Chief Executive, Department of Justice and Attorney-General v Rodgers [2018] QCAT 99

CITATION: Chief Executive, Department of Justice and Attorney-General v Rodgers & Anor [2018] QCAT 99 PARTIES: Chief Executive, Department of Justice and Attorney-General (Applicant) v Michelle Ann Rodgers and Keppel Lifestyle Creations Pty Ltd (Respondents) APPLICATION NUMBER: OCR212-17 MATTER TYPE: Occupational regulation matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Cranwell DELIVERED ON: 3 April 2018 DELIVERED AT: Brisbane ORDERS MADE: 1. Ms Rodgers is reprimanded. 2. Ms Rodgers is ordered to pay a fine of $3,000 to the Chief Executive, Department of Justice and Attorney- General within 28 days of the date of this order. 3. Ms Rodgers is disqualified from holding or obtaining a licence or certificate of registration under the Property Occupations Act 2014 (Qld) for a period of two years from the date of the order. 4. For a period of three years after the disqualification referred to in paragraph 3 is complete, any licence or certificate of registration issued to Ms Rodgers is to be subject to a condition that she not be a signatory to, or have management, control or responsibility for the operation of a trust account under the Agents Financial Administration Act 2014 (Qld). 5. Keppel Lifestyle Creations Pty Ltd is reprimanded. -- 1 of 7 -- 2 6. Keppel Lifestyle Creations Pty Ltd is ordered to pay a fine of $5,000 to the Chief Executive, Department of Justice and Attorney-General within 28 days of the date of this order. 7. Keppel Lifestyle Creations Pty Ltd is disqualified from holding or obtaining a licence or certificate of registration under the Property Occupations Act 2014 (Qld) for a period of two years from the date of the order. 8. For a period of three years after the disqualification referred to in paragraph 7 is complete, any licence or certificate of registration issued to Keppel Lifestyle Creations Pty Ltd is to be subject to a condition that it not be a signatory to, or have management, control or responsibility for the operation of a trust account under the Agents Financial Administration Act 2014 (Qld). CATCHWORDS: PROFESSIONS AND TRADES – AUCTIONEERS AND AGENTS – DISCIPLINARY PROCEEDINGS – whether grounds for disciplinary action – considerations of the correct penalty Agents Financial Administration Act 2014 (Qld), s 18, s 22 Agents Financial Administration Regulation 2014 (Qld), reg 3, reg 17 Property Occupations Act 2014 (Qld), s 172, s 186 Chief Executive, Department of Justice and Attorney-General v Cameo Property Services Pty Ltd and Johnson [2012] QCAT 509 Chief Executive, Department of Justice and Attorney-General v DJ Stringer Property Services Pty Ltd [2012] QCAT 27 Chief Executive, Department of Justice and Attorney-General v Leach (No 2) [2012] QCAT 427 Chief Executive, Department of Justice and Attorney-General v Pease [2016] QCAT 178 Chief Executive, Department of Justice and Attorney-General v Smart Real Estate (Qld) Pty Ltd [2013] QCAT 58 -- 2 of 7 -- 3 APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act). REASONS FOR DECISION [1] Ms Rodgers is a licensed real estate agent. Her licence was issued on 18 December 2007 and has an expiry date of 18 December 2019. [2] Ms Rodgers is the sole director and secretary of Keppel Lifestyle Creations Pty Ltd (“KLC”). Ms Rodgers and her husband are joint shareholders of KLC. KLC is also a licensed real estate agent. Its licence was also issed on 18 December 2007 and has an expiry date of 18 December 2019. [3] KLC owned and carried on a real estate business trading as McGarth Wynnum Manly, and was the holder of a Suncorp-Metway Ltd trust account. Ms Rodgers was the principal licensee in charge of the business. [4] The Office of Fair Trading conducted an investigation in relation to the trust account. The investigation revealed that: a) Between 30 September 2014 and 15 March 2016, 17 cheques from the trust account were issued to a value of $61,476.86. In July 2016 these cheques were cancelled as having not been presented. b) Between 2 September 2014 and 30 June 2016, 28 payments were made from the trust account totalling $38,888.56 which were not recorded. c) Between 30 October 2015 and 24 July 2016, 11 bond payments totalling $20,440 were made to and receipted by McGrath Wynnum Manly. The Residential Tenancies Authority (“RTA”) did not receive these bonds within the period required by s 22 of the Agents Financial Administration Act 2014 (Qld) (“the AFAA”). Ms Rodgers admitted the payments were never sent. d) Between 31 July 2015 and 29 January 2016, there were multiple instances of the same cheque numbers being allocated to different payees. In a number of these cases the cheques were allocated as payments of multiple bond payments to the RTA but records show the payee to be another party. e) On 1 July 2016, Ms Rodgers transferred $14,560 from the McGrath Wynnum Manly rentals general account to the trust account, referenced as “Refund Rental Bonds”, to allow the late funding of missing bonds. f) Ms Rodgers and KLC had not reconciled the trust account against the bank balance since October 2014 as required by r 17 of the Agents Financial Administration Regulation 2014 (Qld) (“the AFAR”). -- 3 of 7 -- 4 g) Ms Rodgers and KLC had not kept the required books, accounts and records in a manner which allowed them to be properly audited as required by r 3 of the AFAR. [5] I note that Ms Rodgers and KLC have disputed whether the payment of $14,560 into the trust account from the rentals general account, as set out in sub-paragraph e) above, constitutes a contravention of s 18 of the AFAA. That section relevantly provides: (1) An agent must not pay to a trust account an amount other than an amount that must be paid to the account under section 16 or 17. [6] While on one level it is commendable that Ms Rodgers transferred the money to cover the shortfall in the trust account, the money transferred was clearly not trust money. The provisions of s 18 are unambiguous and have been contravened by Ms Rodgers and KLC. Grounds for disciplinary proceedings [7] Section 172 of the Property Occupations Act 2014 (Qld) (“the Act”) provides that grounds for