Trispine Pty Ltd trading as Pacific Commercial and Residential Real Estate v Chief Executive, Department of Justice and Attorney-General Office of Fair Trading
[2021] QCAT 284
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Trispine Pty Ltd trading as Pacific Commercial and Residential Real Estate & Anor v Chief Executive, Department of Justice and Attorney-General – Office of Fair Trading & Ors [2021] QCAT 284
PARTIES: TRISPINE PTY LTD TRADING AS PACIFIC COMMERCIAL AND RESIDENTIAL REAL ESTATE
CHRISTOPHER EDWIN JACKSON
(applicants)
v
CHIEF EXECUTIVE, DEPARTMENT OF JUSTICE AND ATTORNEY-GENERAL – OFFICE OF FAIR TRADING
WARREN GILBERT SCOTT
PETER ANTHONY SMITH
(respondents)
APPLICATION NO/S:
GAR119-20
MATTER TYPE:
General administrative review matters
DELIVERED ON:
11 August 2021
HEARING DATE:
27 July 2021
HEARD AT:
Brisbane
DECISION OF:
Member Kanowski
ORDERS:
1. The decision made by Chief Executive, Department of Justice and Attorney-General – Office of Fair Trading on 27 February 2020 to allow the claim of Warren Gilbert Scott on the claim fund; to pay $17,500 to Warren Gilbert Scott from the claim fund; to name Trispine Pty Ltd trading as Pacific Commercial and Residential Real Estate, Peter Anthony Smith and Christopher Edwin Jackson as liable for the financial loss of Warren Gilbert Scott, and as liable to reimburse the claim fund $17,500, is set aside.
2. A decision is substituted to reject the claim of Warren Gilbert Scott on the claim fund.
3. Warren Gilbert Scott must refund $17,500 to the claim fund by 8 September 2021.
CATCHWORDS:
LANDLORD AND TENANT – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OTHER MATTERS – where a person collected rent for a property owner – whether the person misapplied rent
PROFESSIONS AND TRADES – AUCTIONEERS AND AGENTS – STATUTORY OR OTHER FIDELITY OR COMPENSATION FUND – where claim against statutory fund – whether loss established
Agents Financial Administration Act 2014 (Qld), s 82(1)(b)
Briginshaw v Briginshaw (1938) 60 CLR 336
APPEARANCES & REPRESENTATION:
Applicants:
Christopher Edwin Jackson appeared for himself and Trispine Pty Ltd
Respondents:
R Vize, Principal Legal Officer, Department of Justice and Attorney-General appeared for Chief Executive, Department of Justice and Attorney-General – Office of Fair Trading
The other respondents were self-represented
REASONS FOR DECISION
Introduction
This is a review of a decision made by the Chief Executive, Department of Justice and Attorney-General – Office of Fair Trading (‘Office of Fair Trading’) in respect of a claim on the claim fund under the Agents Financial Administration Act 2014 (Qld) (‘Agents Financial Administration Act’). The claim was made by a property owner in respect of rent said to have been collected by an agent from the tenant, but not forwarded to the owner.
The claim on the fund was made by Warren Scott. Respondents to the claim were Trispine Pty Ltd (which operated a real estate agency), Christopher Jackson (director of Trispine Pty Ltd), and Peter Smith (consultant to the real estate agency at the time the lease began).
On 27 February 2020, Office of Fair Trading decided that Mr Scott’s claim against the fund was allowed; that $17,500 be paid to him from the fund; and that Trispine Pty Ltd, Mr Jackson and Mr Smith were jointly and severally liable to reimburse the fund, as persons liable for Mr Scott’s loss.
Trispine Pty Ltd and Mr Jackson have sought a review of that decision by the tribunal. The matter was heard on 27 July 2021. Oral evidence was given by Mr Jackson, Mr Scott and Mr Smith, and there were 12 exhibits.
Background
Mr Scott owns a commercial building at 54 Smallwood Street, Underwood, which is a suburb of Logan City. In September 2014 he entered into a general tenancy agreement with Vincenzo Invincible trading as the Pasta King for the lease of unit 3. The lease was for an initial period of four years, with options to extend. Mr Invincible leased the premises to produce pasta products.
