Sutton v Cecil Tomkins t/as Prime Real Estate
[2014] QCAT 111
•21 March 2014
| CITATION: | Sutton & Anor v Cecil Tomkins t/as Prime Real Estate [2014] QCAT 111 |
| PARTIES: | David Sutton Sandra Joanne Sutton (Applicants) |
| v | |
| Mr Cecil Tomkins t/as Prime Real Estate (Respondent) |
| APPLICATION NUMBER: | OCR221-12 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Paratz |
| DELIVERED ON: | 21 March 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The time for the filing of a claim against the claim fund by Sandra Joanne Sutton and David Sutton is extended to the date upon which they lodged their claim, being 19 March 2012, pursuant to section 511 of the Property Agents and Motor Dealers Act 2000. 2. I refer the claim to the Chief Executive for processing. |
| CATCHWORDS: | Where real estate agent made representations to buyer about the meaning and operation of a deposit bond – whether misrepresentation gives rise to a claim against the claim fund – where application for extension of time to lodge claim – whether applicant has any realistic prospects of success Property Agents and Motor Dealers Act 2000 (Qld) |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
David Sutton, Sandra Joanne Sutton and Damian Edward Cahill, (‘the buyers’) are seeking to obtain compensation from the Fund maintained under the Property Agents and Motor Dealers Act 2000 (Qld) (‘the Act’). Sandra Sutton is the mother of Mr Cahill.
These matters have had a long and protracted history. There are two files, one is an application by the Suttons (OCR221-12), the other is an application by Mr Cahill (GAR210-12). The applications have not yet progressed past the initial procedural hurdles. The circumstances and arguments are for all purposes effectively identical. I will deliver separate Reasons and Decisions on each file, but they are also effectively identical, only with necessary identification and detail modifications.
Mr Tomkins was a Real Estate Agent (‘the agent’). He was involved in transactions whereby the Suttons and Mr Cahill signed contracts to purchase lots off the plan in 2008 in a residential unit development on the Gold Coast known as “Elston” at the corner of Hamilton Avenue and Surfers Paradise Boulevard. They allege that actions of Mr Tomkins, and loss suffered by them, give rise to their entitlement to claim on the fund.
Sandra Sutton entered into a contract to buy a unit on Level 3 - Lot 24 for $469,000. The contract was entered into on 23 January 2008. Arrangements were made for the 10% deposit of $46,900 to be provided by means of a Deposit Bond provided by QBE Insurance (Australia) Limited by its authorised agent Deposit Access Pty Ltd. The application for the deposit bond was signed on 29 February 2008 and it was issued on 4 March 2008.
QBE Insurance (Australia) Limited (QBE) paid the lot 24 Deposit Bond premium of $4,845 to Deposit Access Pty Ltd on 4 March 2008.
The Contract was due to settle on 14 August 2009. The Suttons failed to complete the contract. On 14 October 2009, Ramsden Bow Lawyers, acting for the Vendor, wrote to the Solicitors for the Suttons advising them that the Seller terminated the contract and had directed that the deposit bond be called on immediately.
On 14 December 2010 QBE paid the amount of $46,900 to the Vendor under the lot 24 bond.
QBE instituted proceedings against Sandra Joanne Sutton and David John Sutton in the Local Court of NSW. An amended Statement of Claim was dated 20 July 2011. The claim was for a total of $50,770.16 being $47,340 for Claim plus interest and fees and costs. The basis of the claim against David Sutton was under a Guarantee written and contained in the deposit bond application dated 29 February 2008.
The Suttons filed an amended defence to the action on 5 August 2011. It alleged that Sandra Sutton was induced to request the bond on the basis of misrepresentations of Mr Tomkins made for himself and on behalf of the vendor and QBE, and that the conduct of Mr Tomkins and his principals was deceptive and misleading and otherwise unconscionable and unfair.
The Suttons were represented in those proceedings by Synergy Group Legal Pty Ltd. They alleged that the misrepresentations were to the effect that:[1]
(a)the deposit bond was a requirement to facilitate the transaction;
(b)the transaction was an option to purchase which Cecil Tomkins undertook to novate prior to completion;
(c)the only monies which the Defendant had to pay was the fee accompanying the bond (which was duly paid by the Defendant);
(d)Cecil Tomkins had done this many times successfully for the plaintiff and developers of real property under construction benefiting himself and other clients;
(e)In this development, Cecil Tomkins was doing this with at least 3 other Buyers;
(f)Cecil Tomkins was experienced and knowledgeable in such matters and the defendant did not need independent legal or financial advice; and
(g)In any event, the legal liability of the defendant was limited to the deposit Bond fee paid by the defendant.
