Chief Executive, Department of Justice & Attorney-General v Simmons [2017] QCAT 320

CITATION: Chief Executive, Department of Justice & Attorney-General v Simmons [2017] QCAT 320 PARTIES: Chief Executive, Department of Justice and Attorney-General (Applicant) v Michael Joseph Simmons (Respondent) APPLICATION NUMBER: OCR106-15 MATTER TYPE: Occupational regulation matters DECISION OF: Member Olding DELIVERED ON: 19 September 2017 DELIVERED AT: Brisbane ORDERS MADE: 1. The Respondent is reprimanded for breaching his obligations as the holder of a resident letting agent’s licence. 2. The Respondent is ordered to pay a fine of $3,000.00 to the Chief Executive, Department of Justice and Attorney- General on or before 3 months from the date of this order. 3. The Respondent is disqualified from holding a property agent licence, resident letting agent licence or certificate of registration as a real estate salesperson under the Property Occupations Act 2014 (Qld) for a period of ten (10) years commencing on the date of this order. CATCHWORDS: PROFESSIONS AND TRADES – AUCTIONEERS AND AGENTS – DISCIPLINARY PROCEEDINGS – where respondent held resident letting agent’s licence – where respondent withdrew funds from trust account without authority – consideration of appropriate orders Property Agents and Motor Dealers Act 2000 (Qld), s 385(1), s 408, s 496(1) Property Occupations Act 2014 (Qld), -- 1 of 11 -- 2 s 12(2)(g)(iii), s 171, s 186, s 239, s 258 Chief Executive, Department of Justice and Attorney-General v Sparkling Property Developments Pty Ltd Christine Jayne Jury [2014] QCAT 24 The Chief Executive, Department of Tourism, Fair Trading & Wine Industry Development v John Cornwell [2005] CCT X007-05 The Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General v Magnussen [2008] CCT PD001-08 This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). REASONS FOR DECISION [1] The Respondent, Mr Simmons, was formerly the holder of a resident letting agent’s licence. [2] The Chief Executive has applied to the Tribunal to conduct a disciplinary proceeding in relation to Mr Simmons’ conduct as licensee and seeks various orders. Broadly speaking, the grounds of the application stem from allegations of unauthorised withdrawals from a trust account operated by Mr Simmons. [3] The Tribunal’s task is to determine whether the grounds are made out and, if so, the appropriate orders to be made. The Tribunal’s jurisdiction [4] The basis of the Tribunal’s jurisdiction is complicated by the repeal of the Property Agents and Motor Dealers Act 2000 (Qld) (PAMDA) and its replacement, so far as is relevant to this matter, with the Property Occupations Act 2014 (Qld) (the Act). [5] Section 171 of the Act gives the Tribunal jurisdiction “to hear and decide disciplinary matters involving a licensee”. This is consistent with s 12(2)(g)(iii), which provides that the objects of the Act are to be achieved by, amongst other things, providing that “responsibility for disciplinary matters rests with QCAT”. [6] The expression “disciplinary matters” is not defined, or used elsewhere, in the Act. However, it must be intended to encompass “disciplinary proceedings”, which are provided for in Division 2 of Part 9 of the Act. [7] The Bill for the Act received assent on 21 May 2014, with most of its provisions commencing on 1 December 2014. However, the conduct alleged to be relevant to this matter occurred in 2012. -- 2 of 11 -- 3 [8] Section 258 deals with disciplinary action relating to pre-commencement conduct by relevantly providing: (1) Subsection (2) applies if, before the commencement, a ground existed for starting disciplinary action under PAMDA against a former licensee or former registered employee. (2) Prescribed action may be taken against the former licensee or former registered employee on that ground under the relevant Act as if the ground were a ground for starting a proceeding for the prescribed action under the relevant Act. [9] “Prescribed action” includes “disciplinary action” and a “former licensee” means “a person who held a licence under PAMDA at any time within 3 years before a proceeding is started under subsection (2)”.1 [10] The proceedings in the Tribunal were commenced by the filing of the Chief Executive’s application on 14 July 2015. Mr Simmons held his licence until 28 November 2012. He is therefore a “former licensee” for this purpose. [11] “Relevant Act” is defined for this purpose as follows: relevant Act, for a licence or registration certificate under PAMDA that is not a transitioned licence, means the relevant Act for the licence or licences or registration certificate that the licence would have become under section 239(2) or 240(2) if it had still been in force immediately before the commencement.2 [12] Mr Simmons’ former licence is not a “transitioned licence”, as only a licence held immediately before commencement of the Act may be a transitioned licence: s 239(1). But it would have become a resident letting agent licence under s 239(2) if it had still been in force immediately before the commencement. [13] Accordingly, disciplinary action, in the form of disciplinary proceedings in the Tribunal, may be taken against Mr Simmons under the Act but on a ground that existed for starting disciplinary action under PAMDA. The grounds [14] The grounds under PAMDA for starting a disciplinary proceeding were set out in s 496. [15] The Chief Executive alleges that there are grounds under s 496(1)(b)(i), s 496(1)(d) and s 496(1)(g), which are as follows: 1 The Act, s 258(5). 