Mr Scott lives in New South Wales. It is undisputed that from the start of the lease until mid-2018, Mr Smith collected rent in cash from Mr Invincible on many occasions. Mr Scott says that Mr Smith failed to pass all of the rent money on to him. This prompted Mr Scott to make his claim on the fund.
Mr Scott’s claim was made on 15 January 2019. He named Mr Smith as the respondent. He described Mr Smith as the leasing agent, and Mr Smith’s trading name as Pacific Commercial and Residential Real Estate. However, Office of Fair Trading determined that Trispine Pty Ltd and Mr Jackson should also be respondents.
It is undisputed that Mr Smith had performed various functions for Trispine Pty Ltd over the years, including at least one transaction in relation to the lease in question. However, the extent to which Mr Smith acted on behalf of Trispine Pty Ltd in connection with the lease is a matter in dispute in this proceeding. Office of Fair Trading and Mr Scott contend that Mr Smith was acting as property agent for the premises, and was ostensibly the agent for Trispine Pty Ltd over a number of years. Mr Smith and Mr Jackson contend that Mr Smith’s dealings with Mr Invincible and Mr Scott, after the initial formation of the lease, were neither actually nor ostensibly on behalf of Trispine Pty Ltd.
It is undisputed that, in 2014, Pacific Commercial and Residential Real Estate was the trading name of Trispine Pty Ltd. Mr Smith was at that time permitted by Trispine Pty Ltd to describe himself as sales/rental consultant and as commercial and industrial consultant for Pacific Commercial and Residential Real Estate. He used one or other of those titles in correspondence and on business cards.
The undisputed transaction involving Trispine Pty Ltd occurred at the outset of the lease. Mr Smith, as consultant to Pacific Commercial and Residential Real Estate, brought Mr Invincible and Mr Scott into contact. He then facilitated their entry into the lease, including by providing the lease agreement, obtaining Mr Invincible’s signature, and then sending the agreement to Mr Scott in Sydney for signature. Mr Smith signed the letter to Mr Scott as sales/rental consultant, Pacific Commercial and Residential Real Estate. Mr Smith invoiced Trispine Pty Ltd for his work in forming the lease. This was pursuant to a long-running arrangement between Mr Smith and Trispine Pty Ltd for similar transactions. Mr Smith did not have a real estate licence that would enable him to broker leases in his own right, whereas Trispine Pty Ltd did. The arrangement had the effect of splitting the initial leasing commission between Trispine Pty Ltd and Mr Smith.
The lease made some special provisions for payments in the first months of the tenancy, and whether those provisions were departed from by agreement is a matter of dispute between the parties. However, payments in the first few months are not significant in this review. This is because it is only rental payments from 1 December 2014 that can be the subject of a claim under the claim fund.[1] The period in question in this case is 1 December 2014 to 30 June 2018. For that period, the lease provided for monthly rent of $2,200.
[1]The question of the relevant period was dealt with in QCAT proceeding GAR066-19: Scott v Trispine Pty Ltd and Anor, at Exhibit 1, 113.
On the first page of the agreement, it is said that rent is to be paid to the ‘Landlord or his agent’.[2] However, a special condition later in the lease specified that rent was to be paid by electronic funds transfer to a particular ANZ bank account. This is Mr Scott’s account. The special condition as a more specific term about payment takes precedence, on general principles for interpreting contracts. Accordingly, I find that the contractual intention was that rent was to be paid by way of electronic funds transfer to the ANZ account.
[2]Exhibit 1, 22.
Office of Fair Trading notes that the lease included an agreement by ‘the landlord’ to pay outgoings, including ‘property management fees’.[3] However, I note that this was a generic term. Mr Jackson emphasises that the lease did not provide for Trispine Pty Ltd to collect rent, or make other provision for ongoing property management functions to be performed by an agent.
[3]Ibid.
