Crozier v Key to Australia Pty Ltd & Anor [2024] QCAT 240

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Crozier v Key to Australia Pty Ltd & Anor [2024] QCAT 240 PARTIES: PAUL TREVOR CROZIER (applicant) BELINDA JANE CROZIER (applicant) v KEY TO AUSTRALIA (DEREGISTERED) (first respondent) GRAHAM MARK SCARROTT (A BANKRUPT) (second respondent) APPLICATION NO/S: OCL071-21 MATTER TYPE: Other civil dispute matters DELIVERED ON: 10 June 2024 HEARING DATES: 12 June 2023 and 7 March 2024 HEARD AT: Brisbane DECISION OF: Member Poteri ORDERS: Pursuant to s 105 of the Agents Financial Administration Act 2014 (Qld), the claim is allowed and the amount of $40,000 should be paid to the Applicants from the Claim Fund at the expiration of the appeal period as outlined in s 143 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). The First Respondent and Second Respondent are jointly and severally liable for the losses of the Applicant. Pursuant to sections 105(3) and 116(3) of the Agents Financial Administration Act 2014 (Qld), the First Respondent and the Second Respondent are jointly and severally liable to reimburse the Claim Fund in the amount of $40,000. CATCHWORDS: Where residents of New Zealand have invested in real estate in Australia – where the residents were induced to make this investment because of the false and or misleading representations of an Australian registered real estate agent – where the real estate agent is alleged to have disbursed funds without authorisation from the real estate agent’s trust -- 1 of 22 -- 2 account – where the scheme has failed – where the residents have made a claim against the Claim Fund under the provisions of the Agents Financial Administration Act 2014 (Qld) – where the claim has been referred to the Tribunal for a determination. Agents Financial Administration Act 2014 (Qld), s 21, s 22, s 77, s 80, s 82, s 85, s 95, s 105, s 113, s 116 Criminal Code Act 1899 (Qld), s 24 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 19, s 20, s 143 Planning Act 2016 (Qld), s 43 Property Occupations Act 2014 (Qld), s 12, s 26, s 97, s 154, s 155, s 206, s 207, s 208, s 209, s 212 Airstrike Industrial Pty Ltd v Robertson & Anor [2014] QCATA 43 Dunn v Chief Executive, Department of Justice and Attorney-General [2012] QCAT 476. Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418. Goodchild v Ferrantino [2007] CCT PC020 – 06 To v Chief Executive, Department of Tourism [2006] QDC 381 APPEARANCES & REPRESENTATION: Applicant: Self-represented First Respondent: Key to Australia Pty Ltd No appearance Second Respondent: Graham Mark Scarrott No appearance Office of Fair Trading: Mr A Tan, Legal Officer of the Office of Fair Trading GENERAL OVERVIEW [1] This is an overview of 17 claims made under the provisions of the Agents Financial Administration Act 2014 (Qld) (‘AFAA’) regarding the activities of the First Respondent, Key to Australia Pty Ltd (‘Key’), and the Second Respondent, Graham Mark Scarrott (‘Scarrott’). [2] Except for one claimant, I have the consent of all the claimants to refer to the evidence and details of each of the various claims in considering the individual claims. [3] The consideration of the claims should be viewed as a whole because all of the claims refer to the proposed purchase of some 20 lots at Pimpama. The lots were the subject of put and call option agreements (‘P&C’) with Eagle Street Finance Pty Ltd, Leda (‘Vendor’). [4] In all Scarrott and Key were paid the total of approximately $2,380,000 by the claimants. Scarrott paid approximately $603,000 to the Vendor for deposits under the P&Cs. Approximately $72,000 was paid to The Gold Coast City Council (‘Council’) for application fees and approximately $33,000 was paid to the town planners, Zone -- 2 of 22 -- 3 Planning Group (‘ZPG’). The Tribunal has not been informed of any other amounts that Scarrott may have paid to other consultants or contractors. [5] Scarrott and Key had at their disposal approximately $1,690,000. It is not clear to me how Scarrott and Key used these funds. However, most of these funds were used without the implied or express authority of the claimants on personal expenses, company expenses and keeping the whole scheme going. That is the funds were dishonestly used by Scarrott and Key. [6] Scarrott and Key were charged and convicted of breaches of the Australian Consumer Law (‘ACL’) regarding their marketing of land at Pimpama. There were 18 complainants. Scarrott and Key pleaded guilty to the charges. Scarrott participated in voluntary records of interview with officers of the Office of Fair Trading (‘OFT’) in 2020. The admissions were summarised and read to the Court during the criminal proceedings. The admissions are set out in schedule 3 to the material filed by OFT on 17 March 2023. In summary the admissions show: (a) Scarrott and Key fraudulently converted approximately between $1,600,000 and $1,700,000 to their own accounts or to pay another person. (b) Scarrott forged Australia and New Zealand Banking Group (‘ANZ’) finance approval letters to buy time. (c) Scarrott started marketing the lots in May 2018. (d) Scarrott had no assurances from the Council that it would approve the subdivision of the lots. This was confirmed by advice from ZPG dated 23 April 2019. (e) Scarrott arranged for ZPG to lodge 6 applications with the Council on 26 August 2019 to subdivide lots 280, 281, 282, 333, 334 and 335. Post lodgement of the applications, Scarrott had meetings with the Council officers from September 2019 onwards where the officers raised 12 concerns with the applications and stated that the applications may have to be amended. Notwithstanding this advice Scarrott continued to market lots at Pimpama. (f) The complainants’ funds were paid into the bank account known as the Key to Australia Pty Ltd trust account ATF Scarrott Family Trust. Scarrott told the complainants that he and Key were licenced agents, and this bank account was a “trust account”. (g) The returns that Scarrott was promising to the complainants were based on imagined figures rather than evidence based. (h) Scarrott and Key’s trading losses per month were between $75,000 and $120,000. This is the reason why he was signing up new investors and trying to expedite the process. Scarrott was running out of time. (i) Scarrott estimated that he only spent on average approximately $4,100 of each complainant’s funds in prosecuting the subdivision approval for the lots. [7] The Tribunal has no investigation powers. These powers are exercised by the Chief Executive of OFT under the AFAA. -- 3 of 22 -- 4 [8] The consideration of each claim was difficult and complicated because Scarrott and Key did not appear at the hearings. Scarrott did provide an unsworn statement which is very general in nature, self-serving and is not corroborated. [9] The claimants were ordinary everyday New Zealanders (except for one Australian claim) who trusted Scarrott. Generally, I found the claimants to be entirely credible and honest. Also, I found them to be extremely courteous and at times somewhat embarrassed by the way they were convinced by Scarrott to trust him. [10] In almost all cases there is no question that Scarrott did not provide the claimants with full details of his proposal. That is, he did not inform them of the possible shortcomings, disadvantages, and obstacles to overcome. He almost invariably told the claimants about the expected profit and gave them certainty. [11] Scarrott’s plan was for the parties to enter P&Cs with the Vendor and pay a deposit to secure the purchase of a lot (or lots). Other monies were paid to Scarrott by the claimants so that Scarrott could obtain approval from the Council to subdivide the lot into 3 individual lots and obtain approval to erect 3 townhouses on the individual subdivided lots. [12] Scarrott received formal advice from ZPG in April 2019 and he arranged for ZPG to lodge applications with the Council to subdivide lots 280, 281, 282, 333, 334 and 335 in April 2019. No applications were