Chandra v Key to Australia Pty Ltd & Anor [2024] QCAT 225

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Chandra v Key to Australia Pty Ltd & Anor [2024] QCAT 225 PARTIES: SARISH CHANDRA (applicant) SATPREET CHANDRA (applicant) v KEY TO AUSTRALIA PTY LTD (DEREGISTERED) (first respondent) GRAHAM MARK SCARROTT (A BANKRUPT) (second respondent) APPLICATION NO/S: OCL069 -21 MATTER TYPE: Other civil dispute matters DELIVERED ON: 10 May 2024 HEARING DATES: 14 June 2023 and 7 March 2024 HEARD AT: Brisbane DECISION OF: Member Poteri ORDERS: Pursuant to section 105 of the Agents Financial Administration Act 2014 (Qld), the claim is allowed and the amount of $70,000 should be paid to the Applicants from the Claim Fund at the expiration of the appeal period as outlined in section 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 Applicants. 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 $70,000. CATCHWORDS: ADMIINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – 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 -- 1 of 22 -- 2 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 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 6, s 8, s 21, s 22, s 33, s 84, s 77, s 80, s 82, s 84, s 85, s 95, s 105, s 113, s 116 Criminal Code Act 1899 (Qld), sch 1 Criminal Code (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 115, s 154, s 155, s 206, s 207, s 208, s 209, s 212 Airstrike Industrial Pty Ltd v Robertson [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] QCCTPAMD 2 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] I have consent of all the claimants to refer to the evidence and details of each of the various claims when 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, Queensland. The Lots were the subject of put and call option agreements (‘P&C’) with Eagle Street Finance Pty Ltd (‘Vendor’). -- 2 of 22 -- 3 [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 (‘the Council’) for application fees and approximately $33,000 was paid to the town planners, Zone 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. 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 Annexure 3 attached to the Form 4 – Complaint in the Supplementary Document Bundle filed by OFT on 17 March 2023. In summary the admissions show:1 (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 ANZ finance approval letters to buy time. (c) Scarrott started marketing the Lots in late 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 six (6) applications with the Council on 26 August 2019. 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 that the applications may have to be amended. Notwithstanding this advice Scarrott continued to market the Lots at Pimpama. (f) The complainants’ funds were paid into the bank account known as the Key To Australia Pty Ltd As Trustees For The 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. 1 OFT Supplementary Document Bundle filed 17 March 2023, 10-3. -- 3 of 22 -- 4 (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. [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. 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 three (3) individual Lots and obtain approval to erect three (3) townhouses on the individual subdivided Lots. [12] Scarrott 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] 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. [14] Bridging finance may have been required because the Council took more than the expected three (3) to four (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 during this period. [15] 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. [16] 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 purchase prices under the P&Cs. Many of the claimants could not complete the purchases so their deposits were forfeited to the Vendor. -- 4 of 22 -- 5 [17] Ironically, two (2) claimants who had the resources to complete the purchase of 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 [18] The Applicants, Sarish and Satpreet Chandra (‘Chandras’) were at all relevant times residents of New Zealand. [19] Key was at all relevant times a corporation incorporated in Australia and had offices in Queensland. [20] Scarrott was at all relevant times a resident of Queensland and a director and the secretary of Key. [21] Between September 2019 and December 2019, the Chandras met and communicated with Scarrott in Australia and New Zealand to discuss a real estate scheme. Certain representations are alleged to have been made by Scarrott: (a) A substantial profit could be made by investing in a real estate scheme regarding land which the Council had pre-approved for subdivision. (b) An initial investment of $104,000 was required from the Chandras. An initial payment of $70,000 and a further payment of $34,000 before settlement. 