WOODS and COMMISSIONER FOR CONSUMER PROTECTION - [2021] WASAT 2

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: REAL ESTATE AND BUSINESS AGENTS ACT 1978 (WA)
CITATION:   WOODS and COMMISSIONER FOR CONSUMER PROTECTION [2021] WASAT 2
MEMBER:   MS P LE MIERE, MEMBER
MS S GILLETT, SENIOR SESSIONAL MEMBER
MR B POUND, SESSIONAL MEMBER

HEARD:   19 NOVEMBER 2020
DELIVERED          :   13 JANUARY 2021
FILE NO/S:   VR 38 of 2020
BETWEEN:   SAMUEL WOODS
Applicant
AND
COMMISSIONER FOR CONSUMER PROTECTION
Respondent

Catchwords:

Vocational regulation - Real estate and business agent - Fit and proper - Type of experience - Experience as a sales agent not required

Legislation:

Corporations (Western Australia) Act 1990 (WA)
Real Estate and Business Agents Act 1978 (WA), s 23(1), s 26, s 27(1), s 27(1)(b), s 27(1)(d), s 27(2), Sch 1, cl 1(a), cl 2, cl 2(a), cl 2(b)

Result:

Application allowed

Category: B

Representation:

Counsel:

Applicant	:	Mr C Beetham and Mr N Malone
Respondent	:	Mr J Rivalland

Solicitors:

Applicant	:	Pragma Legal
Respondent	:	Commissioner for Consumer Protection

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

Arasi and Real Estate and Business Agents Supervisory Board [2010] WASAT 83

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

On or about 11 December 2019, Mr Samuel Woods applied to the Real Estate and Business Agents Supervisory Board (Board) under s 27(1) of the Real Estate and Business Agents Act 1978 (WA) (REBA Act) (the application) for a licence to be a real estate agent and business agent (licence). The REBA Act prohibits a person from carrying on business as a real estate agent or business agent or both (agent) unless that person holds a licence under the REBA Act and a current triennial certificate in respect of the licence: s 26 of the REBA Act.
On 18 March 2020, the respondent provided its reasons for decision in which it refused the application.
Mr Woods seeks a review by the Tribunal of the Board's decision to refuse the application, pursuant to s 23(1) of the REBA Act. The hearing before us was a hearing de novo, the purpose of which was to reach the correct and preferable decision on the question as to whether Mr Woods should be granted a licence under s 27(1) of the REBA Act.
There are a number of criteria in s 27(1) for the grant of a licence. These include that the respondent is satisfied that the applicant is a person of good character and repute, and a 'fit and proper' person to hold a licence (s 27(1)(b)), and that the respondent is satisfied that the applicant understands fully the duties and obligations imposed by the REBA Act on agents (s 27(1)(d)). In Arasi and Real Estate and Business Agents Supervisory Board [2010] WASAT 83 (Arasi) at [9] the Tribunal found that that the requirement that an applicant be 'fit and proper' includes being qualified in accordance with criteria set out in s 27(1).

Factual background

The parties filed a number of documents, in support of their respective positions which collectively were Exhibit 1. Mr Woods gave oral evidence, was cross-examined by counsel for the Board and asked questions by the Tribunal.
Mr Woods also filed references from a number of people he worked with that are included in Exhibit 1. Other than in so far as we refer below to factual issues which were in dispute between the parties, the facts in relation to this matter were established by the documents and were not disputed.
Mr Woods has never, individually or in any other capacity, held a licence. He has however been active within the real estate industry since 2007, working for KordaMentha; primarily this work has been in the context of insolvency but not entirely.
The documentary evidence before the Tribunal shows that the applicant:
•has passed the prescribed examinations (subject to approved exemptions);
•is over the age of 18 years;
•has sufficient material and financial resources available to enable him to comply with the requirements of the REBA Act; and
•is a person of good character and repute.
We do not understand the respondent to contend otherwise.
We are satisfied and find the applicant:
•has passed the prescribed examinations (subject to approved exemptions);
•is over the age of 18 years;
•has sufficient material and financial resources available to enable him to comply with the requirements of the REBA Act; and
•is a person of good character and repute.