[1]Amended Defence 18 July 2011 at [2].
An application was apparently to be made to join Cecil Tomkins and Deposit Access Pty Limited to the proceedings on 25 October 2011, but the application in respect of Deposit Access Pty Ltd was not proceeded with, and a Cross-Claim against Mr Tomkins by the Suttons was filed on 17 November 2011. It is unclear what happened to that application and cross-claim.
Judgment was given for QBE against Sandra Sutton and David Sutton on 29 February 2012 as per a Consent Order for the amount of $103,243.14. The judgment was entered on 3 April 2012.
It appears that the units were resold by the Vendor at a higher price, so no claim was made against the Suttons by the Vendor in that respect.
Synergy Group Legal Pty Ltd forwarded a letter to the Office of Fair Trading dated 16 March 2012 enclosing a PAMD Form 50 “Claim against the claim fund” signed by Sandra Sutton and David Sutton on 20 February 2012. The form provided that the event alleged to give rise to the claim occurred on 5 February 2008, and that Mr Cahill became aware of the loss on 30 March 2011. The respondents were named as Cecil Tomkins and Prime Real Estate. The claim was lodged on 19 March 2012.
The Office of Fair Trading (‘OFT’) responded by a letter dated 24 May 2012 to Synergy Group Legal Pty Ltd rejecting the claim on grounds that:
Claims against the Claim fund must be grounded in an event prescribed in section 470 of the Act. I reiterate from my previous correspondence that the actions of the respondents in relation to this claim do not constitute a breach of section 470 of the Act which would give rise to a valid claim against the Claim Fund. Of all the events prescribed in section 470 as giving rise to a claim against the Claim Fund, it would appear that section 574 (false representations about property) is the one most relevant to the Claimant’s claim. However, the claimant’s allegations against the Respondents do not allege any false or misleading representations in relation to the sale of the Property.
(and)
I also note that the claim is out of time.
A PAMD Form 52 “Claim out of time notice” dated 24 May 2012 was issued by the OFT. An application was filed in the Tribunal on 8 June 2012 submitting that the claim was within time, and seeking any necessary extension of time.
The Suttons then engaged new lawyers in July 2012, known as Australasian Lawyers and Consultants.
The Tribunal considered the application for an extension of time in which to lodge a claim against the fund by a written judgment dated 2 October 2012. The learned Senior Member referred to the proceedings in New South Wales, noting that the Suttons commenced proceedings in July 2011 which was within the time that he could have claimed against the fund, and that by s 472(3) of the Act a person can make a claim against the fund within three months after the proceeding in court ends.
The reasons then concluded that:
[7]The material filed indicates that the last action in the New South Wales proceeding occurred on 2 March 2012. Mr and Mrs Sutton lodged their claim on 19 March 2012. The claim was filed within time.
Conclusion
[8]The application for an extension of time is not necessary because Mr and Mrs Sutton filed their claim within 3 months of legal proceedings being concluded. Those legal proceedings were filed within the time they were permitted to make a claim. The application for an extension of time is therefore refused because it is unnecessary. The Chief Executive should reconsider the claim.
The OFT took this decision as a refusal of the application to extend time absolutely, and in a letter to the Sutton’s solicitor dated 24 October 2012 advised that the Chief Executive had reconsidered the claim as per the reasons provided by QCAT and confirmed the application remained out of time, and as such the Chief Executive was powerless to progress the claim.
The Suttons then filed an Application in the Tribunal on 2 July 2013 seeking that the application be confirmed as within time. The matter came before me on 2 October 2013 when I ordered that the decision of the Tribunal made on 2 October 2012 in relation to the Application for extension of time be renewed pursuant to s 133 of the QCAT Act, in order to allow the problems with interpreting the Tribunal’s decision to be determined.
I gave directions for the filing of consolidated material and submissions, and for the application to be determined on the papers after 29 November 2013 if no application for an oral hearing was made. No application for an oral hearing was made, and this application is now being determined on the papers. This is the renewed decision on the Application for extension of time.