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. (c) Scarrott and Key would on-sell the subdivided Lots for the Chandras without the necessity of the Chandras having to pay for the balance of the land purchase. (d) The outcome for the Chandras would be an estimated return of $201,400. (e) The funds paid by the Chandras to Key/Scarrott would be paid into and held in a trust account. [22] In November 2019, the Chandras committed to the purchase of Lot 403 Pimpama Village (‘the Land’) based on the representations made by Scarrott by signing an expression of interest. In December 2019, the Chandras signed a P&C for the purchase of the Land. [23] In November and December 2019, the Chandras remitted the sums of $1,000 and $69,000 ($70,000 in total) into the bank account of Key with the Commonwealth Bank of Australia (‘CBA’) in Queensland. This is the account that Scarrott refers to as his “trust account”. It is in the name of Key to Australia Pty Ltd As Trustees For Scarrott Family Trust. [24] In June 2020, the Chandras’ lawyer emailed the Applicants advising that settlement of the P&C agreement was due to be completed. [25] In June 2020, the Chandras’ lawyer advised him that the arrangement with Scarrott was not going ahead and Scarrott may have misappropriated their funds. LEGISLATION [26] For reference, I outline the relevant legislative provisions of the AFAA and Property Occupations Act 2014 (Qld) (‘POA’): -- 5 of 22 -- 6 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 [27] Pursuant to section 82 of the AFAA, the Chandras lodged a claim (‘Claim’) signed 24 July 2020 on 10 August 2020 against the Claim Fund which is administered by OFT. The Claim was made within the time stipulated in section 85 of the AFAA. [28] Pursuant to section 95 of the AFAA the Claim was referred (‘the Referral’) to the Tribunal on 31 August 2021 for determination. REFERRAL [29] In the Referral, OFT has raised several issues that should be considered by the Tribunal. [30] The issues are: (a) Jurisdiction. (i) The AFAA is legislation enacted in Queensland. There is no specific provision in the AFAA which restricts claims to Queensland. However, for a claim to be successful, a claimant must demonstrate that there is a sufficient nexus to Queensland. (b) 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. (c) OFT point out that Scarrott and Key may have been providing property development advice rather than acting as a real estate agent when the Chandras entered the arrangements. (d) A claim may be made under section 82 of the AFAA if the claimant suffers financial loss because of a contravention of sections 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 Chandras paid $70,000 into the trust account of Key. These monies were to be distributed by payment of $29,400 for the deposit to the Vendor for securing the Land and the balance to Key to prosecute the scheme. A further payment of $34,000 was to be paid by the Chandras at settlement. (e) Section 82(1)(g) of the AFAA states that a claimant may make a claim if there has been a contravention of section 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 issue relates to whether Key had the ability to subdivide the Land and/or whether the Chandras would not be required to pay for the balance of the purchase price of the Land to the Vendor. -- 6 of 22 -- 7 EVIDENCE Chandras [31] I found the Chandras to be open and honest when giving evidence and I accept their evidence. [32] Sarish Chandra (‘Mr Chandra’) provided a signed statement (‘Mr Chandra’s Statement’) to OFT dated 3 September 2020 which is exhibited on pages 4 to 6 of the Referral. This statement also annexes other relevant material. The Chandras also gave evidence at the Tribunal Hearings by Teams and remote conferencing. [33] Prior to 2019, the Chandras had known Scarrott for several years. In late September 2019, when the family was holidaying on the Gold Coast, Mrs Chandra was contacted by Scarrott and met with him during that trip. At this meeting, Scarrott outlined a real estate scheme where they could invest an initial $70,000 and a further $34,000 (at final settlement) and realise a net profit of $201,400. [34] In November 2019, Scarrott emailed the Chandras with some brochures and figures.2 On 20 November 2019, the Chandras executed the expression of interest and sent it to Scarrott.3 [35] Mr Chandra says that Scarrott emailed him some revised figures on 4 December 2019.4 The figures on page 9 in the Document Bundle of the Referral seem to be the same that are annexed on page 22 of the Referral. Mr Chandra may be referring to the figures outlined in Key’s letter on pages 20, 21, 26 and 27 in the Document Bundle of the Referral. The letters dated 4 December 2019 and 17 December 2019 outline some undertakings and promises from Key/Scarrott. [36] Scarrott also advised the Chandras that the funds that were paid to Key/Scarrott would be “secured” in a trust account.5 [37] Mr Chandra says that based on the representations and promises made by Scarrott, the Chandras executed the P&C for the purchase of the Land on 17 December 2019 and paid the balance of the deposit of $69,000 into the trust account of Key on 18 December 2019.6 ADMISSIONS BY SCARROTT [38] A claim was made against the Claim Fund by a Simon Allan Wilson (‘Wilson’) in Queensland Civil and Administrative Tribunal file OCL067-21. Wilson had similar dealings with Scarrott and Key regarding the subdivision of a Lot at Pimpama, Queensland. 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. 2 The Referral Document Bundle, 7-15. 3 The Referral Document Bundle, 16. 4 The Referral Document Bundle, 18-27. 5 Mr Chandra’s Statement, [13]. 