Despite the term in the lease that rent was to be paid by way of direct deposit into Mr Scott’s ANZ account, it is undisputed that Mr Invincible never paid rent in that manner during the period in question. It is also undisputed that the only payments made into the ANZ account on behalf of Mr Invincible – with the possible exception of one in November 2015– were cash deposits made by Mr Smith after he collected rent in cash from Mr Invincible.
The reason I say there is a possible exception of November 2015 is that Mr Scott says he received a cash payment of $1,500 for rent from Mr Smith on that occasion. Presumably he may then have paid some or all of that amount into his ANZ account. There is a deposit in the ANZ account of $1,000 on 18 November 2015, next to which Mr Scott has added in handwriting ‘Unit 3 Enzo’.[4] Conceivably, this may have been part of the $1,500.
[4]Exhibit 1, 40.
It should be added that Mr Scott has given inconsistent statements about when he received the $1,500 in cash. His accountant’s table[5] and a statement in this proceeding[6] place it in November 2015. However, in emails to Office of Fair Trading, Mr Scott said that the $1,500 was received in November 2014.[7] These do not appear to be mistaken references, because in the second of these emails Mr Scott says the payment was made ‘in November 2014 when [I] was in Underwood to attend to the claimed refrigeration failure’.[8] As will be discussed below, the claimed (or actual) refrigeration failure must have been in 2014, because Mr Scott has produced an invoice for $9,020 for an overhaul of the cold-room in December 2014.
[5]Exhibit 1, 107.
[6]Exhibit 9, 13th page.
[7]Exhibit 1, 117, 118.
[8]Exhibit 1, 118.
The source or sources of the deposits in question into the ANZ bank account are, with one exception, unattributed in the bank statements themselves. Mr Scott has added handwritten notes to identify deposits he says were for Mr Invincible’s rent. The exception is on 21 January 2015, where the entry in the bank statement itself is labelled ‘AGENT DEPOSIT 54’.[9] However, even that is ambiguous, given that the statements have other entries for monies coming in for ‘54 Smallwood’[10] which Mr Scott has not identified as rent from Mr Invincible. Presumably they are payments from other tenant/s in the building.
[9]Exhibit 1, 37.
[10]Exhibit 11.
The deposits identified by Mr Scott in the bank statements as being for Mr Invincible’s rent are sporadic. None of them are for $2,200. Almost all are for only $1,000. There are quite a few months when there are no deposits identified as being for Mr Invincible’s rent.
Mr Scott never appointed Mr Smith (in writing at least) as his property agent. This can be contrasted with Mr Scott’s later action, in April 2018, when he completed a Form 6 to appoint Ellison Specialised Properties, a licensed real estate agent, as his property agent to perform letting and other services for the premises. Indeed, Mr Smith could not have been so appointed because he was not licensed. Further, it is not suggested that Mr Scott paid Mr Smith for his rent-collection services. Mr Smith says he was merely assisting, as a friend, Mr Invincible and Mr Scott. Mr Smith says that Mr Invincible preferred to deal in cash and as a matter of convenience gave the rent money to Mr Smith who did his own banking at a location near the local ANZ branch. Mr Scott, for his part, denies that he was friends with Mr Smith or Mr Invincible.
There is also disagreement about whether, as Mr Smith claims, Mr Scott at one point in late 2014 agreed to reduce the monthly rent from $2,200 to $1,000, and at another point, in December 2014, agreed to a seven-month rent-free period because of major stock loss suffered by Mr Invincible when the cold-room broke down. Mr Scott says neither agreement was made. I will return to those controversies in due course.
The amount claimed
The amount of rent which Office of Fair Trading and Mr Scott say was collected by Mr Smith from Mr Invincible, but not passed on to Mr Scott, has been calculated with reference to a table prepared by Mr Scott’s accountant.[11] The table covers a period slightly longer than the period in question – which as I have mentioned is 1 December 2014 to 30 June 2018 – but the discussion below relates to the period in question.
[11]Exhibit 1, 107.
