Department of Justice and Attorney-General – Office of Fair Trading v Noosa Resort Management Pty Ltd and Ors (No 2) [2020] QCAT 403

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Department of Justice and Attorney-General – Office of Fair Trading v Noosa Resort Management Pty Ltd and Ors (No 2) [2020] QCAT 403 PARTIES: DEPARTMENT OF JUSTICE AND ATTORNEY- GENERAL – OFFICE OF FAIR TRADING (applicant) v NOOSA RESORT MANAGEMENT PTY LTD JENNIFER MAY CARR PETER CHARLES BUTT (respondents) APPLICATION NO/S: OCR254-18 MATTER TYPE: Occupational regulation matters DELIVERED ON: 14 October 2020 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Kanowski ORDERS: Noosa Resort Management Pty Ltd must pay a fine of $5,000 to the chief executive by 11 November 2020. Noosa Resort Management Pty Ltd is reprimanded. Jennifer May Carr must pay a fine of $2,500 to the chief executive by 11 November 2020. Jennifer May Carr is reprimanded. Peter Charles Butt must pay a fine of $2,500 to the chief executive by 11 November 2020. Peter Charles Butt is reprimanded. CATCHWORDS: PROFESSIONS AND TRADES – AUCTIONEERS AND AGENTS – DISCIPLINARY PROCEEDINGS – where disciplinary ground established that real estate agent contravened legislative requirements – where disciplinary ground established that real estate agent failed to ensure employee properly supervised – whether agent should be reprimanded or fined -- 1 of 7 -- 2 Property Occupations Act 2014 (Qld), s 186 REPRESENTATION: Applicant: R Vize, in-house counsel Respondent: A Collins instructed by Garland Waddington Solicitors and Notary APPEARANCES: This matter was heard and determined on the papers pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) REASONS FOR DECISION Introduction On 8 July 2020 I decided that grounds exist for disciplinary action against the respondents under the Property Occupations Act 2014 (Qld) (‘Property Occupations Act’).1 As discussed in more detail in the reasons of 8 July 2020, the corporate respondent Noosa Resort Management Pty Ltd (‘NRM Pty Ltd’) was the letting agent appointed by Jebral Nominees Pty Ltd to manage lettings of a holiday house. Ms Carr and Mr Butt are the shareholders in, and directors of, NRM Pty Ltd. All respondents hold real estate licences: NRM Pty Ltd is a licensed real estate corporation, while Ms Carr and Mr Butt each hold a real estate agent principal licence. Ms Carr and Mr Butt have held their licences since 1997 and 1993 respectively. After Jebral Nominees Pty Ltd gave notice to NRM Pty Ltd in 2015 that it was terminating the appointment of NRM Pty Ltd, an employee of NRM Pty Ltd told four prospective guests who had made advance bookings that the house would no longer be available. This was incorrect. The house was available, and the bookings could have been taken over by the new letting agent that Jebral Nominees Pty Ltd was appointing. The employee gave the prospective guests details of other properties, managed by NRM Pty Ltd for other clients, that would be available on the dates of their bookings. Two of the prospective guests cancelled their bookings, and NRM Pty Ltd refunded the deposits they had paid. The other two prospective guests switched their bookings to other properties managed by NRM Pty Ltd, and NRM Pty Ltd transferred the deposit moneys to those new bookings. In respect of one of the prospective guests, however, the change of booking occurred after NRM Pty Ltd must have told the guest that Jebral Nominees Pty Ltd’s property would be available after all, through a different agent. The financial reporting system used by NRM Pty Ltd was such that it did not inform Jebral Nominees Pty Ltd what NRM Pty Ltd ultimately did with the deposits that had been held for the prospective bookings. I found that NRM Pty Ltd had contravened a section of the Agents Financial Administration Act 2014 (Qld) (‘Agents Financial Administration Act’) that requires 1 Department of Justice and Attorney-General – Office of Fair Trading v Noosa Resort Management Pty Ltd and Ors [2020] QCAT 277. -- 2 of 7 -- 3 an agent to account to clients. I will refer to this as ‘the accounting contravention’. The provision requires an agent to account, amongst other things, for how an amount received for a transaction is paid out. I also found that Ms Carr and Mr Butt had contravened the same section by enabling NRM Pty Ltd’s contravention. This was because they were responsible for the accounting system used by their company. This contravention amounts to a ground for disciplinary action. I also found that a disciplinary ground exists against NRM Pty Ltd, and against Ms Carr and Mr Butt as the company’s controllers, on the basis that NRM Pty Ltd had failed to ensure that the employee in question was properly supervised in the performance of her duties. In respect of this ground, the respondents conceded that more rigid systems may have prevented the employee giving wrong information to the prospective guests. I also found that NRM Pty Ltd had contravened a provision of the Property Occupations Act which prohibits false representations relating to the letting of real property. NRM Pty Ltd was held to be responsible for the making of the false representations by its agent, the employee, to the prospective guests about the availability of the house. This contravention amounts to a ground for disciplinary action. I found that Ms Carr and Mr Butt did not themselves contravene the provision, because