6 The Referral Document Bundle, 30-139. -- 7 of 22 -- 8 [39] Further, I refer to the admissions made by Scarrott in interviews regarding his criminal prosecution referred to earlier in these Reasons.7 SCARROTT AND KEY [40] Scarrott did not attend the hearings to give evidence. He provided an unsworn statement (‘Scarrott’s Statement’).8 [41] Key was not represented at the Tribunal Hearings and no material was filed by Key in these proceedings. Key has now been deregistered as a corporation. [42] Details of Scarrott’s activities are outlined on pages 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. [43] 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. [44] 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 page 12 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 to the business account of Key to Australia Pty Ltd As Trustees For The Scarrott Family Trust. Scarrott informed clients that this was a “trust account”. The Chandras 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 7 OFT Supplementary Document Bundle filed 17 March 2023, 10-3. 8 The Referral Document Bundle, 159-165. -- 8 of 22 -- 9 2019. See letter from ZPG to Mayor Tom Tate and Councillor Hammel dated 23 April 2020.9 (g) 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. (h) 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. (i) No application for subdivision of Lot 403 was lodged with the Council. (j) In the criminal prosecution of Scarrott there were approximately 18 affected parties. (k) Scarrott admitted to forging letters from the ANZ bank to buy time. (l) Scarrott attempted to obtain finance with Latrobe Financial Ltd, but the valuations of the land fell short of the valuations required by the financer. (m) Scarrott always described himself as a sales consultant or a licensed real estate agent not as a development consultant. (n) Scarrott initially expected the subdivision approval process with the Council to take three (3) to four (4) months. This process took much longer than expected and eventually the Council rejected/approved Scarrott’s application with certain conditions which Scarrott/Key were not able to satisfy. Ransom describes the response from Council as a “refusal”. The more accurate way of describing the actual situation is that the Council delayed in processing the application for subdivision and the approval was subject to certain conditions. (o) He advised some claimants that once the six (6) applications lodged by ZPG in August 2019 were approved by the Council then the applications to Council for the rest of the Lots would be approved “as of right” by the Council without any delay or problems. This is contrary to the advice from Ransom of ZPG. (p) 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. (q) 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. (r) 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. (s) Ultimately the Council process took too long, Council rejected/approved the application with conditions, bank lending requirements became tighter, introduction of a foreign buyer’s surcharge was introduced into New Zealand, 9 The Referral Document Bundle, 176-183. -- 9 of 22 -- 10 the COVID pandemic struck, and New Zealand banking institutions’ actions were delayed. DAVID RANSOM AND ZONE PLANNING GROUP [45] David Ransom (‘Ransom’) is a director of ZPG which is a business specialising in town planning. [46] Ransom has provided a sworn statement executed on 24 August 2020.10 Ransom has an Urban and Town Planning degree from the University of New England. Annexed to his statement are: (a) a fee proposal; (b) terms of engagement; and (c) some attached correspondence with the Council. [47] 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.11 [48] 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 with the Council on 26 August 2019. See page 2 of the letter from ZPG to Tom Tate, Mayor of the Gold Coast Council, making complaints about the time taken to process the development application.12 [49] In the letter from ZPG to Key dated 23 April 2019 there is no mention of Lot 403. Lot 403 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”. When 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 the Council was required. Such applications would be assessed by the Council in the normal manner. [50] 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.13 [51] I note the advice, given to Key and Scarrott in the letter, from ZPG dated 23 April 2019, stated:14 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… 10 The Referral Document Bundle, 166-306. 11 The Referral Document Bundle, 169-175. 12 The Referral Document Bundle, 176-7. 13 The Referral Document Bundle, 170. 14 The Referral Document Bundle, 170. -- 10 of 22 -- 11 [52] From Ransom’s statement he says that the Council assessment took much longer than anticipated and ultimately the application was “refused” (approval with conditions unsatisfactory to Key/Scarrott) by the Council on 11 June 2020. According to Ransom this delay and refusal/approval with conditions was “completely wrong”. [53] Ransom says that ZPG has no knowledge of the details of Scarrott’s New Zealand sales scheme. [54] The Tribunal called Ransom to give oral evidence on 7 March 2024. His evidence was: (a) “Pre-approval” refers to preliminary approval in section 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 2016.15 (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. (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. 15 The Referral Document Bundle, 169. -- 11 of 22 -- 12 (k) He provided payment details to the Tribunal after giving evidence. ZPG were paid a total of $33,000 by Scarrott. JURISDICTION [55] OFT has raised the issue of jurisdiction of the AFAA in these matters. 