The table proceeds on the basis that Mr Invincible paid a total of $43,000 in rent during the period in question, at the rate of $1,000 per month for each of the 43 months. The table also sets out the amounts which Mr Scott says he received in his ANZ bank account, plus the $1,500 he says he received in cash in November 2015. According to the table, Mr Scott received $26,000. The difference between the $43,000 said to have been paid, and the $26,000 said to have been received, is $17,000. This alleged loss accumulated sporadically across the period in question.
When Office of Fair Trading made its original decision, it said that $25,500 had been received by Mr Smith. I am not sure why the figure was not $26,000, but perhaps $500 of the $1,500 payment discussed above was treated as being for an outgoing rather than rent. Office of Fair Trading therefore calculated the amount of rent collected by Mr Smith but not passed on to Mr Scott at $17,500. This was the amount which Office of Fair Trading awarded to Mr Scott on his claim against the claim fund, and for which it decided that Trispine Pty Ltd, Mr Jackson and Mr Smith are liable.
At the outset of the hearing, Mr Vize for Office of Fair Trading advised the tribunal that the relevant figure should be $18,000 rather than $17,500, and he submitted that the tribunal should vary Office of Fair Trading’s decision accordingly. The calculation explained by Mr Vize treats the amount received by Mr Scott during the period in question as $25,000, rather than the $26,000 shown in the table prepared by Mr Scott’s accountant. The reason for the change is that the table indicates that $3,000 was received by Mr Scott in December 2017, but an examination of the bank accounts shows that only $2,000 was received.
I note, though, that this proposition proceeds on the basis that only the $2,000 deposit into the ANZ account on 8 December 2017 is a relevant payment. The source of the deposit is not shown in the bank statement. Mr Scott has handwritten next to it: ‘Rental Unit 3. Dep by P. Smith’.[12]
[12]Exhibit 1, 54.
There is also a deposit of $1,000 into the ANZ account on 22 December 2017, with no source shown.[13] Presumably Mr Scott and/or his accountant thought this too was a relevant payment when the table was prepared. Why this is no longer thought to be the case is not apparent.
[13]Exhibit 11.
I should add that until unredacted bank statements were tendered at the hearing, only heavily-redacted copies of Mr Scott’s bank statements were made available. Transactions on 22 December 2017, for example, had not been made available. Even the unredacted statements provided at the hearing have very significant gaps. For example, there is no statement for the period 13 December 2014 to 14 January 2015, or for the period13 April 2015 to 13 November 2015, to take just two examples. I can only wonder if there are further deposits which may or may not be relevant payments. This is not to accuse Mr Scott of deliberately hiding evidence, but to highlight that Mr Scott’s interpretation of the remaining statements cannot be scrutinised.
It can be seen from the above discussion that a critical issue is whether Mr Invincible did indeed pay $1,000 per month in rent throughout the period in question. There is dispute about that. There are no receipts for Mr Invincible’s rent payments in evidence, and it is not suggested that rent receipts were issued during the period in question, either by Mr Smith or Mr Scott.
The position of Mr Smith and Mr Jackson
Mr Smith says that he passed on to Mr Scott all rent that he received from Mr Invincible. Mr Jackson agrees with Mr Smith but this is based purely on his good opinion of Mr Smith. It is undisputed that Mr Jackson retired from the real estate business in mid-2015. Further, it is not suggested that he had any personal involvement in the collection of rent for the premises at any stage.
Mr Smith says that there was a seven-month rent-free or rent-offset period verbally agreed to by Mr Scott in December 2014 when the cold-room broke down and spoiled Mr Invincible’s stock worth $8,600. Mr Smith also says that prior to this, Mr Scott had verbally agreed to reducing the monthly rent from $2,200 to $1,000 until other problems in the premises were fixed. Mr Smith says the agreed reduced rent remained at $1,000 per month throughout the period in question.
Mr Smith has written letters of support for Mr Invincible. In a letter to Ellison Specialised Properties dated 2 October 2018, Mr Smith said that Mr Invincible ‘has always paid the asking rent’.[14] In a letter to lawyers dated 8 October 2020, Mr Smith said ‘Mr Invincible has always paid his rent every month at the figure of $1000 …’.[15] There is no mention of a rent-free period in 2014/2015, though I note that the letter was written some six years later.