lodged with the Council to subdivide any other lots. [13] However, Scarrott must have discussed his proposal and plans with Council officers and/or ZPG prior to April 2019 because he mentioned these lots to claimants, P&B Crozier in Tribunal file OCL 059-21, and he advised them that he had purchased lot 333. See email from Scarrott to P Crozier dated 22 March 2019 in Tribunal file OCL 059-21. In this email Scarrott says that he has purchased lot 333 and the project is “ready to start immediately”. [14] I presume the plan was to on-sell the subdivided lots with approved plans or to erect the townhouses on the subdivided lots and to on-sell these subdivided improved lots. However, Scarrott did promise the claimants that they would not have to invest any further funds in the scheme or would not have to become purchasers of the individual lots. It is not clear to me how this would work in practice from a legal or timing perspective. [15] Bridging finance may have been required because the Council took more than the expected 3 to 4 months (as advised by ZPG) to assess the applications. One of the claimants stated that at one stage Scarrott did discuss the necessity to obtain bridging finance. Scarrott has admitted forging ANZ approval letters to buy time. [16] It was all a question of timing and the Council approving the subdivision of the individual lots without the necessary setbacks and relaxation of on street parking. In the end the Council took 10 months to assess and reject Scarrott’s application, financing became more difficult and the COVID epidemic made all commercial activities more complicated. [17] It is difficult to ascertain when Scarrott started using the funds for his personal and Key’s expenses and other financing expenses to keep the whole scheme going. However, the Vendor became impatient and in 2020 the Vendor called upon the claimants to perform their obligations under the P&Cs and to pay the balance of the -- 4 of 22 -- 5 purchase prices under the P&Cs. Many of the claimants could not complete the purchases so their deposits were forfeited to the Vendor. [18] Ironically 2 claimants who had the resources to complete the purchase a lot and retain the lot have seen a substantial increase in the value of their lot and thus they have not suffered a financial loss. REASONS FOR DECISION [19] The Applicants, Paul Trevor Crozier and Belinda Jane Crozier (‘the Croziers’) were at all relevant times residents of New Zealand. [20] Key was at all relevant times a corporation incorporated in Australia and had offices in Queensland. [21] Scarrott was at all relevant times a resident of Queensland and a director and the secretary of Key. [22] Between March 2019 and May 2019, the Croziers met and communicated with Scarrott to discuss a real estate scheme. Certain representations are alleged to have been made by Scarrott to the Croziers: (a) A substantial profit could be made by investing in a real estate scheme regarding land which the Council had preapproved for subdivision. (b) An initial investment of $104,200 was required from the Croziers. The Croziers advised Scarrott that they could only afford $40,000 to invest. Scarrott advised the Croziers that he would commit to the balance of funds required for the scheme. (c) A deposit would have to be paid to the Vendor to secure the block of land. Scarrott and Key would facilitate the subdivision of the land, including lodgement of plans. (d) Scarrott and Key would on-sell the subdivided lot for the Croziers without the necessity of the Croziers having to pay for the balance of the land purchase. (e) The outcome for the Croziers would be an estimated return of 164.11% from the sale of the subdivided lots. (f) The subdivision of individual lots, development of the subdivided parts of the lot and the sale of the subdivided lots could be achieved in 6 months. (g) The funds paid by the Croziers to Key/Scarrott would be paid into and held in a trust account. (h) Key committed to a refund option to the Croziers by way of a letter from Key signed by Scarrott dated 9 May 2019. [23] In May 2019 the Croziers committed to the purchase of lot 491 Pimpama Village (‘the Land’) based on the representations made by Scarrott by executing a P&C for the purchase of the Land for $290,000. The P&C is dated 15 May 2019. [24] On 27 May 2019, the Croziers remitted the sum of $40,000 into the bank account of Key with the Commonwealth Bank of Australia (‘CBA’). This is the account that Scarrott refers to as his “trust account”. It is in the name of Key to Australia Pty Ltd ATF Scarrott Family Trust. -- 5 of 22 -- 6 [25] A deposit of $29,000 was paid under the provisions of the P&C. [26] On or about 6 November 2019 Scarrott assured the Croziers that settlement would happen before Christmas 2019. [27] In April 2020, the Croziers’ lawyer emailed them advising that settlement of the put and call agreement was being exercised by the Vendor. In August 2020 the Croziers were advised that the Vendor had terminated the P&C. [28] On 4 September 2019 Scarrott contacted the Croziers to advise them that they should contact a Mr Mark Stratura to see if he could assist. After 7 September 2020 the Croziers have not been able to contact Scarrott. LEGISLATION [29] For reference I outline the relevant legislative provisions of the AFAA and Property Occupations Act 2014 (Qld) (‘POA’): Sections 6, 8, 21, 22, 33, 77, 80, 82, 84, 85, 95, 105, 113 and 116 of the AFAA. Sections 12, 26, 97, 115, 154, 155, 206, 207, 208, 209, and 212 of the POA. CLAIM [30] Pursuant to s 82 of the AFAA, the Croziers lodged a claim (‘Claim’) dated 1 December 2020 on 21 December 2020 against the Claim Fund which is administered by OFT. The Claim was made within the time stipulated in s 85 of the AFAA. [31] Pursuant to 95 of the AFAA the Claim was referred (‘the Referral’) to the Tribunal on 31 August 2021 for determination. REFERRAL [32] In the Referral OFT has raised several issues that should be considered by the Tribunal. [33] The issues are: (a) Section 80 of the AFAA outlines the definition of a “relevant person” as being current and former licensed real estate agents. At the relevant time OFT admits that Key and Scarrott held valid licenses. (b) OFT point out that Scarrott and Key may have been providing property development advice rather than acting as a real estate agent when the Croziers entered the arrangements. (c) A claim may be made under s 82 of the AFAA if the claimant suffers financial loss because of a contravention of ss 21 and 22 of the AFAA. Section 82(1)(a) and (b) of the AFAA relate to payment of monies or permitted drawings from a trust account. In these proceedings the Croziers paid $40,000 into the trust account of Key. These monies were to be distributed by payment of $29,000 for the deposit to the Vendor for securing the Land and the balance to Key to prosecute the scheme. (d) Section 82(1)(g) of the AFAA states that a claimant may make a claim if there has been a contravention of s 212 of the POA by a relevant person. Section 212 of the POA provides that in making a sale of real property, the relevant person must not make representations to someone that are false or misleading. This -- 6 of 22 -- 7 issue relates to the ability of Key to subdivide the Land and/or whether the Croziers would not be required to pay for the balance of the purchase price of the Land to the Vendor. EVIDENCE CROZIERS [34] I found the Croziers to be open and honest when giving evidence and I accept their evidence. [35] Paul Crozier provided a signed statement (‘Paul Crozier’s Statement’) to OFT dated 5 November 2020 which is exhibited on pages 4 to 6 of the Referral. This statement also annexes other relevant material. The Croziers gave evidence at the hearings by Teams and remote conferencing. [36] The Croziers first met Scarrott when they were intending to refinance their house property. Scarrott advised the Croziers that he was a licenced real estate agent, financial advisor and mortgage broker. [37] In March 2019 Scarrott