 16 September 2004 to the sellers, the respondent confirmed the request to represent them at settlement and enclosed a number of documents including an authority to act and a form disclosing that the respondent did many settlements for, and had a special relationship with, Mirvac Real Estate (Mirvac), the real estate agent that sold the property. Mirvac was also a member of the Fini group. The respondent also provided a sellers' provisional settlement statement showing the DFF including GST, the retention of an amount pending adjustment of 2004/2005 rates and outstanding levies owed to Fini Villages.
Fini Villages wrote to the respondent on 17 September 2004 advising of the amount owed by the sellers for council rates for 2003/2004 and 2004/2005 noting that these amounts 'will need to be taken into consideration at time of settlement'.
On 20 September 2004 the respondent advised Fini Villages of its instructions from the sellers to hold the GST in trust because of a dispute. Fini Villages responded that there was no dispute and that the sellers had 'to pay the GST and outstanding rates or the settlement does not take place ‑ please speak to Ross'.
In a telephone conversation between Mr McCallum and Mr Mews on 28 September 2004, Mr McCallum advised that he was the licensee of the respondent and had acted and continued to act for Fini Villages as part of his work with the law firm. Mr Mews instructed the respondent to speak to Fini Villages about the dispute concerning the GST amount. On the same day Mr McCallum told Mr Harrison of Fini Villages that the sellers refused to pay the GST. Mr McCallum gave evidence of his view that from 28 September to 3 November 2004 he ceased to act in the transaction for the sellers.
The Tribunal accepted Mr McCallum's evidence of the content of a telephone conversation he had with Mr Mews on 29 September 2004 to the following effect:
(a)Mr Mews said he would 'meet' the caveat. He asked if Mr McCallum would give him a copy of the caveat if it is lodged. Mr McCallum said he would, (not realising or thinking that the firm would be lodging the caveat). Mr Mews questioned what the caveat was likely to be based on and Mr McCallum indicated that it was likely to be based on the charging clause in the residency deed.
(b)Mr McCallum indicated quite definitely that neither he nor the settlement agent were acting for Mr Mews and that he should get himself a solicitor.
(c)There was a brief discussion about purple title and undivided shares, the cost of lodging a caveat and withdrawing a caveat. There was a disbursement fee totalling $158 which the residency deed required the sellers to pay. Mr Mews indicated that that was a waste of money. Mr Mews then discussed the differences he had with Fini Villages concerning questions based on the whole land or a lot. He said Fini Villages were vindictive. Mr Mews said the sellers could have sued Fini Villages in the past over issues relating to his title to the property. He had put it to his lawyers in the past.
(d)Mr Mews indicated that there was no need to stop settlement. They discussed the difference between levies and the [DFF]. Mr Mews believed that it was a deferred management fee, not a deferred facilities fee. He said he had a lawyer's opinion. Mr Mews said he would put pressure on Fini Villages and that he would approach the Australian Taxation Office to get a ruling on the GST.
(e)Mr Mews said something about threats which Mr McCallum could not recall and that some things being said were almost lies. Mr Mews said all bets are off if the settlement does not go ahead [40].
The Tribunal also accepted Mr McCallum's evidence that this conversation with Mr Mews caused him to remember that he had acted for Fini Villages against the sellers.
By letter dated 30 September 2004 from the respondent to the sellers, the respondent requested the sellers to sign a transfer of land form and advised them that Fini Villages had stated it would lodge a caveat over the property. The letter also stated
In case of a dispute, we would not be able to act on your behalf due to our conflict of interest, of which you are aware. We would suggest that you retain independent legal advice in relation to this matter.
In a letter of the same date (30 September 2004) Fini Villages advised the respondent of the amount the sellers owed for council rates ($932.04 for 2003/2004 and 2004/2005) and asked the respondent to ensure the amount was collected at settlement.
The buyer had given the respondent authority in writing to act on the settlement. Under cover of a letter dated 2 October 2004 the sellers sent the respondent a signed disclosure form and authority to act, the certificate of title for the property, a signed transfer of land and disbursement authority and an amended sellers' provisional settlement statement. The letter stated that if the sellers had known of Mr McCallum's involvement in the respondent they would not have accepted Mirvac's recommendation to appoint it as the settlement agent but that it was too late for them to make alternative arrangements and 'if a dispute arises we will deal with the matter ourselves'. The letter continued:
If you proceed to settlement you are requested and authorised to hold the amount of GST $2,257.19 in trust pending ATO Ruling. If you are not prepared to proceed to settlement, please remit the full amount [of the purchase price] to us and we will attend to disbursements ourselves and arrange refunds.