[14]Exhibit 1, 93.
[15]Exhibit 5, annexure ENI5.
Controversies over whether there was a rent reduction or rent reprieve
Mr Scott says there were no agreements to reduce rent or to relieve Mr Invincible of his rent liability for a period. He says there is no way that he would have agreed to reduce the rent by more than half when Mr Invincible had only recently signed a lease agreeing to pay $2,200 per month. He also points to a handwritten term in the lease, clause 5D, which says ‘COOL ROOMS LESSEE AT HIS EXPENSE TO KEEP AND MAINTAIN IN GOOD CONDITION’.[16] However, in oral evidence, it emerged that this was a term Mr Scott wrote in after Mr Invincible had signed the lease. There is no evidence of Mr Invincible counter-signing this addition. Mr Scott says the added clause reflected the pre-contractual discussions, which I have no reason to doubt. However, it is also noteworthy that Mr Scott says that he paid $9,020 to Refrigeration House of Queensland for work on the cold-room at the premises on 9 December 2014. Mr Scott has described this work as the cold-room being ‘completely overhauled and rebuilt’.[17] It is noteworthy, in my view, that Mr Scott felt obliged to take responsibility for this, despite the clause he had added to the lease.
[16]Exhibit 1, 24.
[17]Exhibit 5, 3.
Mr Scott says he did not agree to a rent-free period. He emphasises that Mr Invincible has not produced documentary evidence about the stock that he says he lost. He also points to payments into his account, which he says were for rent for the premises, during the seven-month period after 9 December 2014 when, allegedly, no rent was payable: $1,000 in January 2015, $1,000 in March 2015, and $1,000 in April 2015.
Mr Smith says that he witnessed the extent of the stock loss and was instrumental in liaising between Mr Invincible and Mr Scott about a rent reprieve to compensate for this. In relation to the payments in January, March and April 2015, Mr Smith says that Mr Invincible simply paid rent when he could afford it, and would have regarded payments during the rent-free or rent-offset period as advance payments.
Mr Smith points to a handwritten document written by Mr Scott, headed ‘ENZO Unit 3’,[18] which Mr Scott sent to him at some point. Presumably it was compiled in September or October 2015, because it lists rent details up to September 2015. In reaching a figure in that document for rental arrears, Mr Scott subtracted $6,000 which he described as ‘allowance for loss due to freezer malfunction’.[19] Mr Scott says this notation was based on Mr Smith telling him in a phone call that Mr Invincible had suffered a stock loss worth $6,000, and he noted this claim on the document, without accepting it. Mr Scott says he sent the document to Mr Smith ‘to get some attention to the outstanding rentals owed’.[20]
[18]Exhibit 3, attachments, 1.
[19]Ibid.
[20]Exhibit 5, 4.
Mr Scott has also said that the allowance of $6,000 was ‘conditional on Invincible producing perishable food and stock purchases receipts for the previous 2/3/4 weeks prior to the alleged freezer malfunction’.[21] Mr Scott says no such receipts were produced. I note, though, that there is nothing in the handwritten list to indicate that the allowance was conditional.
[21]Exhibit 9, fourth page.
Mr Invincible has given differing versions of events, as I will describe later in more detail. In his first and third versions, he makes no mention of a rent-free or rent-offset period. In the middle version, he says that Mr Smith advised him that Mr Scott ‘had agreed to offset rent / give me a rent-free period for 7 months (equating to $7,000)’,[22] and he did not pay rent for seven months. However, as will be discussed, I do not regard Mr Invincible as a reliable source of information. Accordingly, I do not place weight on this comment.
[22]Exhibit 3, affidavit of Mr Invincible, [13].
Mr Scott’s explanation for the $6,000 allowance is, in my view, unconvincing. It is not credible that he would make such an allowance in a document sent to Mr Smith unless he had agreed to an offset for the impact of a cold-room malfunction.