Submissions were filed accordingly on behalf of Mr Cahill and the Suttons on 4 November 2013 by Australasian Lawyers and Consultants. I note particularly the following paragraphs:
3.Tomkins misrepresented the nature of the bonds and the purpose for which they would apply regarding the purchase of this real estate and many other things about the nature of the real estate which are detailed at length in this material. It is the misrepresentation about the position overall to induce the Suttons and Mr Cahill to act to their detriment, and engage in the purchase of this real estate according to the scheme by which Tomkins was able to extract advanced commission payments from the seller, without properly accounting which seem most germane.
7.As a licensed real estate agent engaging in such misrepresentation and failing to appropriately deal with the instrument of the deposit (which is no less a matter of trust keeping), Tomkins has breached the Property Agents and Motor Dealers Act 2000 (as amended) and recourse is sought from the Fund provided that the Commissioner is persuaded following this review.
8.For present purposes, the critical argument is about the timing of the claims. The Tribunal has considered and made orders in this regard; however, this has been questioned by the Commissioner; and needs to be determined. The Applicants continue to argue the case under Section 372(3) that the claim was made on 19 March 2012 following cessation of the NSW proceedings on 28 February 2012. However, there is some technical debate in this regard and probably the most striking feature of it is that, in reality, the financial loss complained of, was not realised until the NSW judgments entered on 5 March 2012. I note that the claim was made within one (1) month thereof so the argument remains still that the claim always was within time.
The Chief Executive filed submissions on 27 November 2013. Those submissions canvass the issues as to time, and also canvass the merits of the Suttons claim, arguing that the claim is hopeless and bound to fail and as such the extension of time ought to be refused.
Is the claim within time due to the date of ending of a proceeding?
The Chief Executive submits that the matter is not within time as regards a proceeding. It refers to s 472 of the Act and argues that s 472(3) requires that the applicant must start a proceeding, not defend one. It points out that QBE commenced a proceeding against the applicant to recover QBE’s loss.
I see merit in the Chief Executive’s argument in this regard. The section clearly apprehends that an Applicant would be seeking to recover loss directly from the Respondent to the claim in proceedings in a court, and was pursuing that claim before turning to claim against the fund. In this matter there was no claim by the Suttons against Mr Tomkins for any loss he had suffered at the inception of the proceedings.
A Statement of Cross-Claim was filed by the Suttons on 17 November 2011. It did not make any direct claim against Mr Tomkins. It sought that Mr Tomkins pay any amounts that QBE might recover against Mr Cahill.
Section 472(3) provides as follows:
However if the person starts a proceeding in a court to recover the person’s financial loss within the time permitted to make a claim under subsection (2), the person may make the claim within 3 months after the proceeding in the court ends.
The question then becomes, did the Suttons start proceedings to recover their financial loss, and if so when did they do so?
The Suttons could not be said to have commenced a proceeding in a court to recover their financial loss when QBE initiated the NSW court proceedings against them (which would have been a date before the date of the Amended Statement of Claim on 20 July 2011). That was a claim against them, not by them.
It is arguable that filing a Cross-Application amounted to commencing proceedings to recover a financial loss. At the time of filing the cross-application there was no financial loss, however those were the appropriate proceedings in which to make such a claim. If the Suttons had waited until the completion of the NSW proceedings whereby they were found liable to pay QBE the value of the deposit, and had then sought to commence new proceedings against Mr Tomkins to recover that financial loss, they would have had to relitigate many of the same issues and evidence. The Commissioner appears to give credence to this argument, and said in its letter of 19 October 2012 that:[2]
Therefore the earliest time that your client can assert that he commenced proceedings in a court to recover his loss is the date the cross claim was filed which appears to be on or after 25 October 2011.
[2]Letter OFT to Synergy Group Legal Pty Ltd 19 October 2012 p2.
Section 472(2) provides two options as to time in respect of financial loss. That section provides as follows:
(2)A person may make the claim against the fund only if the person makes the claim within the earlier of the following –
(a)1 year after the person becomes aware that the person has suffered financial loss because of the happening of an event mentioned in section 470(1);
(b)3 years after the happening of the event that caused the person’s financial loss.
When did the Suttons become aware that they had suffered financial loss? The Commissioner submits[3] that “the Applicant’s alleged loss could not arise until consent judgment was entered in the NSW proceedings on 3 April 2012”. The Suttons make a similar submission that the financial loss was not realised until the NSW judgment was entered on 3 April 2012.
[3]Submissions filed 27 Nov 2013, Para 12.