On 6 October 2004 Mr Harrison of Fini Villages faxed to Mr McCallum a copy of a caveat Fini Villages had prepared over the property and asked Mr McCallum to call him. Mr McCallum did so. Mr Harrison orally advised Mr McCallum that the sellers must pay the GST on the DFF and the refurbishment sum. He stated Fini Villages would lodge the caveat to protect their interest and seek recovery of the caveat disbursement costs.
In a letter dated 7 October 2004 from Mr Mack of Fini Villages, copied to Mr McCallum, Fini Villages advised it would seek a private ruling on the application of GST to the DFF and if the Australian Tax Office ruled against the GST, it would refund GST 'inappropriately collected'.
On 7 October 2004 Mr McCallum telephoned Mr Mews. The Tribunal accepted that the following was discussed in that telephone call:
(a)Mr Mews indicated that he had spoken with Mr Mack and with Mr Watson (from the residents' group) and that they had agreed with each other about the GST ruling. Mr Mews had discussed holding the money in trust with Mr Watson.
(b)Mr Mews said he had agreed to pay the GST to Fini Villages on the basis that a Fini Villages director would guarantee it would be repaid to him if the ATO ruled the GST was not payable. Mr Mews said he had initiated an ATO private ruling and that Mr Mack had drafted a letter to the ATO that he agreed with. He said Mr Mack would get the ATO ruling.
(c)Mr Mews said he is happy for the settlement agent to act. Mr McCallum indicated the settlement agent would act for the sellers as there was no longer a dispute between Fini Villages and the sellers.
(d)Mr McCallum queried the $300 rates and taxes provision Mr Mews had shown on the disbursement statement as not applicable. Mr Mews said he had paid it.
(e)Mr McCallum informed Mr Mews of Fini Villages' letter now claiming $932 for council rates. They discussed the break up of that amount. As it was September, most of the current year rates would be paid by the buyer. The caveat was also discussed [48].
By letter to the sellers dated 7 October 2004 written by Mr McCallum, the respondent:
(a)disputed that it is too late for the sellers to now appoint an alternative settlement agent if they 'wish to do so';
(b)noted that it is 'happy to act for' the sellers;
(c)disputed it had been unethical, saying that it only recently became aware of the GST dispute;
(d)stated that its 'potential conflict lies in that we act for the Buyer and also have in the past and do act for Fini Villages';
(e)noted that the dispute the sellers have with Fini Villages may have been resolved;
(f)strongly suggested the sellers seek independent legal advice or alternatively appoint another settlement agent to act if there is any dispute with Fini Villages;
(g)noted that Fini Villages had advised the settlement agent that it will not agree to the GST being held in trust and requires full payment of the [DFF] including GST and the sellers were now agreeable to that;
(h)noted that Fini Villages had informed the settlement agent that it would repay the GST to the sellers if their application to the ATO is successful; and
(i)concluded by asking the sellers to sign the letter to record their agreement with the above [49].
The sellers did not sign the letter.
On 8 October 2004, the respondent sent a revised sellers' settlement statement to the sellers including the levy of $103.90 and outstanding council rates of $932.04.
On about 8 October 2004, Mr Harrison of Fini Villages personally delivered to the law firm an executed caveat and the applicable registration fee requesting that it be lodged at the Department of Land Information. It appears the request was made to the law firm's receptionist and actioned on the same day by its outside clerk without reference to Mr McCallum or the settlement clerk handling the settlement of the property. On 11 October 2004 Mr McCallum received an email from Fini Villages asking whether 'the Mews' caveat' had been lodged.
By letter dated 13 October 2004 to the sellers, the respondent advised that (1) Fini Villages had lodged a caveat over the property; (2) settlement was not able to occur until the caveat was removed; (3) the sellers had three working days in which to settle or the buyer might charge penalty interest; and (4) strongly suggested the sellers obtain independent legal advice.
Settlement did not occur on the contractually specified date of 14 October 2004.
On 21 October 2004 the respondent wrote to the buyer informing him that settlement had not occurred on 14 October 2004 because of the caveat and that notice had been given to the sellers that the buyer was ready willing and able to settle. The letter inquired if the buyer wished to claim penalty interest for late settlement and suggested the buyer obtain independent legal advice as the respondent 'acts for both parties and there is the potential for a conflict of interest'.
In a letter from the respondent to the sellers on the same date (21 October 2004) the respondent advised the sellers that the buyer was ready willing and able to settle and suggested the sellers obtain independent legal advice. The letter continued:
As previously outlined we cannot act on your behalf in relation to a dispute with Fini Villages Pty Ltd or a dispute with the buyer over penalty interest.
On 25 October 2004 Mr McCallum had a telephone conversation with Mr Mews. Mr Mews indicated that GST was the only sticking point and that he would not be appointing an independent solicitor to act for him. Mr Mews went through the proposed GST ruling, advised that he would have it within 28 days and commented that he had not received a directors' guarantee from Fini Villages. Mr Mews advised Mr McCallum that he would pay the GST into trust to be held for 90 days and that if the GST ruling had not been made by the end of that period the GST would be paid to Fini Villages. However if the GST ruling had been made by then, then payment would be in accordance with the outcome of the ruling.
On 25 October 2004 Mr McCallum spoke to Mr Harrison of Fini Villages who confirmed he was happy with the sellers' suggestion concerning GST but that the council rates issue still needed to be resolved. On 26 October 2004 Mr McCallum conveyed that to Mr Mews. Mr Mews advised him that the shire rates were not correct and that he would pay the GST to Fini Villages if Fini Villages repaid it to the sellers if they were successful in their ATO Ruling.
On 26 October 2004 the buyer informed Mr McCallum that he did not want to claim penalty interest. Mr McCallum advised the buyer about the caveat and issues regarding the GST and council rates.
On 26 October 2004 Mr Harrison of Fini Villages advised Mr McCallum that the sellers had agreed to pay the GST but that Fini Villages required them to pay all rates and taxes. It was Mr McCallum's understanding that the sellers and Fini Villages were dealing directly with each other on these matters.
On 29 October 2004 Mr Mews informed Mr McCallum there was a stalemate. On 1 November 2004 the respondent sent a letter to the sellers enclosing a copy of the caveat.
In a telephone conversation on 1 November 2004 Mr McCallum and Mr Mews discussed the issue of the rates and taxes, the Residency Deed, the caveat and a 21‑day notice to remove the caveat. Mr Mews indicated that it was the principle of the matter and they discussed the meaning of paying the rates and taxes under protest without prejudice to the sellers' rights.
In a telephone conversation on 3 November 2004 Mr Mack of Fini Villages advised Mr McCallum that Fini Villages would agree without prejudice and under protest that it would sue for the rates and taxes after settlement. They discussed the fact that the GST issue had been resolved and would be paid by the sellers and repaid by Fini Villages if the ATO Ruling was successful.
On 3 November 2004 Mr McCallum settled a draft letter from Fini Villages to the respondent concerning the terms on which settlement could proceed. The settled letter was then sent from Fini Villages to the respondent on behalf of the sellers.
On 4 November 2004 Mr McCallum had discussions with the sellers and representatives of Fini Villages which resulted in adjustments to what was proposed in Fini Villages' letter of 3 November. Settlement occurred on 5 November 2004.