emailed the Croziers with details of a scheme that he was promoting at Pimpama. See pages 7 to 12 of the Referral. Paul Crozier says in his Statement that Scarrott advised the Croziers: (a) The Croziers would not have to provide the balance of the purchase price as the subdivided lots would be on-sold before the settlement of the P&C. (b) In the email Scarrott says “the total project will be 6 months”. (c) Council had already approved 6 lots to be subdivided into 4 townhouse residences or words to that effect. I note that in the email from Scarrott to Paul Crozier dated 22 March 2019 (page 7 of the Referral), Scarrott refers to lots 334, 335, 260 and 261. Scarrott says in the email that he has purchased lot 333. Applications for subdivision of these lots were lodged with Council in August 2019. (d) If the Croziers purchased the Land they would not have to commit any further funds except the original investment of $104,200. (e) In the email, Scarrott attached a mud map of the Land and development proposal (dated 28/11/2018) where the indicative return was 164.11%. (f) The Croziers advised Scarrott that they could only afford to invest $40,000 and they could not afford the whole commitment of $104,200. Scarrott advised them that he would contribute the balance of the commitment. (g) It appears that no agreement or formal documentation was ever settled or prepared in regard to Scarrott providing the balance of the $104,200 (i.e. $60,200) and/or how the parties (i.e. the Croziers and Scarrott/Key) would share any profits or liabilities and when and how this partnership would operate. [38] The Croziers must have had doubts so in May 2019 Scarrott provided a guarantee of the return of the Croziers’ initial investment if Scarrott was unable to sell the subdivided lots prior to the expiry of the P&C. Also, Scarrott promised the Croziers that 2 months before the term was up the Croziers would have the opportunity to settle -- 7 of 22 -- 8 on the Land or Key would pay back the funding to the Croziers. See page 12 of the Referral. [39] In May 2019 the Croziers received the P&C for the Land and executed the P&C. Subsequently on 27 May 2019 the Croziers transferred the sum of $40,000 into the Key account with the CBA in Queensland. [40] Whilst giving evidence the Croziers confirmed that Scarrott always described himself as a licenced agent and in discussions with Scarrott he advised them that any funds paid by the Croziers to Key would be held in a trust account. [41] During the discussions and negotiations with Scarrott, the Croziers believed that he was on the Gold Coast. Also, Scarrott sent emails from Queensland to the Croziers. See email from Scarrott to Paul Crozier dated 22 March 2019 (page 7 of the Referral) and the invoice from Key dated 9 May 2019 (page 13 of the Referral). [42] The Croziers had discussions with Scarrott after the P&C was executed and the deposit was paid. Scarrott was always positive about the scheme. Paul Crozier confronted him about the possibility of the Croziers having to complete the P&C. Scarrott stated that “he had a solution” and “we (the Croziers) would still make a profit” or words to that effect. Paul Crozier says in his Statement that Scarrott was still trying to convince people to trust him in September 2020. This was after the P&C was terminated. [43] Eventually the Croziers were called upon by the Vendor to complete the P&C. They were not able to do this and on 11 August 2020 the Vendor terminated the P&C and forfeited the deposit. ADMISSIONS BY SCARROTT [44] A claim was made against the Claim Fund by a Simon Allan Wilson (‘Wilson’) in Tribunal file OCL067-21. Wilson had similar dealings with Scarrott and Key regarding the subdivision of a lot at Pimpama. In sworn testimony given to the Tribunal, Wilson stated that Scarrott had made admissions to him that he had used the money that he collected from the New Zealand claimants on personal expenses, paying for settlements, paying deposits, Key’s expenses and to other New Zealand purchasers. [45] Further I refer to the admissions made by Scarrott in interviews regarding Scarrott’s criminal prosecution referred to earlier in these reasons. See annexure 3 in the bundle of documents filed in the Tribunal by OFT on 17 March 2023. SCARROTT AND KEY [46] Scarrott did not attend the hearings to give evidence. He provided an unsworn statement (‘Scarrott’s Statement’) (pages 196 to 202 of the Referral). [47] Key was not represented at the hearings and no material was filed by Key in these proceedings. Key has now been deregistered as a corporation. [48] Details of Scarrott’s activities are outlined on page 1 to 26 in the Supplementary Document Bundle attached to OFT’s submissions filed in the Tribunal on 17 March 2023. From this material Scarrott was convicted of offences under the ACL. Scarrott was not charged with or convicted of any offences under the POA. -- 8 of 22 -- 9 [49] Scarrott was not subjected to any cross-examination to test his evidence. Therefore, I have reservations about the accuracy or veracity of Scarrott’s Statement. Further, in Scarrott’s Statement, Scarrott does not outline the admissions made by Scarrott in his interviews with officers of OFT in 2020 or the summary of the admissions read to the Court in the criminal proceedings when Scarrott pleaded guilty. [50] I make the following findings in relation to Scarrott and Key: (a) The Respondents and the Vendor appear to have no formal arrangements for any of the Respondents to market the Vendor’s land at Pimpama. (b) The Respondents appear to have never formally acted for or represented the Vendor. The Respondents did not have any authority from the Vendor to negotiate with any buyers of the Vendor’s land at Pimpama on behalf of the Vendor. See the comments relating to the “Developer” of annexure 3 of the supplementary bundle of documents filed with OFT’s submissions filed in the Tribunal on 17 March 2023. (c) Notwithstanding that there were no formal arrangements for Scarrott to market lots of land at Pimpama for the Vendor, it is almost certain that the Vendor was aware of Scarrott’s activities and there would have been numerous interactions between Scarrott and the Vendor’s representatives in 2019 and 2020. After all, Scarrott had achieved the sale of approximately 20 lots of land for the Vendor. (d) Scarrott had been marketing residential housing lots in the Gold Coast region and at Pimpama prior to 2018. (e) All funds were paid into the business account of Key to Australia Pty Ltd ATF Scarrott Family Trust. Scarrott informed clients that this was a “trust account”. The Croziers always believed and Scarrott gave them the impression that their funds were being paid into a real estate agent’s trust account and held in this trust account pending payment of the deposit under the P&C and payment of the expenses to facilitate the subdivision of the Land. (f) Scarrott arranged for ZPG to lodge a development application relating to lots 280, 281, 282, 333, 334 and 335 at Pimpama with the Council on 26 August 2019. See letter from ZPG to Tom Tate dated 23 April 2020 – page 214 to page 220 of the Referral. (g) Scarrott would have had discussions with officers of the Council and/or ZPG regarding his plans to subdivide lots at Pimpama prior to receiving formal advice from ZPG in April 2019. Scarrott mentions the 6 lots in an email to the Croziers dated 22 March 2019 where he says the “project is ready to start immediately” and he has purchased lot 333. (h) Scarrott admitted that he had meetings with Council officers from September 2019 onwards where the officers raised 12 concerns with the applications and advised Scarrott that the applications may have to be amended. (i) Notwithstanding the advice from Council in September 2019, Scarrott continued to market lots at Pimpama on the basis that Council approval to subdivide was just a formality. (j) No application for the subdivision of the Land was lodged with the Council. -- 9 of 22 -- 10 (k) In the criminal prosecution of