they did not know about or encourage the actions of the employee. The present decision is about what orders should be made, under section 186 of the Property Occupations Act, in light of the findings that grounds exist to take disciplinary action. Submissions The parties have provided written submissions as to ‘penalty’: the applicant (‘Office of Fair Trading’) on 5 August 2020 and in reply on 2 September 2020, and the respondents on 28 August 2020. The respondents adopted and expanded upon their earlier submissions, dated 8 August 2019. Office of Fair Trading submits that each respondent should be reprimanded and fined. The respondents submit that the appropriate orders would be modest fines. Should orders await the outcome of an appeal proceeding? The respondents advise that the finding that there was an accounting contravention is the subject of an application by them for leave to appeal. They submit that any orders should await the outcome of the appeal proceeding. Office of Fair Trading submits to the contrary. The tribunal is required to deal with matters quickly,2 but for various reasons it is likely that the appeal proceeding will take quite some time to determine. On balance, I consider the preferable course is to proceed to make orders in the present proceeding. The respondents can then decide whether they wish to bring an appeal proceeding in respect of the disciplinary orders, with a view to having that matter dealt with by the Appeal Tribunal together with the existing appeal proceeding. 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3(b). -- 3 of 7 -- 4 Available disciplinary orders A range of orders is available under section 186 of the Property Occupations Act, including reprimand, fine, licence disqualification, and compensation. A fine for an individual can be of up to 200 penalty units (totalling $26,110 as at the time of the disciplinary referral) and for a corporation of up to 1,000 penalty units (totalling $130,550). A disciplinary decision must be informed by the objects of the Property Occupations Act, in section 12, which include: 12 Objects (1) The objects of this Act are— (a) to provide a system for licensing and regulating persons as property agents or resident letting agents and for registering and regulating persons as real estate salespersons that achieves an appropriate balance between— (i) the need to regulate for the protection of consumers; and (ii) the need to promote freedom of enterprise in the market place; … (2) The objects are to be achieved by— (a) ensuring— (i) only suitable persons with appropriate qualifications are licensed or registered; and (ii) persons who carry on business or are in charge of a licensee’s business at a place under the authority of a licence maintain close personal supervision of the way the business is carried on; and (b) providing— (i) protection for consumers in their dealings with licensees and their employees; … The function of a disciplinary order is not to punish, and Office of Fair Trading in its submissions has cited a number of cases which emphasise the role of disciplinary proceedings in protecting the public.3 Office of Fair Trading also submits, and I accept, that a purpose of disciplinary action is to encourage the maintenance of professional standards in the real estate industry. While the disciplinary function is not punitive, deterrence of similar conduct by the particular respondents and by other licensees is no doubt a relevant factor. The parties have not located any cases comparable to the present case. Submissions of Office of Fair Trading Office of Fair Trading observes that the wrong information given by the employee put Jebral Nominees Pty Ltd at risk of financial loss because it may or may not have been able to find replacement tenants. The conduct also had the potential to benefit NRM 3 For example, Walter v Council of Queensland Law Society Inc [1988] HCA 8. -- 4 of 7 -- 5 Pty Ltd through the receipt of commissions, if prospective guests chose to move their bookings to another property managed by NRM Pty Ltd. Office of Fair Trading submits that the conduct of the employee was not isolated because it occurred on four occasions. However, I regard it as isolated in that it occurred over just two days in respect of a single property, and was not replicated by other staff. In relation to the accounting contravention, Office of Fair Trading notes that the provision of the information required by the Agents Financial Administration Act allows an owner to make an informed assessment about whether funds have been properly dealt with. Office of Fair Trading submits that Ms Carr’s conduct is more culpable than Mr Butt’s because on 19 August 2015 she received an email from a director of Jebral Nominees Pty Ltd describing what the employee had told one of the prospective guests. Office of Fair Trading submits that Ms Carr should have used this information to further investigate the actions of the employee, and that her failure to do so is an aspect of the failure to supervise. However, the email was received a month after the employee had provided the wrong information to the prospective guests. The failure to supervise that I found related to the systems in place when the employee gave that information, rather than to any later conduct of Ms Carr. Accordingly, I do not consider that there is a basis for differentiating the culpability of Ms Carr from that of Mr