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. [56] 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. [57] In Freehold, the Court held that the activities occurred in Queensland. However, the Court stated:16 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 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 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. [58] The matter of Goodchild v Ferrantino,17 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, even though the land was situated in New South Wales, all the activities occurred in Queensland, therefore, the claim was allowed, even though 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. [59] 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. [60] In these proceedings the following facts apply: 16 Freehold, 425-6. 17 [2007] QCCTPAMD 2 (‘Goodchild’). -- 12 of 22 -- 13 (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 Chandras paid monies into a bank account of Key which is situated in Queensland. (e) Mrs Chandra met Scarrott on the Gold Coast in September 2019 where Scarrott discussed the details of the scheme and showed her land at Pimpama Village. (f) There was communication between the Chandras (in New Zealand) and Key/Scarrott (in Queensland) prior to the execution by the Chandras of the expression of interest and P&C. Further, the Chandras communicated with Key and JMV Law in Queensland between January 2020 and June 2020. [61] 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 [62] OFT have outlined a number of “representations” made by Scarrott to the Chandras between October 2019 and December 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. [63] 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 – land parcels in Pimpama Village have already been Gold Coast Council approved to be configured into smaller Lots with townhouses to be built on each smaller Lot. (c) Representation 3 – The Respondents planned to reconfigure the Applicants’ reserved land parcels into 3 smaller Lots and on sell them to first home buyers to generate a substantial profit. (d) Representation 4 – The Applicants could participate in this scheme by: (i) Securing an option to purchase Pimpama Village land, and (ii) Investing $70,000 with the Respondents to cover the land deposit, reconfiguration costs and fees. [64] There is sufficient evidence for me to find that, prima facie, Representation 1, 2, 3 and 4 are true. However, Scarrott was not telling the full story when he was selling the scheme and Land to the Chandras. When these representations were made Scarrott must have known about the full details of his plans regarding the proposed subdivision of the Land, plans to seek on-street parking and setback relaxations from the Council and that any such application was subject to the Council’s procedures and timelines to assess the application and the application may or not be successful. -- 13 of 22 -- 14 [65] The Chandras gave oral evidence that Scarrott advised them and gave them the impression that the Council approval to subdivide was just a formality and it was certain to happen. Scarrott did not inform or disclose to the Chandras of the concerns of the Council officers (‘the officers’) and that the applications may have to be amended. [66] Between 30 September 2019 and 17 December 2019, Scarrott had the benefit of Ransom’s advice, and he had meetings with the officers from September 2019 onwards where the officers raised 12 concerns with the applications and Scarrott was advised by the officers that the applications will need to be amended. This is the status of the applications for subdivision for Lots 280, 281, 282, 333, 334 and 335. From this information and his own experience as a real estate agent, Scarrott would have known that the application process was far from being a formality or a certainty, and not just a case of paperwork and that approval may be difficult to achieve. [67] Further, Scarrott always spoke in generalities when selling the Land to the Chandras. Scarrott did not disclose the status of the above applications before the Council. He was wildly optimistic about times and outcomes. For example, the Chandras were advised by Scarrott that the whole process of Council approval of the subdivision of the Land into three (3) Lots and the development (erection of 3 townhouses) on the subdivided Lots would take 9 to 12 months. This was impossible from a timing and outcome perspective. The current applications before Council were lodged in August 2019 and there were still problems with approval of these applications. Ultimately the current applications were refused by the Council in June 2020. That is some 10 months after lodgement. In December 2019, when the Chandras executed the P&C, the application for subdivision of Lot 403 had not even been lodged with the Council. Further, there was no evidence before me that building plans (and ancillary documentation) had been prepared for this application. [68] Even if the application to subdivide Lot 403 had been approved the application and planning process would have taken at least 9 or 10 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 and development taking 9 to 12 months was impossible to achieve. [69] In any event, it is my view that by December 2019 Scarrott must had doubts about the outcome of any applications for subdivision currently before the Council. Additionally, he must have had doubts that that approval by the Council to subdivide Lot 403 with the building plans (i.e. relaxation of setbacks and parking) was ever going to happen. [70] Scarrott knew