It is relevant to reiterate at this point that Mr Scott denies that there was ever an agreed reduction in the monthly rent from $2,200 to $1,000. It is not necessary for the purposes of this case to decide whether there was such an agreement, though it is obviously hard to fathom why Mr Scott took so long to take the action of appointing a licensed property agent, in 2018, if he was expecting but not receiving monthly rent of $2,200 for all those years. Even at the point when he appointed Ellison Specialised Properties, Mr Scott did not insist on rent of $2,200 per month. Ellison Specialised Properties wrote to Mr Invincible on 7 June 2018 saying that while Mr Scott had never agreed to a reduced rent, future rental payments of only $1,000 per month were required.[23]
[23]Exhibit 1, 15.
Tribunal’s analysis
Weighing up the evidence about whether there was a rent-offset / rent-free period, I consider it more likely than not that there was such a period, of seven months, as Mr Smith contends. Although it seems odd if Mr Invincible made some payments during that period (assuming Mr Scott has correctly identified them), other factors tip the balance. First, major work was carried out on the cold-room in December 2014 at Mr Scott’s expense, despite his position as at September 2014 that Mr Invincible was to be responsible for maintaining cool-rooms in good condition. As Mr Scott was prepared to foot the bill for that work in December 2014, it would not be surprising if he also took financial responsibility for loss of Mr Invincible’s stock. Second, Mr Scott’s allowance for $6,000 in the document he sent to Mr Smith is inconsistent with his later denial of any such allowance being agreed upon. The absence of records from Mr Invincible about the stock is not decisive, in my view. It is entirely possible that Mr Scott was prepared to rely on verbal advice from Mr Smith that there had been a significant loss of stock, given that he was prepared to trust Mr Smith to collect rent.
Accordingly, I find that it was mutually agreed between Mr Scott and Mr Invincible in December 2014 that Mr Invincible would be relieved of paying seven months’ worth of rent. It is likely that Mr Invincible took advantage of this agreement by refraining from paying rent for a number of months, even if only sporadically.
Mr Smith says that there were payments of rent to Mr Scott in addition to those into the ANZ account statements. He says these were made in cash to Mr Scott when Mr Scott visited Logan City, either by himself or by Mr Invincible. In his affidavit dated 3 August 2020, Mr Smith says that on 20 February 2015 Mr Invincible gave Mr Scott $1,000 on an occasion when the three of them went to a restaurant. Mr Smith says he gave Mr Scott $1,000 on each of 29 May 2015 and 2 May 2017. However, it is not apparent how he can identify these with confidence as dates on which payments were made. They are dates when entries in Mr Scott’s diary indicate meetings with Mr Scott, but the entries are very brief. No money amounts are mentioned. In fact the first entry just says ‘W G Scott, Enzo @ 54 Smallwood’[24] and the second just says ‘W G Scott @ PCRE – paid’.[25] Mr Smith goes on to say in his affidavit that he also paid Mr Scott amounts of cash on other dates when he saw him. He then lists five dates for which he has diary entries, but these diary entries are similarly brief and uninformative. In respect of one of the dates nominated by Mr Smith, 20 February 2015, in the face of bank records produced by Mr Scott which he says show he banked a cheque that day in Sydney, Mr Smith conceded in cross-examination that he cannot be correct in identifying that date as one when cash was paid to Mr Scott.
[24]Exhibit 3, attachments, 58.
[25]Exhibit 3, attachments, 63.
Mr Smith’s oral evidence was that he believes that Mr Invincible was about a month behind in his rent during the period in question, when allowance is made for the seven-month offset / rent-free period.
Mr Smith denies failing to pass on any collected rent to Mr Scott. However, Ruth Ellison of Ellison Specialised Properties, in a statement that she provided on 24 May 2019, said that she had a number of discussions with Mr Smith in 2018, and:
When I raised the issue of the missing funds he advised that there were multiple people he did this service for and perhaps he had banked the funds to the incorrect account.[26]
[26]Exhibit 1, 84.