starting a disciplinary proceeding against a licensee or real estate salesperson include: Grounds for starting disciplinary proceedings (1) The following are grounds for starting a disciplinary proceeding against a licensee or real estate salesperson under section 173 — (b) the licensee or salesperson has contravened or breached— … (ii) the Administration Act; or (g) for a licensee— … (iii) the licensee has, in carrying on a business or performing an activity, been incompetent or acted in an unprofessional way; or (iv) the licensee has failed to ensure the licensee’s employed licensees or real estate salespersons, or employees under the licensee’s supervision— (A) are properly supervised in the performance of their duties; or (B) comply with this Act; … [8] I have carefully reviewed the material filed by the Chief Executive. -- 4 of 7 -- 5 [9] I am satisfied that Ms Rodgers and KLC committed the breaches of s 18 and s 22 of the AFAA, and r 3 and r 17 of the AFAR, set out in paragraph 4 above. Ms Rodgers and KLC have also acted in an incompetent or unprofessional way in carry on their business, and have failed to ensure that persons under their supervision were properly supervised in the performance of their duties or complied with the Act. There are therefore clear grounds for starting a disciplinary proceeding under s 172 of the Act. Appropriate penalty [10] The orders that the Tribunal can make upon a finding that grounds exist for taking disciplinary action against a person are set out in s 186 of the Act. They include a reprimand, fines, and the payment of compensation. The maximum fine in the case of an individual is 200 penalty units, or $25,230.1 The maximum fine in the case of a corporation is 1,000 penalty units. In addition, a person’s licence of registration can be suspended or cancelled. Conditions or disqualification can be imposed for the holding of a licence or registration certificate. [11] I have been referred to the following cases as precedents: a) In Chief Executive Department of Justice and Attorney-General v Leach (No 2),2 Ms Leach was found to have: …failed to lodge trust account audit reports when required, failed to give written notice after opening a trust account, and failed to reconcile bank statements to trust account cash book balances ... acted as a real estate agent while unlicensed for a period of six months ... failed to provide documents in response to a notice to produce ... acted in a way that lacked honesty, fairness and professionalism by sending an abusive email and ... harassed [a client] in the course of her work as an agent.3 There was no remorse shown by Ms Leach, and a failure to appreciate the standards which she had been required to meet. She was disqualified until she could prove she had completed courses in trust accounting, and the legal and ethical requirements of property management and sales. b) In Chief Executive, Department of Justice and Attorney-General v Pease,4 Ms Pease was employed as a registered employee of a real estate agent, and was responsible for accepting bond money from tenants. On 10 occasions over a period of 9 months, she failed to properly receipt money paid in cash, and to cause it to be paid into the agency's trust account or to the RTA. There was no suggestion that Ms Pease benefited personally from the funds, but claims were 1 Penalties and Sentences Regulation 2015 (Qld), r 3. 2 [2012] QCAT 427. 3 Ibid, [2]. 4 [2016] QCAT 178. -- 5 of 7 -- 6 made on the compensation fund in the amount of $16,000. An agreed statement of facts was filed which admitted the substance of the contraventions and that grounds for taking disciplinary action existed. The only matter put in issue by Ms Pease was an assertion that it was not her responsibility to remit money to the RTA. The parties jointly proposed a penalty of a reprimand and financial penalty, rather than disqualification. A penalty of $8,100 was ordered, together with a reprimand, and an order made that a failure to pay the penalty would trigger a two-year disqualification. c) In The Chief Executive, Department of Justice and Attorney General v DJ Stringer Property Services Ply Ltd,5 fines of $7,000 and $2,000 were imposed on a company and an individual respectively for, on 21 occasions, withdrawing commissions from a trust before becoming entitled to them. The conduct was done by an employee, but the company and executive officer who was a licensee accepted responsibility. d) In Chief Executive, Department of Justice and Attorney-General v Cameo Property Services Pty Ltd and Johnson,6 the contravening conduct involved withdrawals over a number of months of sums eventually totalling $31,759.80. The withdrawals were made for the purposes of business expenses. A fine of $1074.37 was imposed, and a disqualification for two years was also imposed. e) In Chief Executive, Department of Justice and Attorney-General v Smart Real Estate (Q!d) Pty Ltd,7 where a company and principal were disqualified for five years, but the disqualification was suspended. That occurred because the licensee had taken "director's loans" from the trust account, having a genuine belief that he was entitled to do so, and self-reported to the Office of Fair Trading upon his accountant informing him of the seriousness of the conduct. Each was also fined $5,000. [12] It was jointly submitted that this is a case where a disqualification period is appropriate. However, given the lack of dishonesty and the co-operation by Ms Rodgers and KLC, a disqualification period of two years, with further conditions imposed for a subsequent three years, is appropriate. [13] It was also jointly submitted that fines of $3,000 for Ms Rodgers and $5,000 for KLC were appropriate. [14] I accept the joint submissions on penalty. An analysis of cases referred to above suggests that more serious penalties, such as disqualifications in excess of 3 to 5 years (or permanently) are generally only appropriate to be imposed in cases where there is a lack of cooperation or dishonesty. 5 [2012] QCAT 27. 6 [2012] QCAT 509. 7 [2013] QCAT 58. -- 6 of 7 -- 7 [15] I will make formal orders pursuant to s 186 of the Act in terms of these findings. -- 7 of 7 --