I accept the position that both parties agree to, that the Suttons financial loss did not arise or crystalise, and that they did not suffer financial loss, until the date that the judgment against them by QBE was entered on 3 April 2012. The Suttons therefore had 1 year after that to make a claim against the fund in respect of s 472(2)(a). That date would be 3 April 2013.
The second alternate of s 472(2)(b) is in relation to the date when the event that caused the financial loss arose. The event that caused the financial loss is the date when the Deposit Bond was entered into, which was 29 February 2008. Three years after the event would therefore be 29 February 2011.
The claim was dated 22 February 2012, and was lodged on 19 March 2012.
Whilst there is discrepancy as to the actual dates in the various submissions and correspondence, the relevant dates therefore appear to be on or about:-
· Date that is three years after the happening of the event – 29 February 2011.
· Date that proceedings to recover financial loss started – 25 October 2011.
· Date of claim to OFT – 19 March 2012.
· Date that is one year after the Suttons became aware that they suffered financial loss – 3 April 2013.
· Date that proceedings to recover financial loss ended - 3 April 2012.
The earlier of the two options in s 472(2) is the date that was three years after the event, which was 29 February 2011.
Applying these dates to s 472(3) as to court proceedings, then the date that the Suttons started their proceedings to recover their financial loss (25 October 2011) was not within three years of the happening of the event (29 February 2011).
As the proceedings were not commenced within s 472(2), then the exception in s 472(3) as to the ending of the proceedings will not apply.
Is the claim within time in relation to financial loss?
The previous discussion reveals that the claim was not made within time in relation to awareness of suffering financial loss under s 472(2), as the date that the Suttons started their proceedings to recover their financial loss (25 October 2011) was not within three years of the happening of the event (29 February 2011).
Is an extension of time required?
The claim is therefore out of time under any of the provisions of s 472, and an extension of time would be required under s 511 for the claim to proceed.
Should an extension of time be allowed?
Section 511 provides that the Tribunal may extend the time within which to file the claim if the tribunal is satisfied that:
511(b) it is appropriate to extend time having regard to –
(i)the reasons for not making the claim or seeking the review within the time allowed; and
(ii)the application generally; and
(iii)for a claim, the relative hardship that an extension of time or a refusal to extend time would place on the claimant or respondent; and
(iv)the justice of the matter generally
The Chief Executive argues that even if the claim is within time, that it should not be allowed to proceed as it has no merits and is doomed to fail. The reasons put forward for that proposition are also relevant to the appropriateness of extending time.
Section 511(b)(i) Reasons for not making the claim within the time allowed
The Chief Executive does not take any issue with this limb as the Suttons alleged loss could not arise until consent judgment was entered in the NSW proceedings on 3 April 2012.[4]
[4]Submissions of Chief Executive filed 27 Nov 2013 at [12].
The Suttons do not specifically say why a claim was not made until 19 March 2012. However, they were engaged in legal proceedings in NSW until after that date, as the Chief Executive notes, so it understandable that they would have been pre-occupied with those proceedings and looking to see how they resolved before seeking the alternate possible source of recovery of making a claim against the fund.
I am therefore satisfied that the Suttons have a satisfactory explanation as to why the claim was not made within time.
Section 511(b)(ii) The application generally
This matter has generated a great volume of submissions already. Many of the submissions on behalf of the Suttons are framed in generalities and without reference to specific provisions of the Act. There is frequent reference to an alleged scheme by Mr Tomkins to obtain commission earlier than would normally apply on a sale.
In order to ultimately succeed in his claim against the fund, the Suttons will have to identify what provisions of the Act they are claiming within, and establish the factual foundation for their claim. There are considerable difficulties facing them in doing so, and it is by no means clear that they would ultimately be able to do so.
The Chief Executive refers to the comment of the Tribunal in Potter v Klar Pty Ltd & Ors[5] that “if the claim is hopeless or bound to fail, there would be no utility in extending the time”. This sentiment would apply in a clear case where the Applicant has no realistic prospect of success. However, Tribunals or Courts are generally slow to deny a citizen their “day in court”. The risk for the applicant is that they may incur significant legal costs and be unsuccessful, and may also run the risk of a costs order being made against them.
[5][2008] CCT PE008-07.
The Chief Executive refers to the following obstacles and arguments facing the Suttons:
· They are well outside the time limits for making a claim relating to marketeering contraventions in s 472A.
· A claim under s 574 as to false representations is not made out as none of the representations regarding the valuation of the property on completion, the ready availability of finance, and the ability to resell the property prior to completion, appear to be false.