Scarrott there were approximately 18 affected parties. (l) Scarrott admitted to forging letters from the ANZ bank to buy time. (m) Scarrott attempted to obtain finance with Latrobe Financial Ltd, but the valuations of the land fell short of the valuations required by the financier. (n) Scarrott always described himself as a sales consultant or a licensed real estate agent not as a development consultant. (o) Scarrott initially expected the subdivision approval process with the Council to take 3 to 4 months. This process took much longer than expected and eventually the Council rejected the applications. David Ransom of ZPG describes the response from Council as a “refusal”. (p) He advised some claimants that once the 6 applications lodged by ZPG in August 2019 were approved by Council then the applications to Council for the rest of the lots would be approved “as of right” by Council without any delay or problems. This is contrary to the advice from David Ransom. (q) At one stage Scarrott approached the Vendor for Vendor finance to complete the contracts. The Vendor would agree to providing 50% Vendor finance with the balance to be provided from the funds to come from New Zealand. This was not practical. (r) Admissions were made by Scarrott that he expended the funds by paying for the deposits of various New Zealand investors for the purchase of the land under other P&Cs, Key’s expenses, expenses relating to the Council application process and personal expenses. (s) Scarrott admitted that Key’s business was running at losses of between $75,000 and $120,000 per month. He was desperate for further sales so investors would provide him with funds to keep the scheme going. That is buying time. (t) Ultimately the Council process took too long, Council rejected the applications, bank lending requirements became tighter, introduction of a foreign buyer’s surcharge was introduced into New Zealand, the COVID pandemic struck, and New Zealand banking institutions’ actions were delayed. DAVID RANSOM AND ZONE PLANNING GROUP [51] David Ransom (‘Ransom’) is a director of ZPG which is a business specialising in town planning. [52] Ransom has provided a sworn statement executed on 24 August 2020 which is on pages 203 to 343 of the Referral. Ransom has an Urban and Town Planning degree from the University of New England. Annexed to this statement are a fee proposal, terms of engagement and some attached correspondence with the Council. [53] ZPG was engaged by Scarrott to assist him in obtaining planning approval for his development application. On 23 April 2019 ZPG provided advice to Scarrott regarding the proposed development approval. See annexure ZP1 of Ransom’s statement, pages 206 to 211 of the Referral. [54] Scarrott accepted the fee proposal and terms of engagement of ZPG and commenced work on the development application. The applications to the Council were lodged -- 10 of 22 -- 11 with the Council on 26 August 2019. See page 2 of the letter from ZPG to Tom Tate, the mayor of the Council, making complaints about the time taken to process the development application. See page 214 of the Referral. [55] In the letter from ZPG to Key dated 23 April 2019 there is no mention of the Land. The Land is not included in the applications to the Council that were lodged on 26 August 2019. Scarrott says that this was the case because he wanted to save costs and ZPG advised him that once the initial applications were approved then the other applications would be approved “as of right.” In giving oral evidence Ransom says that this is not correct and that he never gave this advice to Scarrott. Ransom says that if any lot was to be subdivided then an application to Council was required. Such applications would be assessed by Council in the normal manner. [56] The planning scheme that applies to the Land and the properties that were purchased by other New Zealand purchasers at Pimpama is the Gold Coast 2016 City Plan VS – page 206 of the Referral. [57] I note the advice, in particular paragraph 3, given to Key and Scarrott in the letter, in particular paragraph 3, from ZPG dated 23 April 2019 (page 207 of the Referral). That is: The proposed Dwelling Houses are also Code Assessable as they do not strictly conform with the acceptable outcomes of the Pimpama Village Residential Code… More specifically the dwellings will need to seek alternative outcomes in relation to boundary setbacks, site cover and communal open space. Typically, applications of this nature will take Council in the order of 3 – 4 months to assess and decide… [58] From Ransom’s statement he says that the Council assessment took much longer than anticipated and ultimately the application was refused by the Council on 11 June 2020. According to Ransom this delay and refusal was “completely wrong”. [59] Ransom says that ZPG has no knowledge of the details of Scarrott’s New Zealand sales scheme. [60] The Tribunal called Ransom to give oral evidence on 7 March 2024. His evidence was: (a) “Preapproval” refers to preliminary approval in s 43 of the Planning Act 2016 (Qld). The preliminary approval refers to the approval in the material change of use Council reference MCU201500641 for Pimpama Village development area approved by the Council on 14 November 2016 (See page 33 of the Referral). (b) Lots 280, 281, 282, 333, 334 and 335 are part of the Pimpama Village development area. (c) If an owner intends to subdivide a lot and build on the subdivided lot in the Pimpama Village development area and the proposed subdivision and buildings do not strictly comply with the Pimpama Village Planning Scheme (as contained in MCU201500641) then an application to the Council to seek relaxation of the conditions under the preliminary approval is required. (d) This is what occurred in respect to the applications to Council for lots 280, 281, 282, 333, 334 and 335. There was no preliminary approval (‘pre-approval’) for these lots or any of the other lots in Pimpama being marketed by Scarrott. -- 11 of 22 -- 12 (e) The applications to Council are usually straightforward because they do not require advertising and no third party has rights to object. (f) Ransom never had a pre-lodgement meeting or any discussions with any Council officers before the actual applications were lodged. (g) Ransom was confident that the applications would succeed as there were similar developments at Southport and Varsity Lakes on the Gold Coast where the Council approved the developments with relaxed setbacks and parking requirements. (h) Ransom acknowledged that there is no certainty of outcomes when making such applications with Council. (i) Ransom also acknowledged that if the subdivision of any other lots at Pimpama was required then further applications to Council were required to be lodged and assessed by Council. There is no “as of right” procedure available whereby the other lots would be automatically approved (with relaxed setbacks and parking) if the applications for lots 280, 281, 282, 333, 334 and 335 were approved. Ransom denied giving any “as of right” advice to Scarrott. (j) Ransom did discuss other consultants and contractors with Scarrott but he had no direct dealings with these consultants and contractors and he is not aware how much Scarrott paid them. (k) He provided payment details to the Tribunal after giving evidence. ZPG were paid a total of $33,000 by Scarrott. JURISDICTION [61] OFT has not raised the issue of jurisdiction of the AFAA. However, I have commented on this issue in other claimants’ decisions. Therefore, I will make these comments regarding the issue of jurisdiction. [62] There are no specific provisions in the AFAA which expressly limit the operations of the legislation to activities that take place in Queensland. Therefore, I must look to the caselaw to decide this issue. [63] The High Court decision of Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418 (‘Freehold’) is instructive. Freehold involved a claim for commission where negotiations for a contract for the sale