The Tribunal's decision

The Tribunal dismissed the appellant's claims that the respondent had breached r 5 and r 9 of the Code. It concluded that:
(1)rule 9 of the Code applies where there is a conflict of interest and duty as well as where there is a conflict of duty and a duty [105];
(2)the respondent did not owe any duty to Fini Villages;
(3)even if the respondent did owe a duty to Fini Villages, there was no real and sensible basis for a conflict because at the time of receiving settlement instructions there was no basis for believing there was a dispute [108];
(4)there was no conflict between the duty owed by the respondent to the sellers and the duty owed to the buyer because at the time of receiving settlement instructions there was no dispute between the sellers and the buyer and when a dispute arose the settlement agent stopped acting (I infer for the sellers) [110], [116];
(5)Mr McCallum's involvement did not give rise to the respondent having any conflict of interest and duty or conflict of duty and duty. The Tribunal's reasoning is as follows:
Whilst Mr McCallum had a duty of loyalty to Fini Villages as a partner of the firm, there is no duty that is relevant to this transaction as alleged in these proceedings. There is no evidence before us to show that Mr McCallum wished to retain Fini Villages as a client of the firm; nor is there evidence that his actions were at all motivated by that notion. In our view, whether or not the firm retained Fini Villages as a client has not been established as a relevant issue in these proceedings.
We have difficulty in understanding what the relevance of Mr McCallum's duties as a partner of the firm are to these proceedings and to the transaction. Although he is the director and person in bona fide control of the settlement agent he owed a duty to Fini Villages as a partner of the firm. If the settlement agent did not owe a duty to Fini Villages as we have concluded, then for the purposes of these proceedings we cannot see how Mr McCallum or the firm owed a relevant duty whether as director or as the person in bona fide control of the settlement agent. Mr McCallum acknowledged he owed a duty to Fini Villages as a partner of the firm but it is not relevant in these proceedings. In any event, if it were relevant it was not a foreseeable conflict as there was no dispute at the time that the settlement agent took instructions from the sellers and there was no real and sensible possibility of a dispute [112] ‑ [113].
(6)there can be no real and sensible possibility of a conflict until the facts giving rise to the possible conflict are consciously known to the fiduciary [119];
(7)there cannot be a conflict under r 5 if there is no conflict under r 9. There being no conflict under r 9, there was no breach of r 5 [125].

Grounds of appeal

The appellant's conduct of its case before the Tribunal and in the appeal was based primarily on its claim that the respondent had breached its duty to avoid a conflict of duty and duty, it having a duty to Fini Villages as well as to the sellers and buyer. The claim that the respondent owed a duty to Fini Villages was based on the Tribunal's decision in Settlement Agents Supervisory Board and Crozet Pty Ltd (2006) WASAT 65, a matter to which I will return. The appellant raises five grounds of appeal. It contends the Tribunal erred in law:
(1)in finding that the respondent did not owe a fiduciary duty to Fini Villages;
(2)in holding that there is a real and sensible basis for a conflict under r 9 only if, at the time of receiving settlement instructions, there is some basis for believing there was a dispute;
(3)in finding there was no real and sensible possibility that the respondent had a conflict of interest;
(4)in finding that the respondent ceased to act for the sellers on 28 September 2004 and did not resume until 3 November 2004;
(5)in failing to hold that r 5 imposed positive obligations that had been breached.