Whether Mr Woods is a fit and proper person - experience requirements

The applicant says the proper interpretation of s 27(2) is that the reference to the word 'includes' is not additive, that is that a person does not need to satisfy the criteria in Sch 1 of the REBA Act.
The applicant contends that while compliance with Sch 1 may be sufficient it is not necessary and that we may, when considering if the applicant is a 'fit and proper person' consider matters beyond those specified in Sch 1 and the matters to which we can give regard are broader than the provisions of Sch 1 of the REBA Act.
The applicant confirmed at hearing that fit and proper has to be considered in the context of the REBA Act and therefore it was appropriate for us to give consideration to his experience or qualifications in the real estate industry in determining if he is 'fit and proper' to hold a licence.
At the hearing of the review, the respondent submitted that Mr Woods did not meet all of these criteria for the grant of a licence. Mr Woods submitted that he met each of these criteria.
Those parts of Sch 1 to the REBA Act which are referred to in s 27(2) of the REBA Act, and which are relevant for the purposes of this application, are:
Schedule 1 Qualifications for grant of licence and related matters
1.Qualifications
A person
(a)who has passed, subject to approved exemptions, the prescribed examinations relating to the carrying on and conduct of the business of an agent and the duties and liabilities of an agent and has had sufficient practical experience in negotiating transactions to enable him to carry on the business of an agent satisfactorily; or
(b)who has, within the period of 5 years immediately preceding the application
(i)held a licence, other than a licence held because the person was qualified only under paragraph (c) or (d), under this Act for at least 2 years; and
(ii)acted in the State as, and carried out the functions of, an agent for a period of at least 2 years, whether on the person’s own behalf or on behalf of a firm or body corporate;
or
(ba)who has, within the period of 5 years immediately preceding the application
(i)held for a period of at least 2 years a licence or similar authority under an approved corresponding enactment of a State or Territory to act as an agent or the approved equivalent, other than under a licence or authority held under that enactment only because the person was qualified under an equivalent provision in the enactment to paragraph (c) or (d); and
(ii)acted as, and carried out the functions of, an agent or the approved equivalent for a period of at least 2 years in the State or Territory in which the licence or authority was held, whether on the person’s own behalf or on behalf of a firm or body corporate;
or
(c)who is an executor, administrator, or trustee of a deceased licensee and his application is for the purpose of performing functions, exercising powers, or carrying out duties as such; or
(d)who is a spouse or child of a deceased or incapacitated licensee, or a de facto partner of such a licensee (and has been for not less than 2 years immediately before the death or incapacity of the licensee), and is seeking a licence to conduct the business of that licensee until other arrangements can be made for the lawful conduct thereof but not for any period exceeding 3 years,
is, subject to this Act, qualified for the grant of a licence.
We were provided with full details of Mr Woods' experience in the real estate industry. The applicant contends his experience is sufficient to satisfy the experience requirements whether or not we consider the term 'fit and proper' includes being qualified in accordance with the criteria set out in Sch 1 of the REBA Act.
The gravamen of the respondent's submissions are that the applicant's experience is not sufficient because he has never conducted a single full transaction under the supervision of a licenced agent.[1]
[1] Respondent's Statement of Issues Facts and Contentions (SIFC) dated 15 September 2020 Exhibit 1 page 201.
The inclusion in the REBA Act of Sch 1 is to set out what qualifications are required to obtain a licence. It is trite to suggest that the inclusion of the qualifications criteria is to ensure that only sufficiently qualified and experienced people work as agents.
Relevantly, Sch 1 sets out what qualifications meet the necessary standard or criteria.
The respondent, did not challenge the evidence of the applicant that he carried out the transactions listed in his witness statement or that he did so in the manner described. The respondent did submit however that the experience described by the applicant was not of a nature that was sufficient to meet the necessary requirements of the REBA Act.
There was some discussion at hearing as to the number of transactions conducted by the applicant. The Tribunal, in an effort to move matters on suggested to the parties they might agree it was less than 10 and they did so agree. However it would appear from an arithmetical check of the transactions documented in the applicant's witness statement to be incorrect.
In the respondent's submissions filed on 13 November 2020 it did not dispute that the 20 transactions claimed in total by the applicant occurred but rather proceeded to challenge the extent or nature of the applicant's involvement in them.

What are the practical experience requirements of Sch 1 of the REBA Act?