of land occurred inside and outside of Queensland. The court in Freehold examined the provisions for the Auctioneers, Real Estate Agents, Debt Collectors and Motor Dealers Acts 1922 to 1961 (Qld). This legislation is similar to the legislation in the AFAA. [64] In Freehold the court held that the activities occurred in Queensland. However, the court at page 425 stated: The Act clearly enough is not concerned with what is done outside Queensland, even if it be done in accordance with a contract the proper law of which is the law of Queensland. On the other hand, whatever may be the proper law of an agency contract, the Act applies to a person who acts as, or carries on the business, of a real estate agent in Queensland and a Queensland court would give effect to it. It is not, therefore, possible to support the conclusion which his Honour reached on the ground upon which his Honour based it. The critical question is rather, did the claimant, in doing what it did pursuant to its agency contract with the owner, act as, or carry on the business of a real estate agent in Queensland? The circumstances here are such that unless the claimant acted as a real estate agent in Queensland in the transaction with which -- 12 of 22 -- 13 we are concerned it did not carry on business as a real estate agent in Queensland, so that the question can be narrowed down to **426 whether or not, in the course of the negotiation of the sale from Queensland Estates Pty. Ltd. to Golden Acres Ltd., it acted as a real estate agent in Queensland. [65] The matter of Goodchild v Ferrantino [2007] CCT PC020 – 06 (‘Goodchild’) involved a claim under the Property Agents and Motor Dealers Act 2000 (Qld) (‘PAMD Act’) for certain fraudulent activities that occurred in Queensland. In Goodchild the land was situated in New South Wales, but as all the activities occurred in Queensland then the claim was allowed, notwithstanding the fact that the land was outside of Queensland. In Goodchild the Tribunal noted that one of the objects of the PAMD Act was for the protection of consumers. The main object of the AFAA is “to protect consumers from financial loss in dealing with agents”. The analysis of the law in Goodchild is relevant to the facts and circumstances in these proceedings. [66] I conclude that the protection given to claimants under the provisions of the AFAA is restricted to cases where the activities take place in or predominantly in Queensland. [67] In these proceedings the following facts apply: (a) The Land is in Queensland. (b) Scarrott and Key are licenced and were based in Queensland. (c) The Vendor is in Queensland. (d) The Croziers paid monies into the bank account of Key which is situated in Queensland. (e) There was communication between the Croziers (in New Zealand and Australia) and Key/Scarrott (in Queensland) prior to the execution by the Croziers of the expression of interest and P&C. Further the Croziers communicated with Key, Scarrott and JMV Law in Queensland between May 2019 and September 2020. [68] By taking the above facts into account I find that the activities of Scarrott/Key took place predominantly in Queensland and the provisions of the AFAA apply to the Claim. As far as the issue of jurisdiction is concerned the Claim is valid. REPRESENTATIONS OF SCARROTT [69] OFT have outlined a number of “representations” made by Scarrott to the Croziers between March 2019 and May 2019 in OFT’s submissions filed on 17 March 2023. OFT have submitted that these representations are central to the Claim and the answers to these representations were the subject of cross-examination by Mr Tan of OFT. I will now comment on these representations. [70] Representations 1, 2, 3 and 4 can be examined together and I outline these alleged representations. They are: (a) Representation 1 – The Respondents discovered land parcels in Pimpama Village, Queensland that can be configured into smaller lots. (b) Representation 2 – These land parcels “would be approved by council to be divided into three (3) townhouse residences”. -- 13 of 22 -- 14 (c) Representation 3 – The Respondents planned to reconfigure the land parcels in Pimpama Village into 3 smaller lots and on-sell them to generate a substantial profit for investors. (d) Representation 4 – The Applicants could participate in this scheme by: (i) Securing an option to purchase Pimpama Village land, and (ii) Investing $40,000 with the Respondents. [71] There is sufficient evidence for me to find that, prima facie, Representations 1, 2, 3 and 4 are true. However, Scarrott was not telling the full story when he was selling the Land to the Croziers. When these representations were made Scarrott must have known about the full details of his plans regarding the proposed subdivision of the 6 lots (i.e. lots 260, 261, 262, 333, 334 and 335) and the Land and Scarrott’s plans to seek on-street parking and setback relaxations from the Council, and that any such applications were subject to Council procedures and timelines to assess the applications and the applications may or not be successful. Scarrott advised the Croziers that he had purchased lot 333 and he also referred to lots 334, 335, 260, 261 and lot 262 in his email to P Crozier dated 22 March 2019. See page 7 of the Referral. [72] The Croziers gave oral evidence that Scarrott advised them that the Council had approved the Land to be subdivided into 3 or 4 lots. Scarrott did not inform the Croziers, or disclose to them, the following: (a) The Council approval only related to the Pimpama Village development area as a whole. If the Land was to be subdivided, then an application must be lodged with the Council for assessment. (b) Scarrott was aware of his plans and what steps and approvals were required to action his plans in March 2019 when he first negotiated with the Croziers because he referred to lots 280, 281, 282, 334 and 335 and advised the Croziers that he had purchased lot 333 in his email to P Crozier dated 22 March 2019. See page 7 of the Referral. (c) The advice dated 23 April 2019 from ZPG (received prior to the Croziers executing the P&C and transmitting funds to the Key bank account) that the plans for the subdivision of and the erection of townhouses of the subdivided lots did not strictly comply with the Pimpama Village Residential Code and Small Lot Code for the Pimpama Village development area. Therefore, to subdivide the Land would require applications to Council to seek relaxations in building setbacks and on street parking. (d) Scarrott only had plans with ZPG to make applications to Council to subdivide lots 280, 281, 282, 333, 334 and 335. As of May 2019, there was no indication or evidence that there were any plans or intention to make an application to Council to subdivide the Land. See letter from ZPG to Scarrott dated 23 April 2019 page 206 of the Referral. (e) If there were any plans or proposals to subdivide the Land and erect townhouses on the subdivided lots of the Land then Scarrott would have shown these documents, even drafts, to the Croziers. Scarrott showed them a mud map of the Land in his negotiations with the Croziers. This would have been a marketing strategy for Scarrott to close the deal with the Croziers. No documentation or drafts of any plans to lodge an application to subdivide the Land or erect -- 14 of 22 -- 15 townhouses on the subdivided lots were ever shown to the Croziers. All that Scarrott provided to the Croziers to close the deal with the Croziers in May 2019 was the offer of a refund. (f) The advice from ZPG to Scarrott dated 23 April 2019 was that any application would take 3 to 4 months to be assessed by Council. The application to Council for the 6 lots was lodged with Council in August 2019. It is clear that the representation made by Scarrott to the Croziers was that the subdivision of the Land and the on-sales of the subdivided lots would be completed by the time that the Vendor called upon the Croziers to complete the P&C. This was wildly optimistic, and Scarrott would have been