about all the above problems and obstacles to subdivide Lot 403 and develop according to Scarrott’s proposals and he never disclosed any of this information to the Chandras. To do so would have meant that the Chandras would not have invested their funds and executed the P&C. The Chandras had concerns with Scarrott’s proposal. That is why Scarrott made the promise to reimburse the Chandras the “…$70,000 plus a 30% penalty… within 12 months from signing the contract if the development does not complete or work out as expected”.18 At this point with Key’s outgoings running at $75,000 to $120,000 per month, Scarrott was desperate 18 Mr Chandra’s Statement, [12]. -- 14 of 22 -- 15 and making any promise to get more money into the Key account. It is clear he was buying time. [71] On 13 November 2019, Scarrott provided the feasibility study to the Applicants, which disclosed that a development application and material change of use (‘MCU’) was required.19 Scarrott never elaborated on this process and what obstacles had to be overcome to have the development application approved by the 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 and parking and time was of the essence. Scarrott always gave the Chandras the impression and led them to believe that everything would happen according to plan 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. [72] Additionally, Scarrott gave the Chandras the impression that everything would happen without difficulty and that the 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. [73] 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. [74] 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 and the Council’s concerns with the six (6) applications currently before Council, that may have to be amended. [75] 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.20 At paragraph 30, of the decision the Learned Members refer to a misrepresentation by silence. They say:21 For there to be a misrepresentation by a 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. [76] If Scarrott had fully explained and been truthful about the processes required for Council approval, the concerns raised by the Council with the six (6) applications currently before the Council and that the whole scheme very much depended on timing, then the Chandras 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. [77] I will now speak on Representations 5 and 6. They are as follows: 19 The Referral Document Bundle, 9. 20 [2014] QCATA 43. 21 Ibid [30]. -- 15 of 22 -- 16 (a) Representation 5 - if the Scheme is not completed within 9 months after the contract for Lot 403 arises, the Applicants can elect to proceed in one of the following ways: (i) have their $70,000 investment returned plus a penalty of $21,000; or (ii) accept a new Scheme completion date with a new agree net profit. (b) Representation 6 - if the Scheme is not completed within the 12 months after the contract for the purchase of Lot 403 arises, the Respondents will reimburse the Applicants their $70,000 investment plus a penalty of $21,000. [78] The Chandras answered “yes” when asked about Representations 5 and 6. [79] These Representations are connected with Representations 1, 2, 3 and 4. Some of the above commentary is applicable to Representations 5 and 6. [80] Scarrott always gave the Chandras the impression that he had everything in place to undertake the subdivision. He gave the Chandras the impression that there would be no problems, and everything was ready to go. Scarrott did not disclose the full story to the Chandras. He gave them certainty when there was no certainty. There were no approvals in place, the “pre-approval” only related to the Pimpama Village development area and not the Land, 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. [81] Scarrott did not disclose the caveat in Ransom’s advice of April 2019, and he did not disclose the concerns that the Council officers raised with him at their meetings from September 2019 onwards. [82] For Scarrott to bring the scheme to fruition he would have required the Council to approve the application to subdivide Lot 403, 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 was having problems with the current applications before Council, and he had not even started the Council approval process for Lot 403. [83] Further, what corroborates the false, misleading and deceptive behaviour of Scarrott in making all six (6) Representations is the fact that the Chandras requested updates from Scarrott on two (2) occasions after executing the P&Cs and did not receive a response. [84] Again, Scarrott was not telling the whole story and not making full disclosure when he was making the offer of a refund and penalty. [85] 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 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. -- 16 of 22 -- 17 (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 January 2019 when Scarrott made this promise, he must have been under some pressure because there were concerns and time delays regarding the applications to the Council. It appears that at the same time he was trying to buy time by arranging bridging or Vendor finance. [86] Accordingly, I find Representation 5 and 6 taken as a whole, including the non- disclosure issues, were false or misleading. [87] In summary, I find that Scarrott/Key made the following representations to the Chandras to induce them to enter into the P&C which were false and/or