Mr Scott says the only occasion when he received cash was in November 2015 (or November 2014, as discussed earlier), when he received $1,500 from Mr Smith. Mr Vize submits that it is noteworthy that Mr Scott had his accountant include this sum in the table of payments. It enhances Mr Scott’s credibility, Mr Vize contends, that Mr Scott acknowledged receiving a payment for which there are no records. I accept that, though I note that there is some record, albeit one that is just as vague as most records in this case. This is the $1,000 deposit discussed in paragraph 15 above. There is no way of knowing whether this $1,000 was part of the $1,500 that Mr Scott says he received in cash, or some additional deposit made by Mr Smith, or indeed some deposit unconnected with the premises in question.
I also note that in Mr Scott’s ‘Enzo Unit 3’ document,[27] from September or October 2015, he included comments suggesting cash payments on other dates:
(a)next to the figure of $1,000 on 12 March 2015, he wrote ‘Cash for Feb.’;
(b)next to the figure of $1,000 for 2 April 2015, he wrote ‘cash Peter Deposit’; and
(c)next to the figure of $1,000 for 24 May 2015, he wrote ‘cash to me’.
[27]Exhibit 3, attachments, 1.
The first and third of these are suggestive of cash payments other than via Mr Smith. Further, I note that there is no entry in Mr Scott’s accountant’s table for a payment received in May 2015, so that amount has not been added by the accountant to the amount of $25,000 reported as received by Mr Scott.
Mr Invincible has given varying written accounts. He did not give oral evidence.
In a statutory declaration dated 27 September 2018, Mr Invincible said that prior to 1 December 2014, Mr Smith told him the monthly rent had been reduced to $1,000, and that he had paid $1,000 in cash to Mr Smith at the start of each month.
There is no mention in the statutory declaration of a rent-free period.
In an affidavit dated 3 August 2020, Mr Invincible gave a somewhat different version of events, including that the rent reduction was agreed to at a meeting attended by himself, Mr Smith and Mr Scott; and that there had been a rent offset or rent-free period of seven months. Mr Invincible also described making a cash payment of $1,000 to Mr Scott, which he had not mentioned in the statutory declaration and which Mr Scott says did not happen. Mr Invincible also said in the affidavit that he did not recall making the statutory declaration of 27 September 2018, and that parts of it are incorrect.
Later, however, Mr Invincible gave yet another version of events in documents, including affidavits, filed in QCAT proceeding MCD060383/20. That is an unfinalised action by Mr Scott against Mr Invincible, Mr Smith, Mr Jackson and Trispine Pty Ltd for unpaid rent for a period that includes the period in question in this case. In those documents, Mr Invincible said that he paid all of his rent regularly as it fell due to Mr Smith. He relied on both his 27 September 2018 statutory declaration and his 3 August 2020 affidavit. He also provided a handwritten sheet which he says is his personal record of payments of rent. It sets out monthly payments of $1,000 to Mr Smith throughout the period in question.[28]
[28]Exhibit 7, Annexure ENI8.
Mr Jackson questions the authenticity of this list, saying that it has all been written in one pen. I cannot tell from the photocopy in evidence if that is correct. However, it is curious that Mr Invincible abandoned the ditto marks he was using in the right-hand column in the list after a few lines and simply wrote ‘AS ABOVE’ in large letters across the remainder of the column. Those words, at least, cannot have been contemporaneous with most of the entries. Frankly, I am by no means convinced that the entries were made contemporaneously. If Mr Invincible had been meticulous about keeping records, surely he would have demanded receipts for his rent payments.
Mr Scott has described Mr Invincible’s August 2020 affidavit as ‘tailored to suit the narrative of Jackson, Smith and Invincible’.[29] That may well be so. The affidavit was produced at the same time and at the same solicitors’ office as Mr Smith’s, presumably to be used by Mr Smith and Mr Jackson in this case.
[29]Exhibit 9, 10th page.