aware of the obstacles involved to bring the scheme to fruition. He was trying to buy time. [73] Even if an application to subdivide the Land had been approved the application and planning process with Council would have taken many months. It would be at this stage that building could have commenced on the subdivided lots. It is my view that the promise of approval of the subdivision of the Land, the development of the Land and the on-sales of the subdivided lots by the time the Vendor called upon the Croziers to complete the P&C was impossible to achieve. That is when the representations were made leading up to the execution of the P&C in May 2019. At this point Scarrott did not even have plans to build on the subdivided lots of the Land and he was not even contemplating lodging an application to subdivide the Land. Scarrott was concerned with the subdivision of the 6 lots (including lot 333 which Scarrott had purchased). [74] The feasibility study, which is page 9 of the Referral, discloses that a development application and MCU (material change of use) was required. Scarrott never elaborated on this process and what obstacles had to be overcome to have the development application approved by Council. These obstacles were that the pre-approval only applied to the Pimpama Village development area, the Council would need to approve relaxation of setbacks/parking and time was of the essence. Scarrott always gave the Croziers the impression and led them to believe that everything would happen and Scarrott would take care of the whole process. He gave them a sense of security and certainty when that was not the case in any respect. [75] As previously mentioned, in the first part of the negotiations with the Croziers, Scarrott sent them an email dated 22 March 2019. See page 7 of the Referral. In the email Scarrott says that “The total project will take 6 months” when referring to the Land and Scarrott says “the project is ready to start immediately” when referring to the 6 other lots. That was far from the truth. Applications for the 6 lots were not lodged until August 2019 and the Council took 10 months to assess and reject these applications. [76] Scarrott gave the Croziers the impression that everything would happen without difficulty and that sales of the subdivided lots would happen without any delays, and the proceeds of these sales would cover the initial purchase price, less the deposit and other costs, of the Land. [77] I also refer to the admissions of Scarrott read to the Court in the criminal proceedings that his feasibility study was not based on any evidence. [78] Accordingly, I find that Representations 1, 2, 3 and 4 were prima facie true. However, I find that when Scarrott made these representations he was purposely being vague, and he failed to properly explain or disclose the underlying issues and problems involved. He failed to disclose the advice that he had received from Ransom. That is -- 15 of 22 -- 16 an application to subdivide the Land with required relaxations from the Council was required. Further even if the Council had approved the applications for lots 280, 281, 282, 333, 334 and 335, a separate application to subdivide the Land was required to be lodged and assessed by Council. There was no “as of right” approval for the Land as advised by Scarrott. The whole scheme depended on timing. Scarrott was extremely over-optimistic when making his pitch to the Croziers and other claimants. He was buying time. [79] A representation that is false and/or misleading can be either an expressed representation or can be in the form of silence or non-disclosure of a very relevant fact or what was within the knowledge of Scarrott. This principle was discussed in the matter of Airstrike Industrial Pty Ltd v Robertson [2014] QCATA 043. At paragraph 30 of the decision the Learned Members refer to a misrepresentation by silence. They say: “for there to be a representation by silence the representee must establish that there was some relevant fact or matter within the knowledge of the representor and the representor chooses not to disclose the fact or matter to create a false impression”. [80] If Scarrott had fully explained and been truthful about the processes required for Council approval, and that the whole scheme very much depended on timing, then the Croziers would not have committed to the purchase of the Land and transfer of funds to Key. Therefore, I find Representations 1, 2, 3 and 4 were false or misleading. [81] Representation 5 concerned the Refund Option – this representation is the promise made in the letter from Key to the Croziers dated 9 May 2019 (page 12 of the Referral). Representation 5 – (a) They (Scarrott and Key) would refund the Applicants their initial investment if they were unable to “develop Lot 591 into three separate lots and have them sold prior to the expiry of the put and call” and (b) The Applicants may exercise this option 2 months before the put and call expiry by choosing to either settle on their Lot 591 purchase or have the Respondents refund their invested funds and take ownership of Lot 591. The Croziers answered “yes” when asked about Representation 5. [82] In Representation 5 Scarrott has referred to lot “591”. It seems that the Land (lot 491) was substituted for lot 591 and therefore the promise contained in the letter applies to the Land. [83] Representation 5 relates to Representations 1, 2, 3 and 4. Some of the above commentary is applicable to Representation 5. [84] Scarrott always gave the Croziers the impression that he had everything in place to undertake the subdivision. He gave the Croziers the impression that there would be no problems, and everything was ready to go. Scarrott did not disclose the full story to the Croziers. He gave them certainty when there was no certainty. There were no approvals in place, the “pre-approval” or approval only related to the Pimpama Village development area as a whole, there was no certainty that the Council would approve the application with the requested relaxations and the success of Scarrott’s proposal depended on timing. -- 16 of 22 -- 17 [85] Scarrott did not disclose the caveat in Ransom’s advice of April 2019 and its ramifications regarding moving forward or the possible success or refusal of such an application. [86] For Scarrott to bring the scheme to fruition would have required the Council to approve the application to subdivide the Land, and if necessary, build townhouses on the subdivided lots. There was no prospect of this happening because of the time that would have been required to achieve these milestones. Scarrott had not even started the Council approval process for the Land. The promise of the “total project” for the Land taking only 6 months was impossible to achieve. [87] Further what corroborates the false, misleading and deceptive behaviour of Scarrott in making all six Representations is the fact that when the Croziers requested updates from Scarrott he was always positive that they would receive their money. He never disclosed to them the difficulties that he was having, in terms of approval and timing, with the Council assessing the applications for the six lots. When Paul Crozier confronted Scarrott and advised him that all the Croziers now wanted was their funds to be refunded, Scarrott advised him that “he had a solution and we (they) would still make a profit” or words to that effect. Scarrott/Key did not honour the refund promise. [88] Again, Scarrott was not telling the whole story and not making full disclosure when he was making the offer of a refund and penalty. [89] I do not accept that Scarrott could ever have delivered on this refund/penalty promise because: (a) Scarrott’s commitment is worthless because he did not have the resources or finance to purchase the Land. This is corroborated by Scarrott’s admissions about his use of the various claimants’ funds fraudulently and his failed attempts to obtain bridging finance from ANZ and Latrobe Financial. Scarrott has admitted