The Settlement Agents' Code

The Code is made under s 82 of the Act. A breach of the Code may give rise to proper cause for disciplinary action under s 84 of the Act.
Rule 4 requires a licensee to ensure it has complete knowledge of the Act, the Regulations and the Code. Rule 5 is in the following terms:
Knowledge of legal and equitable duties
A licensee shall have a knowledge of his duties both at law and in equity to the party to the transaction by whom the licensee was appointed (the client) and in particular a licensee shall be aware that his obligation to his client is one of the utmost good faith which requires him not to put his duty to his client in conflict or in likelihood of conflict with his own interests or that of any other person.
The appellant contends that r 5 imposes a positive obligation to comply with the general law. The respondent contends r 5 only imposes a positive obligation in relation to that specifically identified, being not to put its duty to its client in conflict or in likelihood of conflict with its own interests or that of any other person.
Rule 6 provides:
Disclosure of interests
A licensee shall at all times make a full and frank disclosure to his client of any interest he may have in any transaction in which he is concerned and if such interest is adverse to that of his client he shall terminate his appointment.
The respondent contends that r 5 and r 6 do not apply to a conflict between duty and duty but are confined to a conflict between interest and duty.
Section 46(3) of the Act permits a licensee to act for all parties to a transaction in certain circumstances. It provides:
(3)A licensee who holds a current triennial certificate may act for either the vendor, the purchaser, or the mortgagee, in a settlement … but may not act for more than one party to the real estate transaction in that settlement unless each of the parties for whom he is to act, in writing ‑
(a)acknowledges that he is aware that the licensee proposes to so act; and
(b)gives his prior consent to the licensee so acting.
Rule 7 deals with when a licensee may act for both parties. It provides:
When licensee may act for both parties
Subject to section 46 of the Act and to rule 5 a licensee may sometimes act for both parties. The test to apply is to consider whether in the interest of one he should withhold some information or advice from the other. If he should, then he should inform both clients that he is embarrassed and, subject to the following, should cease to act for both. He may continue to act for one of them in the same matter, however, unless he has received some confidential information from the other which it would be improper to use against him yet which should be used in the interest of the selected client. (emphasis added)
The appellant contends the r 7 reference to r 5 demonstrates that r 5 is intended to impose a positive obligation to comply with the general law. The respondent contends the reference to r 5 is a reference back to the particular obligation in r 5 and that r 7 applies to conflicts of interest and duty as well as conflicts of duty and duty.
Rule 8 identifies the circumstances in which there must be disclosure of an interest to a potential client. For example, a corporate settlement agent must give a disclosure notice if any of its shareholders or directors have any interest in the real estate agent who negotiated the transaction the subject of the settlement. Rule 9 provides:
Conflict of interest
No licensee may act or continue to act in the settlement of a transaction if any conflict of interest arises or foreseeably could arise between the licensee and his client.
The respondent contends that r 9 applies to a conflict of interest and duty not to a conflict of duty and duty.
The Code uses terms and concepts drawn from the general law which inform and provide a context for the proper construction of the Code.

The general law

The relationship between a settlement agent and its principal(s) is a fiduciary relationship. A fiduciary is someone who undertakes to act for or on behalf of another in some matter or matters. The undertaking may be specific or general, contractual or non‑contractual, gratuitous or remunerated: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 102 ‑ 104; Walden Properties Ltd v Beaver Properties Pty Ltd [1973] 2 NSWLR 815, 833.
The duties of a fiduciary vary with the circumstances that generate the relationship. Some fiduciaries may be permitted to pursue their own interests in some respects: Hospital Products (102). An example is a company director who is required to own shares in the company: Mills v Mills (1938) 60 CLR 150.
Generally, a fiduciary owes a duty of undivided loyalty to its principal which requires the fiduciary to avoid (1) a conflict of duty and interest and (2) a conflict of duty and duty. I will refer to the two limbs together as 'the conflict rule'. Further, a fiduciary cannot make an unauthorised profit from its fiduciary relationship. The application of these rules often overlap.
A conflict of interest and duty can arise where the personal interest of the fiduciary is pecuniary or non‑pecuniary, direct or indirect. A non‑pecuniary interest includes an interest by way of association, whether by way of kinship or business connection. Whether the interest is within the conflict rule will depend on (inter alia) the nature, intensity and duration of the association.
Not all interests are within the conflict rule. The interest must give rise to a conflict or a real or substantial possibility of a conflict: Hospital Products (103) (Mason J). There are other formulations of the required connection such as 'a sensible, real or substantial possibility' (Clay v Clay (2001) 202 CLR 410) and 'a significant possibility' (Chan v Zacharia (1983) 154 CLR 178, 198). The extension to cover a real or substantial possibility of a conflict serves at least two functions. First, it is intended to signify that not all personal interests come within the conflict rule. An interest will not fall within the conflict rule if it is too remote or insubstantial: Hospital Products (103) (Mason J). Secondly, an anticipatory breach of the conflict rule can be restrained: Re Thomson; Thomson v Allen [1930] 1 Ch 203.
The existence of a conflict of interest and duty (actual or otherwise) is not conditioned on proving that the fiduciary acted with the intention (purpose or motive) of advancing its personal interests: Hospital Products (103). An example illustrates the point. A director of a company will have an actual conflict of interest if the board of that company is to consider a resolution that the company enter into a financially significant transaction with another company in which the same director has a controlling interest. The director's personal interest is indirect and the conflict is actual not potential. This is to be contrasted with the doctrine of actual and apprehended bias applicable to public officers and officials.
The object of the first limb of the conflict rule is to prevent a person who has undertaken to act for someone else from allowing any personal interest to sway or influence that person away from the proper performance of his or her duty to the principal: Chan v Zacharia (198 ‑ 199). A conflict of interest and duty will exist if the interest in question is in opposition to, or in tension with, the duty of loyalty. That will be the case if there is a real and sensible possibility that the interest might sway or influence an agent away from the proper exercise of its duties (which includes powers) to the principal.