misleading: (a) Scarrott if required, would proceed with a refund and penalty. (b) The proposal to subdivide Lot 405 into three (3) Lots with approved plans to build townhouses would happen smoothly with the Council. (c) The funds paid by the Chandras 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. [88] 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, secretary and controller of Key. [89] A general observation of the Chandras and the other New Zealand investors who made claims 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 Chandras and other claimants asked for updates. [90] In this matter and other claims OFT have raised the issue of section 24 of the Criminal Code which 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. [91] I accept OFT’s submission on the application of section 24 of the Criminal Code. However, the defence, Mistake of fact, must be “an honest and reasonable, but mistaken belief in the existence of any state of things”.22 In these proceedings, this mistaken belief may have related to the “pre-approval” by the Council for the subdivision of Lot 403 into three (3) Lots and the construction of three (3) townhouses (with relaxed setbacks, site coverage and communal open space) on those subdivided Lots. Scarrott relied on the advice of ZPG/Ransom and his own enquiries that the Council approval was code assessable, and a material change of use application would result in an approval in three (3) to four (4) months. [92] 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- 22 Criminal Code (Qld) s 24. -- 17 of 22 -- 18 approval only applied where there was strict compliance with the Code regarding the Lots that he was marketing. [93] At this stage, notwithstanding Ransom’s confidence, no reasonable person could honestly describe this as an approval or a certainty to be approved. [94] Further, in the period of September 2019 to December 2019 when the Chandras executed the P&C, Scarrott had advice from the Council that they had concerns with the current applications (i.e. for Lots 280, 281, 282, 333, 334 & 335) and these applications may have to be amended. This advice should have or must have alerted Scarrott that there would be obstacles to overcome if he was to lodge applications for the Chandras or any of the other claimants. [95] Therefore, section 24 of the Criminal Code is not a defence if Key or Scarrott are charged with any criminal offence. CLAIM AGAINST FUND [96] To succeed in their claim the Chandras must satisfy the provisions of section 82 of the AFAA. The provisions that may apply to the Chandras’ claim are sections 82(1)(a), (b) and (g): (1) A person may claim against the fund if the person suffers financial loss because of the happening of any of the following events— (a) a contravention of section 21 or 22; (b) a stealing, misappropriation or misapplication by a relevant person of property entrusted to the person as agent for someone else in the person’s capacity as a relevant person; (c) … (d) … (e) … (f) … (g) a contravention by a relevant person of the following provisions of the Property Occupations Act 2014— • section 154 • section 155 • section 206 • section 207 • section 208 • section 209 • section 212. [97] In section 80 there is a definition of “relevant person”. At all relevant times, Scarrott was an “agent”. [98] What is an “agent”? The relevant sections are sections 8, 33, 41 and 80 of the AFAA. Pursuant to these provisions of the AFAA, Scarrott was as “agent”. [99] Section 16 of the POA outlines who is a “real estate agent” and there is a reference to section 26 of the POA which outlines the activities that the holder of a real estate agent -- 18 of 22 -- 19 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, and that instead he was acting as a property developer or giving advice as a property developer. [100] In section 26, the POA states: (a) A real estate licence authorises the holder of the licence to perform the following activities an agent for others for reward– (i) To buy, sell (other than by auction), exchange or let real estate property or interests in real property: (ii) ……. (iii) To negotiate for the buying, selling, exchanging or letting of something mentioned in paragraph (a) or (b); (iv) ….. [101] I find that the activities that Scarrott was undertaking for the Chandras and the parties that have made claims against the Claim Fund fall squarely in the activities that are outlined in sections 26(1)(a) and (c) of the POA. [102] Has Scarrott complied with section 82 (1)(a) and (b) of the AFAA? Notwithstanding the issue of any false and misleading representations made by Scarrott, I am of the view that only some of the monies paid to Scarrott and Key were disbursed in accordance with the parties’ understanding of how the scheme was to operate. The deposit of $29,400 for the deposit under the P&C was certainly paid in accordance with the Chandras’ express authority. The Chandras gave evidence that the reduced management fee $11,000 fee noted in the development proposal was not mentioned or discussed in any meeting with Scarrott.23 There may be some question whether Scarrott was to receive the management fee up front or when the subdivided Lots were sold. However, the other funds (i.e. in excess of $29,000) were to be used to prosecute the application to the Council to subdivide the Land and Scarrott has admitted using the funds deposited in the Key account to pay deposits for other NZ investors and for personal and Key’s expenses. [103] The Chandras gave evidence that Scarrott gave them the impression that the funds paid to Key were to be held in a separate trust account and only dispersed to prosecute the subdivision of the Land. This did not occur. [104] No actual application was lodged by Scarrott or ZPG to obtain approval to subdivide Lot 403. The application lodged by ZPG was for a MCU and to reconfigure Lots 260, 261, 262, 333, 334 and 335. I am of the view that there was no implied or express authority for Scarrott to disperse the monies when no applications were lodged by ZPG for Lot 403. [105] I note that Scarrott gave the impression to the Chandras and the Chandras 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 Chandras for the payment of expenses to progress the Council applications from the conversations and correspondence between the Chandras and 23 The Referral Document Bundle, 9. -- 19 of 22 -- 20 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 Chandras’ 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 to subdivision, not for other expenses. Therefore, I find that Scarrott/Key have breached sections 82(1)(a) and (b) of the AFAA. [106] 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. However, I have little doubt funds were disbursed without authority, given the amount of money available to Scarrott, the lack of progress in prosecuting the applications to the Council on many of the Lots and his admissions that he was dishonest and acting without authority in his dealing and disbursement of money held by him. [107] Did Scarrott contravene section 82(1)(g) of the AFAA? To determine this question, it is necessary to consider whether there have been any contraventions of sections 154, 155, 206, 207, 208, 209 and 212 of the POA. [108] In section 80 of the AFAA is the definition of “relevant person”. At all relevant times Scarrott was a relevant person because he was an “agent”. [109] The Chandras were given the impression by Scarrott that the funds that they transmitted to Key were to be paid into a trust account. The Chandras say that they transferred the funds into Scarrott’s nominated back account: BSB 064-430 Account number 11287804.24 Evidence from other claims show 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 Commonwealth Bank of Australia is Key To Australia Pty Ltd As Trustees For the Scarrott Family Trust. It is not necessary for me, in this case, to establish if Scarrott/Key established a trust account under Part 2 of AFAA. [110] It is sufficient for me to say that the Chandras paid the funds to Key. [111] It is noted that Scarrott was not charged with or convicted of any contravention of AFAA or POA. He was charged with and pleaded guilty of a contravention of the ACL. [112] 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. [113] On the balance of probabilities, Scarrott has contravened sections 21, 22 and 82(1)(a) and (b) of the AFAA. [114] 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. [115] The provisions of sections 206, 207, 208 and 209 do not apply to the facts and circumstances of the Claim. 24 Mr Chandra’s Statement, [16]. -- 20 of 22 -- 21 [116] The facts and circumstances of the Claim that relate to Scarrott making false and misleading representations about a scheme that induced the Chandras to commit funds to Key and to enter into the P&C are a breach of section 212 of the POA. This scenario fits squarely into section 212 of the POA. Therefore, I find that Scarrott has contravened section 82(1)(g) of the AFAA. OBJECTS OF AFAA AND POA [117] The main object of the AFAA is set out in section 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. [118] The main objects of the POA are set out in section 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. [119] In essence the objects of both pieces of legislation are to provide for a system of licencing agents and to protect consumers. [120] 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, then any such inconsistencies and ambiguities should be exercised in the claimants’ favour. FINDINGS [121] On the balance of probabilities, in their dealings with the Chandras regarding Lot 403, I find as follows: (a) Key and Scarrott have not complied with sections 82(1)(a), (b) and (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 section 80 of the AFAA. (c) Key and Scarrott were carrying out the activities of real estate agents as outlined in sections 26(1)(a) and (c) of the POA. That is facilitating/negotiating the purchase and sale of interests in real property. (d) The Chandras lodged a valid claim pursuant to section 82 of the AFAA. (e) The Chandras have suffered a financial loss. (f) Key and Scarrott are responsible for the financial losses of the Chandras. (g) The Chandras cannot claim any capital losses and interest. See section 113(5) of the AFAA. (h) The limit for any claim is $200,000. See section 113(4) of the AFAA and regulation 25 of the Agents Financial Regulation 2014 (Qld). -- 21 of 22 -- 22 (i) The Chandras have made a claim for $70,000. The Chandras 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 section 113 of the AFAA. [122] Therefore, I allow the amount of $70,000, being the maximum payable under the AFAA, for the Chandras” claim. [123] Scarrott and Key are jointly and severally responsible for the Chandras’ financial losses. [124] 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 $70,000. -- 22 of 22 --