that Key’s business was running at a monthly loss of between $75,000 and $120,000 per month and he was forging ANZ bank approval letters to buy time. There was no possibility of Scarrott or Key honouring their commitment to purchase the Land unless they fraudulently converted other investors’ funds. (b) Scarrott was making the refund or buy back promise to other New Zealand claimants. Scarrott had no prospect of fulfilling any of these promises. (c) By this point in May 2019, when Scarrott made this promise, he must have been under some pressure because there were concerns and time delays regarding the applications to Council. It appears that at the same time he was trying to buy time by arranging bridging or Vendor finance. [90] Accordingly, I find that Representation 5 – Refund Option taken as a whole, including the non-disclosure issues, was false or misleading. [91] In summary I find that Scarrott/Key made the following representations to Croziers to induce them to enter the P&C which were false and/or misleading: (a) Scarrott, if required, would proceed with, and honour the Refund Option. (b) The proposal to subdivide the Land into 3 or 4 lots with approved plans to build townhouses would happen smoothly with Council and the “total project” would take 6 months. -- 17 of 22 -- 18 (c) The on-sale of subdivided lots of the Land would happen before the Vendor called upon the Croziers to complete the P&C. See email from Scarrott to Paul Crozier dated 22 March 2019, page 7 of the Referral. (d) “The project is ready to start immediately, and it is first in secures the lot”. Even if this representation referred to the 6 lots, and not the Land, in Scarrott’s email of 22 March 2019 this was false and misleading because the applications for approval were not lodged until August 2019. (e) The funds paid by the Croziers to Key would be paid into a trust account and held there and only paid out for the deposit under the P&C and payment of other expenses to prosecute the subdivision of the Land. (f) Scarrott/Key would contribute the balance of approximately $64,000 to the purchase/subdivide and on-sell the subdivided lots. This did not occur, and it is my view that Scarrott/Key never had the resources or ability to fulfill this promise. He was under pressure and trying any tactic to induce other purchasers to contribute further funds to Key to buy time. (g) Scarrott was representing to the Croziers that they would not have to borrow or contribute any further funds because the on-sales of the subdivided lots would cover the purchase price of the Land and result in a profit. I am not certain how this would work from a practical and legal point of view. Also, it is possible that bridging finance may have been required for the whole scheme to succeed. Scarrott never explained to the Croziers the details of how this would work from a practical and legal perspective. He was always vague. [92] As a matter of clarification when I refer to representations made by Scarrott in my findings, the same findings also apply to Key as Scarrott was the director and controller of Key. [93] A general observation of the Croziers and the other claimants is that Scarrott gained their trust, and it is clear from the evidence that Scarrott played on this trust and their lack of knowledge of Queensland legal processes relating to the purchase and subdivision of real property. He was always vague and gave them certainty when this was not the case. This is corroborated by his subsequent actions, lying or being deceptive when the Croziers and other claimants asked for updates. [94] OFT have raised the issue that s 24 of the Criminal Code may be available to Key and Scarrott if either was charged with a criminal offence under the POA or other legislation. OFT have cited the decisions of To v Chief Executive, Department of Tourism [2006] QDC 381 at paragraphs 40 to 45 and Dunn v Chief Executive, Department of Justice and Attorney-General [2012] QCAT 476 at paragraph 11 as precedents for their submissions. [95] I accept the application of s 24 of the Criminal Code to these claims. However, the defence under s 24 of the Criminal Code must be “an honest and reasonable, but mistaken belief in the existence of any state of things”. I also note that Scarrott and Key never used s 24 of the Criminal Code as a defence in the criminal charges brought against them. [96] In these proceedings, this mistaken belief may relate to the “preapproval” by the Council to the subdivision of the Land into three lots and the construction of 3 townhouses (with relaxed setbacks, site coverage and communal open space) on the -- 18 of 22 -- 19 3 subdivided lots. Scarrott relied on the advice of ZPG/Ransom and his own enquiries that Council approval was code assessable, and a material change of use application would result in an approval in 3 to 4 months. [97] Scarrott always knew or should have known that the pre-approval for the lots only referred to the Code for the Pimpama Village development area as a whole. The pre- approval did not apply to the relaxation of having to strictly comply with the Code regarding the lots that he was marketing. No reasonable person could describe this as any sort of approval by Council. [98] At this stage, notwithstanding Ransom’s confidence, no reasonable person could honestly describe this as an approval or a certainty to be approved. [99] Further Scarrott stated to the Croziers that the Council had already approved 6 lots in Pimpama Village to be subdivided into three townhouses or words to that effect. Scarrott was referring to the applications for the six lots where ZPG were to lodge applications to subdivide these lots. These applications were not lodged with the Council until August 2019. Therefore, if Scarrott was referring to these applications then there was no approval, only the preapproval of the Pimpama Village development area as a whole. In fact, Scarrott advised the Croziers in an email dated 22 March 2019 that the project relating to these 6 lots “is ready to start immediately”. [100] The mistaken belief may relate to the other timelines that Scarrott was promising regarding the subdivision of the Land, erections of townhouses and on-sale of the subdivided lots by the time the Vendor called upon the Croziers to complete the P&C. In the email to the Croziers dated 22 March 2019, Scarrott says that the “the total project will be 6 months”. Again, I refer to my previous comments that this was not only overly optimistic (no applications were ever lodged for the Land) but also untrue. That is impossible to achieve and Scarrott would have known this when he made his pitch to the Croziers. [101] Therefore, s 24 of the Criminal Code is not a defence if Key or Scarrott are charged with any criminal offence. CLAIM AGAINST FUND [102] To succeed in their claim the Croziers must satisfy the provisions of s 82 of the AFAA. The provisions that may apply to Croziers’ claim are ss 82(1)(a), (b) and (g). In s 80 there is a definition of “relevant person”. At all relevant times Scarrott was an “agent”. [103] What is an “agent”? The relevant sections are ss 8, 33, 41 and 80 of the AFAA. Pursuant to these provisions Scarrott was an “agent” regarding the relevant provisions of the AFAA. [104] Section 16 of the POA outlines who is a “real estate agent” and in s 16 of the POA there is a reference to s 26 of the POA which outlines the activities that the holder of a real estate agent is authorised to undertake as an agent for others. OFT have raised the issue that Scarrott may not have been carrying out the activities of a real estate agent when he was prosecuting his scheme, that he was acting as a property developer or giving advice as a property developer. In s 26 the POA states: (1) A real estate licence authorises the holder of the licence to perform the following activities an agent for others for reward- -- 19 of 22 -- 20 (a) To buy, sell (other than by auction), exchange or let real estate property or interests in real estate: (b) ……. (c) To negotiate for the buying, selling, exchanging or letting of something mentioned in paragraph (a) or (b); (d) ….. I find that the activities that Scarrott was undertaking for the Croziers and the parties that have made claims against the Claim Fund fall squarely in the activities that are outlined in ss 26(1)(a) and (c) of the POA. [105] There is a complication in these proceedings. That is the promised contribution of $64,200 from Scarrott to prosecute the applications to Council and develop the subdivided lots of the Land. There does not appear to have been any discussion or agreement between the Croziers and Scarrott regarding the date or event that this contribution was to be made. Certainly, it would have been clear to the Croziers towards the end of 2019 that Scarrott was not going to honour this promise. [106] The deposit of $29,000 for the deposit under the P&C was certainly paid in accordance with the Croziers’ express authority. The Croziers did not give evidence about whether the $12,000 management fee noted in the development proposal (page 9 of the Referral) was discussed in the negotiations with Scarrott in March to May 2019. [107] It is my view that there is not enough evidence before the Tribunal for a finding that there was an express or an implied condition of the offer of the contribution by Scarrott was that Key/Scarrott was only entitled to be paid the management fee of $12,000 when Key/Scarrott contributed the $64,200. This issue was not discussed. Scarrott almost invariably did not provide details and specifics to the various claimants. He was purposely vague. [108] No actual application was lodged by Scarrott or ZPG to obtain approval to subdivide the Land. The application lodged by ZPG was for a material change of use and to reconfigure lots 260, 261, 262, 333, 334 and 335. [109] I note that Scarrott gave the impression to the Croziers and the Croziers believed that their funds would be held in a trust account. It is difficult to determine the full details of the express and implied authority that Scarrott was to hold the monies on behalf of the Croziers for the payment of expenses to progress the Council applications from the conversations and correspondence between the Croziers and Scarrott/Key. Also, the details of payments to other consultants and contractors (if any) have not been produced to the Tribunal to ascertain how much was paid to these parties. Notwithstanding this lack of clarity, I find that there was an express/implied authority that Scarrott was to hold the Croziers’ funds in trust and only disperse the funds for the deposit for the P&C, possibly the management fee and to prosecute the Council applications for subdivision, not for other expenses. In these proceedings it appears that Scarrott/Key have complied with these arrangements. [110] The only way to determine exactly when and how much Scarrott and Key disbursed from their account without implied or express authority would be for an accountant to forensically examine the bank accounts of Scarrott and Key. I do not have these details. -- 20 of 22 -- 21 [111] On balance I find that Scarrott/Key have not contravened ss 21, 22 and 82(1)(a) and (b) of the AFAA. [112] Did Scarrott contravene s 82(1)(g) of the AFAA? To determine this question, it is necessary to consider whether there have been any contraventions of ss 154, 155, 206, 207, 208, 209 and 212 of the POA. [113] In s 80 of the AFAA is the definition of “relevant person”. At all relevant times Scarrott was a relevant person because he was an “agent”. [114] The Croziers were given the impression by Scarrott that the funds that they transmitted to Key were to be paid into a trust account. The Croziers say that they transferred the funds into Scarrott’s nominated back account BSB 064430 Account Number 11287804. See paragraph 14 of Paul Crozier’s Statement. Evidence from other claims shows that this is the Key to Australia Account that Scarrott referred to as his trust account. The true name of the bank account with the CBA is Key to Australia Pty Ltd ATF the Scarrott Family Trust. It is not necessary for me to establish if Scarrott/Key established a trust account under Part 2 of AFAA. [115] It is sufficient for me to say that the Croziers paid the funds to Key. [116] It is noted that Scarrott was not charged with or convicted of any contravention of the AFAA or POA. [117] Scarrott and Key pleaded guilty to breaches of the ACL. Scarrott’s admissions that he used investors’ funds dishonestly and fraudulently were outlined to the Court in these proceedings. [118] Sections 154 and 155 of the POA refer to disclosure of a beneficial interest. These provisions do not apply to the facts and circumstances of the Claim. [119] The provisions of ss 206, 207, 208 and 209 do not apply to the facts and circumstances of the Claim. [120] The facts and circumstances of the Claim that relate to Scarrott making false and misleading representations about a scheme that induced the Croziers to commit funds to Key and to enter into the P&C are a breach of s 212 of the AFAA. This scenario fits squarely into s 212 of the POA. Therefore, I find that Scarrott has contravened s 82(1)(g) of the AFAA. OBJECTS OF AFAA AND POA [121] The main object of the AFAA is set out in s 6 of the AFAA. In summary the object is to protect consumers from financial loss in dealings with agents and this is to be achieved by regulating the ways agents operate trust accounts and establishing a claim fund to compensate persons in particular circumstances for financial loss arising from dealings with agents. [122] The main objects of the POA are set out in s 12 of the POA. In summary one of these objects is to provide a system of licencing of property which balances between the need to protect consumers and promote freedom of enterprise in the marketplace. Another object is to provide a way of protecting consumers against undesirable practices associated with the promotion of residential property. [123] In essence objects of both pieces of legislation are to provide for a system of licencing agents and to protect consumers. -- 21 of 22 -- 22 [124] If there are any inconsistencies or ambiguity in the facts, circumstances and interpretation of relevant legislation in these proceedings, then given the objects of the legislation are squarely aimed at consumer protection, any such inconsistencies and ambiguities should be exercised in the claimant’s favour. FINDINGS [125] On the balance of probabilities, in their dealings with the Croziers regarding the Land, I find as follows: (a) Key and Scarrott have not complied with ss 82(1)(g) of the AFAA. (b) Key and Scarrott were “relevant persons” and “licenced agents” as contemplated in the provisions of the AFAA and POA, in particular s 80 of the AFAA. (c) Key and Scarrott were carrying out the activities of real estate agents as outlined in ss 26(1)(a) and (c) of the POA. That is facilitating/negotiating the purchase and sale of interests in real property. (d) The Croziers lodged a valid claim pursuant to s 82 of the AFAA. (e) The Croziers have suffered a financial loss. (f) Key and Scarrott are responsible for the financial losses of the Croziers. (g) The Croziers cannot claim any capital losses and interest. See s 113(5) of the AFAA. (h) The limit for any claim is $200,000. See s 113(4) of the AFAA and regulation 25 of the Agents Financial Regulation 2014 (Qld). (i) The Croziers have made a claim for $40,000. The Croziers have not provided sufficient evidence to substantiate any loss of opportunity and other financial losses. Further I cannot award any interest on the claim pursuant to s 113 of the AFAA. (j) Therefore, I allow the amount of $40,000, being the maximum payable under the AFAA, for the Croziers’ claim. (k) Scarrott and Key are jointly and severally responsible for the Croziers’ financial losses. (l) Pursuant to s 116(3) of the AFAA Scarrott and Key are jointly and severally liable to reimburse the Claim Fund in the amount of $40,000. -- 22 of 22 --