The test as to the existence of a conflict or a real and substantial possibility of a conflict is objective. It is to be determined from the standpoint of the objective observer with knowledge of all relevant facts and circumstances: Boardman v Phipps [1967] 2 AC 46, 124.
The same general principles apply to the second limb of the conflict rule which requires a fiduciary to avoid a conflict of duty and duty. There must be a conflict or a real and sensible possibility of a conflict: Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165. A conflict will exist if the duties are inconsistent or irreconcilable. That will be the case if the interests of the persons to whom the duties are owed are in opposition or adverse to each other. The test of the existence of a conflict of duty and duty is objective.
It may be a defence to an action based on breach of the conflict rule if the client has given its fully informed consent to the fiduciary continuing to act: Maguire v Makaronis (1997) 188 CLR 449. What action, if any, a fiduciary must take beyond disclosure will vary depending on all of the circumstances of the case: Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187.

Construction of the Code (ground 5)

Rule 5 and r 9 are to be construed in their context and by reference to the purpose of the Code and the Act.
On its proper construction, r 5 imposes a positive obligation on settlement agents to comply with their duties in law and equity owed to the party to the transaction who appointed them. This conclusion is compelled by the fact that r 7 is made subject to r 5. As to its scope, there are clear indications the obligation is not confined to the duty to avoid a conflict of interest and duty. First, r 7 which is expressly made subject to r 5, deals with the duty to avoid a conflict of duty and duty. Secondly, the particular example given in r 5 is the duty of utmost good faith which not only includes both limbs of the conflict rule but goes beyond them (see Finn PD, Fiduciary Obligations (1977) ch 15). Thirdly, for the reasons discussed below the Code uses the expression 'conflict of interest' to refer to both limbs of the conflict rule.
Rule 6 covers a situation where the agent has an interest in a transaction in which he is appointed to act. Rule 8 is also confined to disclosure of 'interests' in the sense in which that term is used in the general law. It may be thought that r 9 is part of the scheme of the Code relating to conflicts of interest in the sense in which the term is used in r 6 and r 8. On that approach, r 9 would be confined to conflicts of interest and duty that are not expressly addressed in r 6 and r 8.
On the other hand, there are indications that the expression 'conflict of interest' in the Code is intended to signify both limbs of the conflict rule. First, r 7 uses the term 'interest' when it can only sensibly mean duty. Rule 7 is dealing with the classic case that gives rise to a conflict of duty and duty, namely acting for both parties to a transaction. Secondly, the last sentence of r 5 refers to a conflict with his own interests 'or that of any other person'. That is not intended to be a departure from the general law which confines interests to the personal interests of the fiduciary. Rather, as with its use in r 7, it is intended to refer to the interests of those to whom the agent owes a duty. It is pertinent to note that r 7 does not apply to all circumstances which may give rise to a conflict of duty and duty. It only applies when the agent is acting for both parties to the settlement. These matters lead me to the conclusion that r 9 applies to both limbs of the conflict rule.
Any positive inconsistency between the general law obligations the subject of r 5 and the specific provisions of r 6 to r 9 would ordinarily be resolved in favour of the specific rule. In the absence of a positive inconsistency, the general law fills any relevant gap.

Existence of duty (ground 1)