In essence the wording of cl 2 deems a person to have sufficient practical experience if he or she has worked as a sales representative under the supervision of a licenced agent.
Thus cl 2 of Sch 1 sets out that if a person meets the requirements of cl 2(a) or cl 2(b) that person is deemed to have had sufficient practical experience as required in cl 1 (a) of Sch 1 of the REBA Act.
Clause 2 of Sch 1 commences with the words 'For the purposes of clause 1(a), but without limiting the generality of the provisions in that paragraph' (emphasis added). It makes it clear that if the deeming provisions of cl 2(a) or cl 2(b) are not meet then the Tribunal (in the shoes of the respondent may refer back to cl 1 of Sch 1 to determine what is 'sufficient practical experience'.
In considering the meaning of cl (1)(a) of Sch 1 of the REBA Act we are mindful of the reference in cl 2 of Sch 1 of the REBA Act to 'the generality of the provisions in that paragraph' (emphasis added).
As we have said the respondent contends that because the applicant has never conducted a single full transaction under the supervision of a licence real estate agent[2] he does not have sufficient practical experience to satisfy the requirements of the REBA Act.
[2] Respondent's SIFC dated 15 September 2020 Exhibit 1 page 201.
Necessarily unless a person was a sales representative working under the supervision of an agent he or she would not be able to conduct a full transaction end to end because it would be unlawful to do so.
We note there is nothing in cl 1(a) of Sch 1 of the REBA Act that refers to the need to be supervised by a licenced agent to be able to acquire sufficient practical experience.
On the ordinary reading of cl 1(a) of Sch 1 there is nothing to suggest that the only way a person can satisfy the requirements of having sufficient practical experience is to be a real estate sales person. Indeed it would make cl 2 superfluous to read cl 1 in this way.
The wording of cl 1 of Sch 1 only talks about 'sufficient practical experience in negotiating transactions to enable him to carry on the business of an agent satisfactorily'; it does not refer to conducting real estate sales to finality.
Clause 2 of Sch 1 of the REBA Act clearly is a deeming provision meaning that if it can be shown that a person has fulfilled the requirements of that clause the Tribunal (in the shoes of the respondent) does not need to enquire and evaluate if the applicant for the licence has sufficient experience.
Where a person does not meet the deeming provisions then an assessment as to the sufficiency of the applicant's experience by the respondent or the Tribunal needs to be undertaken.
The applicant in his witness statement provided a detailed account of the various transactions he had been involved in and the details of his part in them. The applicant also gave evidence and was crossexamined in respect of his participation in the differing aspects of those sales transactions. The applicant was able to inform us of all the steps an agent needs to take in taking a property to sale, including putting a property in the best saleable condition and arranging and settling a marketing strategy.
The respondent pointed out that the applicant had not been responsible for a marketing strategy at its inception but rather had collaborated with an agent once the 'first draft' had been made. We do not consider this point to be of any significance as the applicant was able to demonstrate his knowledge of what was required for a marketing strategy and how he would go about implementing one.
The applicant impressed the Tribunal that he well understood what was necessary and had recent ample experience in conducting sales of real estate other than actually completing the sale forms.
The only real challenge to the applicant's experience raised by the respondent was that the applicant had not taken a sale from inception to finality on his own but had rather collaborated with a licenced agent who had completed the transaction. As we have said earlier in this decision if that was a requirement of the REBA Act, then it would mandate that sufficient practical experience meant working as a sales person under the supervision of an agent.
The respondent says that the applicant's experience is limited to engaging an agent rather than being directly involved in the negotiating of the transaction. The respondent also asserts that the applicant's experience is as a liquidator/receiver.
The Tribunal does not accept this submission. The oral evidence of the applicant supplemented his written witness statement in that he was able to demonstrate to us the extent of his involvement in negotiations at all stages of the sale. This experience is not as a liquidator as he is not a liquidator. Whilst his employer's business is acting as liquidator we are satisfied that the applicant's role is that of dealing with the properties to realise the best possible sale price. This is a very similar role to that of an agent employed to sell any property.
We accept the submission of the applicant (in particular paras 42 to 45 of the applicant's Statement of Issues Facts and Contentions) that he was able to demonstrate he has experience in negotiating directly with prospective purchasers. We are satisfied that when he was not directly involved with the negotiations his involvement was still integral to the sale and displayed an understanding of and significant experience in sale negotiations.
The applicant set out in his witness statement and referred in his oral evidence to the active role he has taken in marketing properties and his involvement in finalising sale documents including settlement statements.
We do not accept the respondent's submission that to satisfy the requirement that a person has 'sufficient practical experience in negotiating transactions to enable him to carry on the business of an agent satisfactorily' is to conduct a number of real estate transactions 'end to end', that is, to work as a real estate sales person. This is not what is required by the REBA Act.
The applicant freely admitted that he had no experience with managing a trust account and said if granted the licence he would undertake an appropriate course to ensure he understood fully all the requirements of doing so.
We were not provided with any evidence that a sales representative who would be deemed to have the required experience would necessarily have any experience in managing a trust account.
The applicant also conceded he had no experience with accepting bond money or otherwise managing a domestic rental property. He had some limited experience in leasing a commercial property. Again the respondent did not submit any evidence that a person with deemed sufficient experience would necessarily have experience in managing rental properties.
In Arasi at [29] the respondent conceded that a person who has only property management experience may still have sufficient practical experience to be fit and proper to carry on the business of an agent. In this instance the applicant has a wide variety of experience in the sale area but none in property management. The respondent accepted that a person who acted as a sales representative and under the deeming provisions of Sch 1 cl 2(a) would qualify as an agent could have practical experience in the area of property management only and little or none in the sales area.
Ultimately[3] it is necessary for the Tribunal to assess whether the applicant has demonstrated that he has the necessary skills to operate across the full range of real estate transactions.
[3] Arasi at [29].
The applicant has provided a number of impressive references from respected members (it was not suggested otherwise by the respondent) of the real estate industry.
Mr Todd Schaffer, a licenced real estate agent, in his letter to the applicant Exhibit 1 page 22 sets out the nature of his involvement in transactions with the applicant. He opines that the applicant is a person of good character and would be capable of carrying on the business of an agent satisfactorily.
Mr Ryan McGinty, a licenced real estate agent in his reference Exhibit 1 page 23 also opines that given his knowledge of the real estate industry that the applicant would be capable of carrying on the business of an agent satisfactorily.
Similarity Mr Tony Delisch, a licenced real estate agent speaks highly of the applicant and his broad knowledge of and experience in the real estate industry.
For all the reasons set out above we find the applicant to have sufficient practical experience in negotiating transactions to enable him to carry on the business of an agent satisfactorily and that he is a fit and proper person to hold a licence.
We had some difficulty with the applicant's submission that the word 'includes' in s 27(2) of the REBA Act is not additive, that is, that a person does not need to satisfy the criteria in Sch 1 of the REBA Act. However as we are satisfied that under the criteria set out in Sch 1 the applicant does have sufficient practical experience to carry on the business of an agent we do not need to determine the issue.