· The Suttons assert that false representations were made as to how the deposit bond worked at law, but the Act only covers false representations about property.
· The Suttons were provided with a Form 30c warning statement that warned them to seek independent legal advice and an independent valuation, some 15 days before they signed the Deposit Bond.
· The Suttons appear to be suggesting that they suffered loss because the Deposit Bond was paid to a Solicitor’s Trust account, and should not have been released. It is suggested that this may give rise to a claim against the solicitor but not against the claim fund.
In summary the Chief Executive submits on this head that:[6]
In the circumstances, it is submitted that there is no relevant event that caused the Applicant’s alleged loss. Alternatively, if an event could be established, the applicant’s actions/omissions to avoid settlement denied the potential for the representations to become true noting that it appears from the Applicant’s evidence that as a minimum the alleged representation that the properties value would increase appears to have been realised in the on sale of the property.
[6]Submissions of Chief Executive filed 27 Nov 2013 at [26].
It is submitted on behalf of the Suttons that:[7]
The various facts amounting to a breach of (s 574(1) as to false or misleading representations in relation to the sale of a property) are canvassed extensively in the material lodged to date. However, in summary, the respondent misrepresented the sale of the property to the applicant and the process by which it could be purchased by them, to such an extent that they would not have purchased the property had the true position been known; and would not have suffered the loss which they have.
[7]Affidavit Ricardo Viana dated 1 November 2013 at [8].
The misrepresentation that is complained of appears to relate to the operation of the Deposit Bond. In essence the Suttons appear to be saying that they were not aware that the Bond could be called upon by the Vendor and be forfeited to it, and that the provider of the Bond would then seek redress from them. This will then become a question of law as to whether this is a representation as to sale of property under s 574(1).
Many of the submissions made on behalf of the Suttons revolve around propositions that they should be able to claim from the fund on the basis of public policy. Whilst such arguments are understandable, they still have to come within the legislative framework of the Act. An example is this submission:[8]
In my submission, justice in the matter generally would dictate that the Applicant please be given an extension of time to enable their claim to be determined by the Commissioner for relief; and for action to be taken against the Respondent and generally as may be determined to ensure that this type of thing does not happen again to people in the position of the Applicant.
[8]Affidavit Ricardo Viana dated 1 November 2013 at [14(b)(iv)].
I have doubts as to whether the Suttons will ultimately be able to overcome the hurdles highlighted by the Chief Executive, and I would urge them to consider further action carefully as to its utility. That said, I am reluctant to deny them the opportunity to pursue their claim if they seek to do so, and consider they can establish it within the Act.
Section 511(b)(iii) Relative hardship an extension would place on the claimant or respondent
Mr Tomkins has not filed any material in response to the application for an extension of time. He has therefore not raised any issue of hardship that an extension may cause him.
The Suttons point to the substantial financial loss they have suffered, and say they will suffer hardship if they do not recover this.
The Chief Executive doubts that the Suttons will suffer hardship and points to the letter supporting their application for the Deposit Bond written by their accountant on 6 February 2008 that “the proposed commitment for Lot 24, Elston, Surfers Paradise, 4217, of $469,000 will not create undue hardship” as evidence that the Suttons should be able to absorb the financial loss occasioned by the Deposit Bond.
Whether the Suttons were being prudent in committing themselves to purchase of a unit is not revealed on the material, but it is clearly submitted on their behalf that they have suffered hardship by the financial loss. For the current purposes I am prepared to accept that as a reasonable proposition.
Section 511(b)(iv) The justice of the matter generally
The Chief Executive submits that this matter is more akin to a case of the buyer attempting to avoid his contractual obligations and the subsequent termination penalties.
The Suttons for their part argue strongly that they were misled by gross misrepresentation, and base much of their material on grounds of justice.
For similar considerations as discussed above as to the application generally, I am disposed to allow the Suttons to pursue their claim which they see as just, whilst again cautioning them to be realistic about doing so.
Conclusion
For the reasons discussed, I am satisfied that the requirements of s 511 are made out, and allow the extension of time, although I do so with the notes of caution I have made.
I order that the time for the filing of a claim against the claim fund by Sandra Joanne Sutton and David Sutton is extended to the date upon which they lodged their claim, being 19 March 2012, pursuant to section 511 of the Property Agents and Motor Dealers Act 2000; and refer the claim to the Chief Executive for processing.
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