The parties disagree as to the finding made by the Tribunal on the question whether the respondent owed any duty to Fini Villages. The appellant says there was a finding of no duty to Fini Villages. The respondent contended the Tribunal in [112] (set out above) found that the respondent had a duty not to act against Fini Villages (a finding it does not challenge) but the duty was of such a nature that it did not give rise to any conflict of interest in the respondent acting for the sellers.
The respondent elaborated its position as follows: Mr McCallum in his capacity as Fini Villages' lawyer owed an extended duty of loyalty to Fini Villages not to act against it in any matter (even if unrelated to any matter on which the lawyer had acted); the same extended duty was owed by the respondent to Fini Villages by reason of Mr McCallum's position with the respondent; the respondent's extended duty to Fini Villages did not give rise to a conflict in acting for the sellers. I infer the submission is intended to be confined to those occasions when the sellers were not in dispute with Fini Villages concerning the sellers' liability in relation to council rates and GST. The basis for that inference is the concession by senior counsel for the respondent (ts 71) that if Mr McCallum had been consciously aware at the time of accepting instructions from the sellers that there was a continuing dispute with Fini Villages about council rates (or GST), the respondent would have had a conflict of duty and duty that prevented it from acting for the sellers. As is evident from that formulation, the respondent's position is that a conflict only arises when a fiduciary is consciously aware of the facts giving rise to the conflict.
On my reading of the reasons, the Tribunal found that the respondent did not owe any duty to Fini Villages. The Tribunal said so in unequivocal terms:
We find that the settlement agent owed no duty to Fini Villages. It had no instructions to act for Fini Villages and the fact that the [law] firm had a history of acting for Fini Villages did not create a fiduciary duty in the settlement agent to Fini Villages [109].
In [112], relied on by the respondent, the Tribunal was explaining its reasons for rejecting the appellant's claim that the respondent had an interest, pecuniary or by association, that was in conflict with the respondent's duty to the sellers.
Although not challenged in the appeal, it should be noted that the Tribunal made two material errors of law in its approach to determining that the respondent did not have a conflict of interest. First, it applied a wholly subjective test in determining whether there was a relevant interest. Secondly, it required evidence that the respondent's conduct of its duties for the sellers was motivated by its personal interests. These errors undermine the Tribunal's conclusion that there was no conflict of interest and duty.
The appellant's case on conflict of duty and duty at first instance was wider than its formulation in the appeal. The Tribunal summarised the appellant's case below as follows:
The Board contends that there is a conflict because Mr McCallum has a strong relationship with Fini Villages, having acted for Fini Villages for ten years and with Fini Group for 20. He concedes they are a valuable client to him. Mr McCallum acted for Fini Villages in 2003 and early 2004 regarding a dispute with the sellers about rates on the property. The Board says that the settlement agent had a conflict because Fini Villages expected to receive money at settlement. Further, as Mr McCallum controlled the settlement agent, being the fiduciary with a duty of loyalty to the sellers and the buyer, effecting the settlement of the sale of the property from the buyer to the sellers gave rise to a conflict …
The Board also submits that Fini Villages acted as if Mr McCallum, the firm and the settlement agent were acting on its behalf throughout the settlement process [106] ‑ [107].
In oral submissions in the appeal the alleged duty owed by the respondent to Fini Villages was derivative, based on the role of Mr McCallum. The appellant's case was to the following effect: Mr McCallum in his capacity as legal advisor to Fini Villages owed a duty of loyalty to Fini Villages both generally and specifically in relation to the question of the rates payable by the sellers; because Mr McCallum was a director, and in bona fide control, of the respondent under the Act, the respondent also owed a duty of loyalty to Fini Villages; the respondent's duty of loyalty to Fini Villages was in conflict with its duty to the sellers.
The appellant relied on Crozet for the proposition that where two companies (A and B) have a common director who is the corporate controlling mind of both, a duty of loyalty owed by the common director in one capacity (as a director of A) can result in company B also owing a duty of loyalty to A. Crozet is not authority for that proposition. In Crozet, F was a director of the corporate real estate agent that negotiated the sale of land for which it was entitled to a commission on settlement. F was also a director and the person in bona fide control of the corporate settlement agent appointed to act on settlement. The Tribunal concluded that r 9 applies to both conflicts of interest and duty and conflicts of duty and duty [38]. However, the Tribunal found on the facts that the settlement agent had a personal interest in the transaction by reason of its close association with the real estate agent which interest conflicted with its duty to a party to the settlement transaction ([71], [78], [81], [99]). Crozet was a case in which the settlements agent's personal interest was indirect.
I turn now to the question whether the respondent owed any fiduciary duties to Fini Villages. It will only do so if there is a fiduciary relationship between them. The relevant circumstances are as follows. Mr McCallum in his individual capacity and in his capacity as a partner of the law firm owed fiduciary duties (including a duty of loyalty) to Fini Villages both generally and specifically in relation to the sellers' obligations to Fini Villages under the Residency Deed. Mr McCallum and another of his partners in the law firm were directors of the respondent and Mr McCallum was its licensed controller. His legal knowledge and skill was part of the respondent's resources in the performance of its business as a settlement agent. The respondent did many settlements for and had a special relationship with the real estate arm of the Fini Group. It can be inferred that a significant number of the settlements were of properties managed by companies in the Fini Group, including Fini Villages. Fini Villages instructed the respondent to act for the sellers and buyers at settlement of the property. Issues on which Mr McCallum had advised and acted for Fini Villages against the sellers also arose in connection with the settlement of the property.
As Mr McCallum owed fiduciary duties to Fini Villages in his personal capacity and was in control of the respondent who was retained to act in a settlement which directly affected the interests of Fini Villages and involved matters on which Mr McCallum had previously acted for Fini Villages, I would conclude that the respondent owed fiduciary duties to Fini Villages co‑extensive with those owed by Mr McCallum in connection with the settlement.
I reach this conclusion even in the presence of a finding that the respondent did not act for and on behalf of Fini Villages in connection with the settlement of the property. However, the evidence clearly establishes that the respondent did act for Fini Villages in connection with the payment at settlement of moneys claimed to be due and owing by the sellers to Fini Villages. It is wrong to characterise the position of Fini Villages as akin to a mortgagee in relation to settlement. A settlement agent makes inquiries of, and deals with, a mortgagee because the arms‑length mortgagee is required to provide a discharge of its mortgage at settlement.
Even though the Residency Deed signed by the sellers appears to have contained a charging clause over the property for moneys due and owing by the sellers, Fini Villages did not lodge a caveat for some considerable time. Ordinarily, it would not have to if the settlement agent acting for the seller was prepared to do what was necessary to ensure it was paid out of the proceeds of sale at settlement. Fini Villages needed (and in this case had) a settlement agent that was in its corner. Prior to the lodging of the caveat, Fini Villages had (1) instructed the respondent to act for the sellers and buyer on settlement; (2) advised the respondent of amounts allegedly owing by the sellers to Fini Villages (including an outstanding levy, GST and council rates for 2003/2004 and 2004/2005); and (3) instructed the respondent on two occasions that the moneys due to it were to be collected at settlement. The respondent duly incorporated the amounts said to be owing to Fini Villages in the settlement statements sent to the sellers notwithstanding the sellers' denial of liability (of which the respondent was 'consciously aware' when it sent the second statement). Further, Mr McCallum on behalf of the respondent continually conveyed to the sellers Fini Villages' position on all relevant matters including the caveat, council rates and GST and settled Fini Villages' settlement letter to the respondent.
The Tribunal erred in finding that the respondent did not owe any fiduciary duty to Fini Villages. I would uphold ground 1.