Does the applicant understand fully the duties and obligations imposed by the REBA Act on agents?

The respondent did not concede that the applicant understands his obligations as imposed by the REBA Act on an agent. It did not however at hearing deal to any extent with this issue. In its reason for refusing the applicant a licence the respondent did not say that it considered he did not understand his obligations.
The applicant states in his witnesses statement Exhibit 1 page 180 that he has read the requirements of the Real Estate and Business Agents and Sales representatives Code of Conduct 2016 (Code) and understands his obligations under the Code and is aware of his obligations under the REBA Act. He makes reference to his work history of complying with all statutory requirements that relate to the Corporations Act (Western Australia) Act 1990 (WA).

For the above reasons we are satisfied that the applicant does understand fully the duties and obligations imposed by the REBA Act on agents
We are satisfied as to the adequacy of Mr Woods experience, and of his understanding of the duties and obligations of agents under the REBA Act and find he is a person of good character and repute for the purposes of s 27(1)(b) of the REBA Act.
The correct and preferable decision is that the applicant should be granted an agent's licence.

Orders

1.The application is allowed.
2.The decision of the Commissioner for Consumer Protection dated 18 March 2020 is set aside.
3.Mr Samuel Wood's application for a Real Estate and Business Agent's licence pursuant to s 7 of the Real Estate and Business Agents Act 1978 (WA) is granted.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS P LE MIERE, MEMBER
13 JANUARY 2021