Butt. Office of Fair Trading submits that the appropriate orders are that each respondent be reprimanded and that NRM Pty Ltd be fined $10,000, that Ms Carr be fined $5,000, and that Mr Butt be fined $2,500. However, it is relevant to observe that some of the conduct discussed by Office of Fair Trading in its submissions is not conduct which was the basis of the disciplinary findings: for example how NRM Pty Ltd conducted itself in a tribunal proceeding brought by Jebral Nominees Pty Ltd about one of the bookings. I do not propose to take such conduct into account. Submissions of respondents The respondents submit that they genuinely and reasonably believed that the accounting system used by NRM Pty Ltd was appropriate: they did not believe they were required to account to Jebral Nominees Pty Ltd about how the deposits were paid out as they considered those funds were held on behalf of the prospective guests. The respondents submit that accordingly there should be no sanction, or at most a fine of $200, imposed in respect of the accounting contravention ground. The respondents say that they were fully cooperative with Office of Fair Trading, and point for example to their collaboration in an agreed statement of facts used in the proceeding. They argue that the imposition of a sanction would deter cooperation by others in the future. While I accept that there has been cooperation by the respondents, it is not a situation where the problem was identified and voluntarily disclosed by the respondents. The shortcomings which have given rise to disciplinary findings came to light as a result of the persistence of a director of Jebral Nominees Pty Ltd. I do not accept that the imposition of a sanction would tend to deter cooperation by others in the future. In respect of the contraventions relating to the actions of the employee, the respondents say that she was a junior employee. Her conduct was isolated, and not -- 5 of 7 -- 6 replicated by the other 15 staff. The conduct was not done with the knowledge or encouragement of the respondents. The respondents submit that the appropriate order in respect of NRM Pty Ltd’s contravention relating to the giving of wrong information by the employee would be a fine not exceeding $1,500. In respect of the failure to supervise, the appropriate order against NRM Pty Ltd would be a fine not exceeding $1,500 and the appropriate orders against Ms Carr and Mr Butt would be fines not exceeding $250 each. What are the appropriate orders? The conduct of the employee in misinforming the prospective guests was seriously wrongful. She should have ensured that NRM Pty Ltd, as agent for Jebral Nominees Pty Ltd, acted in the interests of Jebral Nominees Pty Ltd. This obligation was in no way diminished by Jebral Nominees Pty Ltd having given notice of the imminent ending of the agency appointment. An owner properly relies on an agent to act in the owner’s interests, as the principal, at all times during an appointment. The conduct of the employee served to enhance NRM Pty Ltd’s interests at the expense of Jebral Nominees Pty Ltd’s. NRM Pty Ltd bears responsibility for the actions of its employee, even though it did not know of the conduct at the time. Further, it bears responsibility for failing to have more rigorous systems in place to try to prevent such wrongdoing by its employees. Ms Carr and Mr Butt also share in that supervisory responsibility. I accept that Ms Carr and Mr Butt did not know of, or encourage, the employee’s conduct. I also accept that the conduct was isolated. In these circumstances, I consider that a fine of $5,000 for the company, and of $2,500 each for Ms Carr and Mr Butt, are appropriate as the orders in respect of the disciplinary grounds other than the one relating to the accounting contravention. The amounts of the fines are not large enough to themselves have a significant deterrent effect. However, the public nature of disciplinary proceedings, with the tribunal’s reasons published on the internet, would have a strong deterrent effect. The amounts are designed to balance the seriousness of the conduct of the employee on the one hand, with, on the other hand, the limited culpability of the respondents because the conduct was isolated and was not encouraged by them. In relation to the disciplinary ground concerning the accounting contravention, I accept that the respondents believed that their accounting system was sufficient. However, the relevant provision in the Agents Financial Administration Act is clearly intended to provide transparency for the benefit of clients. Transparency about whether deposits funds have been refunded or, for example, transferred to a different ledger in the agent’s trust account, places an owner in a stronger position to evaluate whether the agent has served the owner’s interests. This is important, particularly in a context such as the present where there was a breakdown in the relationship between agent and client. NRM Pty Ltd’s system should have been set up to inform owners what was ultimately done with funds that had been received for bookings. I consider that a reprimand for each of the respondents is the most appropriate order in respect of the disciplinary ground concerning the accounting contravention. -- 6 of 7 -- 7 Conclusion Accordingly, the orders will be to reprimand each of the respondents, and to fine NRM Pty Ltd $5,000, Ms Carr $2,500, and Mr Butt $2,500. -- 7 of 7 --