The existence of a conflict (grounds 2 and 3)

The Tribunal said:
There is a real and sensible basis for a conflict only if at the time of receiving settlement instructions there is some basis for believing there was a dispute [108].
The Tribunal later returns to this theme:
At the time that the settlement agent first received instructions to act in the settlement there was no current instructions to the firm by Fini Villages concerning the recovery of rates and taxes or GST. On this basis, the settlement agent said there was no conflict in the settlement agent initially accepting instructions to act for the sellers. We accept that submission, based on the facts [119].
In its written submissions, the respondent's position was that for there to be a conflict between duty and duty, there had to be what it described as an 'actual' conflict, it not being sufficient that there be a real and sensible possibility of a conflict. However, in the course of the hearing of the appeal the respondent accepted that its position was inconsistent with the decision of the High Court in Pilmer.
If the Tribunal intended to convey in [108] that the only relevant time for determining whether there is a conflict is upon receipt of instructions by the settlement agent, it is clearly mistaken. That would undermine the rationale for the conflict rule. Moreover, it is inconsistent on its face with r 9 which provides that no licensee 'may act or continue to act'. However, I do not understand the Tribunal to be intending such a restriction.
I infer the Tribunal's intention was to reject the proposition that the settlement agent had a conflict before 29 September 2004 when Mr McCallum remembered (became consciously aware) that there was a dispute between Fini Villages and the sellers concerning liability to pay council rates and GST.
The formulation of the conflict rule under the general law and in the Code does not expressly require that the fiduciary have knowledge of the material facts giving rise to the conflict. This is consistent with the fact that the test of a conflict is objective and intention is not an element. The purpose of the conflict rule is to protect the interests of the person to whom the duty of undivided loyalty is owed not to sanction or punish the fiduciary for unconscientious or improper conduct. The conflict rule is preventive. On the other hand, the imposition on the fiduciary of a positive duty to avoid a conflict suggests some level of knowledge is required.
The authorities establish that conscious awareness is not required. Courts protect against the possibility of unconscious memory influencing the fiduciary away from its duty of undivided loyalty: Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1977) 17 WAR 98, 105; Australian Commercial Research & Development Ltd v Hampson [1991] 1 Qd R 508. This is consistent with the purpose of the conflict rule. The requirement is not that the controlling mind of the settlement agent remember matters within his knowledge. Thus, the Tribunal erred in law in concluding that a breach of the conflict rule is conditional on a fiduciary being consciously aware of the facts giving rise to the conflict. It is unnecessary to determine whether constructive knowledge suffices to give rise to a conflict.
Moreover, contrary to what the Tribunal suggests in [119], whether or not the law firm had current instructions from Fini Villages at the time the respondent accepted instructions to act on settlement of the property does not determine the question whether the respondent continued to owe any duties to Fini Villages.
The relevant facts are as follows. On 25 November 2003 Mr McCallum wrote to the sellers threatening legal action because of their failure to pay council rates. Around six months later the sellers wrote to Mr McCallum calling his bluff about the threat to issue proceedings. Around six weeks before accepting instructions to act on behalf of the sellers, Mr McCallum again wrote to the sellers threatening legal action for their failure to pay council rates. Based on the exchange of correspondence, Mr McCallum had knowledge of the dispute and had no proper basis to assume that either side had altered their position in relation to council rates.
Thus, Mr McCallum and therefore the respondent had knowledge when it accepted instructions to act on settlement that there was a dispute between Fini Villages and the sellers concerning council rates. By dispute I mean that Fini Villages and the sellers had opposing (adverse) positions on the question of the sellers' liability to pay at settlement (or at all) the amount claimed in connection with council rates (and shortly afterwards, liability to pay GST). The respondent could not discharge the undivided duty of loyalty it owed to Fini Villages, the sellers and the buyer. The Tribunal should have found that the respondent had and continued to have a disqualifying conflict of duty and duty from the time it accepted instructions to act as settlement agent for the sellers and the buyer. I would uphold grounds 2 and 3.

Challenge to fact‑finding (ground 4)

I have already concluded that the Tribunal erred in finding that the respondent did not have a disqualifying conflict at the time of accepting instructions to act for the sellers. The finding was vitiated by demonstrated errors of law in the statement and application of the relevant legal principles. In those circumstances it is not strictly necessary to address ground 4. However, I will do so for the sake of completeness and on the assumption that conscious awareness is necessary to give rise to a conflict.
The appellant sought to challenge the Tribunal's findings on the ground of unreasonableness, applying the test in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223, 229 ‑ 230.
Under the Wednesbury test, an error of law is only made out if it is shown that a decision on a matter is so unreasonable that no reasonable person could ever have come to it. The Wednesbury test ordinarily applies to the exercise of discretionary powers. This case does not involve the exercise of a discretion. Moreover, there is disagreement as to whether Wednesbury unreasonableness applies to a finding of fact leading to the exercise of the discretion. The authorities are discussed in Aronson M, Dyer B and Groves M, Judicial Review of Administrative Action (4th ed, 2009) [6.175] ‑ [6.215]. That issue has been further complicated following the recognition by the High Court of the irrationality/illogicality ground of review in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165: see Aronson [4.405] ‑ [4.435].