However, what confidence can one have in the other versions given by Mr Invincible? The first, the statutory declaration, was written at a time when Mr Invincible was in the midst of maintaining to Ellison Specialised Properties, which had threatened to evict him for unpaid rent, that he had always promptly paid the agreed rate of rent. The third version was produced for a civil claim where, once again, it is in Mr Invincible’s interest to establish that he has always promptly paid the agreed rate of rent. Mr Invincible has relied on ‘personal records’ which do not appear to be contemporaneous. He has relied upon his two earlier versions, despite the inconsistencies between them. In between the first and third versions, Mr Invincible swore to a different version of events.
I do not regard Mr Invincible as a reliable witness.
Having heard oral evidence from both Mr Smith and Mr Scott, my impression was that neither of them appeared evasive. Nonetheless, I do find aspects of Mr Scott’s version very puzzling: particularly why he did not take much prompter action if, as he claims, there was an ongoing large shortfall in rent, for no good reason, and payments were only sporadic. Mr Smith’s version of events, while unorthodox, at least has the virtue of logical coherence.
Further, it is unrealistic to expect anyone to have a precise recollection of when and what payments were made or not made, or even to reconstruct what happened, so long after the event, in the absence of proper and detailed records. Transactions were in cash, and banking records lack description. Contemporaneous ledgers were not maintained. That is the situation, regardless of whether blame lies with Mr Smith for acting as an amateur property agent, perhaps in breach of laws about holding a licence and maintaining records, or with Mr Scott for using, over several years, the unpaid services of a rent-collector; not requiring proper records; and not insisting upon compliance with the contractual method of payment. Had Mr Scott enforced the term of the lease about the method of payment, by electronic funds transfer into his ANZ account, payments would be traceable. The present uncertainty would have been avoided.
A finding that a person failed to pass on money belonging to another would be a matter of gravity. Such a finding should not be made on unreliable evidence. A decision-maker must feel an ‘actual persuasion’[30] that the particular event in issue has occurred. I do not feel an actual persuasion that Mr Smith received $18,000 in rent payments from Mr Invincible that he failed to pass on to Mr Scott. There are too many significant uncertainties to make a finding about whether, and if so how much, money was not passed on. It is unlikely that Mr Invincible made payments in each of the 43 months in question. On the other hand, it may be that Mr Smith neglected to pass on some payments or that he sometimes banked money to other owners’ accounts by mistake. However, it is probably the case that Mr Scott received more cash payments than he presently remembers, as the discussion above of his ‘Enzo Unit 3’ list illustrates. Also, as discussed above, Mr Scott has nominated two different years for when he received a $1,500 cash payment. It is also important to bear in mind that Mr Scott has had to try to identify relevant payments, which are not labelled, from a long series of bank statements containing multiple entries from various sources. There may have been relevant deposits that Mr Scott has missed: the discussion above about December 2017 illustrates the real uncertainty that surrounds the identification of relevant payments.
[30]Briginshaw v Briginshaw (1938) 60 CLR 336, 361.
I am not satisfied on the balance of probabilities that Mr Smith failed to pass on rent to Mr Scott.
What decision should the tribunal make?
The tribunal must make a fresh decision on the merits.[31]
[31]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20(2).
Mr Scott’s claim on the claim fund can succeed only if there was a stealing, misappropriation or misapplication of property by Mr Smith.[32] As I am not satisfied that there was a stealing, misappropriation or misapplication of funds, the correct and preferable decision is to reject Mr Scott’s claim against the fund.
[32]Agents Financial Administration Act, s 82(1)(b).
Accordingly, I will set aside Office of Fair Trading’s decision and substitute a decision to reject the claim. The tribunal can also make an ancillary order which it considers appropriate for achieving the purpose for which the tribunal may exercise its primary power.[33] As Mr Scott has received the $17,500 awarded by Office of Fair Trading in its decision, it is appropriate to order that Mr Scott refund this amount to Office of Fair Trading. This gives effect to the provision in section 121 of the Agents Financial Administration Act that creates a repayable overpayment when a person becomes entitled to less than the payment they received, because of a tribunal decision on review.
[33]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 114(b).
Conclusion
Accordingly, I set aside the reviewable decision, substitute a new decision, and order a refund.
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