It remains to be seen whether the irrationality/illogicality test for judicial review of administrative action is materially different than the Wednesbury unreasonableness test or materially different than the test usually applied to appeals limited to errors of law. The principles relating to appeals from non‑discretionary decisions are to be found in the decision of the High Court in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321. See also Health Department v Prosser [2004] WASCA 83 [21] ‑ [31].
However, as both parties accepted that the Wednesbury test of unreasonableness applies to the challenged findings of fact made by the Tribunal, I will proceed on that basis.
The respondent challenges the appellant's claim that the Tribunal found the respondent had ceased to act for the sellers on 28 September 2004 and did not resume until 3 November 2004. Its position is that the Tribunal found that the respondent acted for the sellers in the following periods:
(a)2 September until 28 September 2004;
(b)7 October until 13 October 2004;
(c)from 3 November 2004.
The Tribunal did not expressly make any such finding. Moreover, there is nothing in the reasons as a whole to support the respondent's contention. The Tribunal's reasons on the subject are as follows:
Mr McCallum maintains that during the period 28 September to 3 November 2004 he merely forwarded letters and the transfer of land and provided factual information to the sellers so that their position was not prejudiced by any lack of information. It appears he felt he had a duty to do that for them even though he was of the view he was not acting. Mr McCallum says he then began acting again on 3 November 2004 when it was clear that the disputes had been independently resolved and that settlement could proceed.
It seems clear that Mr McCallum was of the view that he had ceased to act during that period and his conduct at the time seems to be consistent with having taken that view.
On the whole, we accept Mr McCallum's evidence [95] ‑ [97].
The respondent claimed the Tribunal simply accepted that Mr McCallum held the stated opinion and did not make a finding that Mr McCallum's opinion was correct and the respondent had ceased to act. Mr McCallum's opinion on how his conduct should be characterised is irrelevant. It was for the Tribunal to determine on the facts established by the evidence whether the respondent had ceased to act. I infer the Tribunal intended to make a finding that the respondent ceased to act from 28 September until 3 November 2004. However, it is not clear what Mr McCallum and thus the Tribunal meant by 'ceasing to act'.
In the factual context in which Mr McCallum used the expression it may have meant that the respondent did not take any action referable to its contract of retainer with the sellers in the relevant period or alternatively that the respondent terminated its retainer. Where, as in this case, the fiduciary relationship stemmed from a contract of retainer, the requirement in r 9 that the agent cease to act requires the retainer to be terminated. On my reading of the reasons, the Tribunal did not address itself to that question.
Moreover, having regard to the respondent's course of conduct as a whole, there is no evidence to support a finding that the retainer had been terminated. By 29 September 2004 the respondent was consciously aware that Fini Villages and the sellers held adverse positions on the sellers' liability to pay GST on the DFF and the amount claimed by Fini Villages for council rates. By that time the respondent was consciously aware of the facts giving rise to the conflict. The conflict required it to terminate its retainer. However, that is not the advice it gave to the sellers. In its letter of 30 September 2004 enclosing the transfer for signature and advising of the caveat, the respondent states that 'in case of a dispute, we would not be able to act on your behalf due to our conflict of interest'. That suggests there was no existing disqualifying conflict of duty and duty. The respondent did not advise, as it should have, that it had a conflict which prevented it from continuing to act and that the sellers needed to retain another settlement agent as a matter of urgency having regard to the settlement date.
Further, following receipt of the sellers' letter of 2 October 2004 which showed the sellers understood that the respondent could continue to act, the respondent did not correct the sellers' misapprehension. To the contrary, the respondent shortly thereafter confirmed it. In the telephone conversation between Mr McCallum and Mr Mews on 7 October 2004, Mr McCallum advised that the respondent would act. That was confirmed in a letter of the same date in which he refers to a 'potential conflict',

noting that the dispute between the sellers and Fini Villages 'may have' been resolved. The evidence demonstrates that the disputes had not been resolved. The compelling inference is that the respondent did not terminate the retainer because of the possibility of the dispute being resolved.

Further, and in any event, a finding that the respondent did not take action under the retainer with the sellers in the period from 7 October is itself unreasonable in the Wednesbury sense. It is unnecessary to determine whether the respondent ceased acting thereafter. However, I note the respondent in its letter of 21 October 2004 to the buyer stated it was also acting for the seller.
In summary, by addressing the wrong question, the Tribunal erred in law in finding that the respondent had ceased to act from 28 September until 3 November 2004. Even if the Tribunal did direct itself to the correct question, the finding is unreasonable in the Wednesbury sense, there being no evidence to support it.
I would uphold ground 4.

Conclusion

I would grant leave to appeal and uphold the appeal. I would hear from the parties as to any other orders that should be made.
NEWNES JA: I agree with McLure JA and with the observations of Owen JA.