2 The Act, s 258(5). -- 3 of 11 -- 4 496 Grounds for starting disciplinary proceedings (1) The following are grounds for starting a disciplinary proceeding against a licensee or registered employee- . . . (b) the licensee or employee has contravened or breached- (i) this Act, including a code of conduct; or . . . (d) an amount has been paid from the fund because the licensee or employee did, or omitted to do, something that gave rise to a claim against the fund; . . . (g) for a licensee- (i) the licensee is not a suitable person to hold a licence; or . . . [16] The “fund” means the claim fund established under PAMDA, s 408. Background [17] The following facts are not in contention: a) Mr Simmons held a resident letting agent’s licence from 22 October 2009 until it was withdrawn at his request on 27 November 2012. b) On 17 July 2008, Mr Simmons became the resident letting agent for Burleigh Point Apartments. c) Mr Simmons’ duties included collecting rent and holiday income for which he was entitled to receive a fee. d) The business was operated by Mr Simmons in his capacity as trustee for the Eden Family Trust under the business name Burleigh Point Apartments. e) Mr Simmons operated a trust account into which rent and holiday income were paid. f) Mr Simmons’ business practice was to pay the owners their entitlements from the trust account in the month following the month in which rent or other income was received. g) Mr Simmons also operated two other accounts styled respectively a CHOICE account and a BUSINESS account. -- 4 of 11 -- 5 h) On or about 15 July 2012, Jodie Carolyn Cannon, who was a licensed residential letting agent, and her husband, Mark Cannon, commenced to be contracted (under their business name, Big Gun Management) to Mr Simmons, to work in his Burleigh Point Apartments business. They were to be paid $650.00 per week for general management duties, body corporate cleaning and general maintenance. i) Mr Simmons and his wife, Kristy Simmons, experienced marital and financial difficulties and from July 2012 Mr Simmons was absent from the business from time to time. j) On or around 20 September 2012, Mr Simmons arranged for Mrs Cannon to be issued with a token to allow her to operate the trust account. Mrs Cannon was not made a signatory to the account. Nor was she a signatory to or otherwise able to operate Mr and Mrs Simmons’ personal or business bank accounts. k) On or about 9 November 2012, Julie Ann Williams accepted an appointment by Westpac Banking Corporation as receiver and manager over the secured assets of Mr Simmons as trustee for the Eden Family Trust. l) On 13 November 2012, Ms Williams was appointed, by the Office of Fair Trading in the Department of Justice and Attorney-General, as receiver over the trust property of Mr Simmons trading as Burleigh Point Apartments. m) Ms Williams produced a “Final Report Prepared in Respect of Potential Breaches” dated 14 February 2013 identifying a number of alleged breaches in the period from June to October 2012, as discussed further below. n) Various persons made claims against the claim fund in respect of Mr Simmons, relating to rental receipts and bonds/deposits. These were assessed and, where accepted, paid from the fund. The total amount of such claims paid is $38,741.34. o) Additionally, between December 2012 and April 2013, the Chief Executive paid Ms Williams’ fees for her work as receiver in the total amount of $23,806.42 (excluding GST). p) On 25 June 2013, the Chief Executive received from Ms Williams the sum of $26,193.00, being the balance of the trust account. q) The difference between the amounts paid out to claimants ($38,741.34) and as Ms Williams’ fees ($23,806.42), and the balance of the trust account ($26,193.09), is $36,354.67. In other words, this is the net amount that was paid from the claim fund in relation to Mr Simmons. -- 5 of 11 -- 6 r) No audit of the trust account was carried out in the period it was operated by Mr Simmons. s) Mr Simmons became a bankrupt on 15 July 2013. Ms Williams’ report [18] Ms Williams’ report revealed a significant number of breaches of Mr Simmons’ obligations as licensee. [19] Pursuant to PAMDA, s 385(1), a licensee may only draw upon the licensee’s trust account to pay the licensee’s transaction fees if the licensee is authorised to do so under s 385. Under s 385(2)(c), a transaction fee payable to a licensee may be drawn from the trust account but only after the client’s net entitlement under the transaction has been paid. [20] In the context of Mr Simmons’ business, this means that transaction fees for a month could only be withdrawn from the trust account after the rent or other entitlements of the client, less the amount of Mr Simmons’ transaction fee, had been paid to the client. [21] Ms Williams’ report revealed that Mr Simmons did not operate the trust account over the period June 2012 to October 2012 in accordance with this requirement. Rather, as Ms Williams reported, funds were withdrawn: a) at random dates; b) in lump sums throughout the months; c) otherwise than in accordance with fees entitled to be paid; d) when the licensee’s entitlements were under or over drawn; and e) prior to finalisation of accounts at month end. [22] The summary of withdrawals set out in the report confirms, as Ms Williams reported, that Mr Simmons withdrew lump sum amounts that bore no correlation to his fee entitlement. For example, in June 2012, there were two withdrawals of $2,000.00, two of $500.00 and one in the amount of $1,500.00 – a total of $6,500.00, against a fee entitlement of $1,680.23. [23] Over the six months from May 2012 to October 2012, with the exception of June 2012, drawings were in excess of the fees to which Mr Simmons was entitled. Mr Simmons withdrew $12,376.56 to which he was not entitled. [24] In particular, in October 2012, Mr Simmons withdrew $13,300.00 against a fee entitlement $3,227.49, based on September 2012 income. Even allowing for October 2012 fee income not then due, there is a shortfall for October 2012 of $5,713.25. Mr Simmons admitted to Ms Williams that he -- 6 of 11 -- 7 had withdrawn $12,800.00 for management fees (not admitting a further amount of $500.00) for his personal dealings. Mr Simmons’ submissions [25] Mr Simmons did not in submissions admit to the breaches. Rather, he responded to evidence of the breaches by asserting that (1) Mrs Cannon was responsible and had “manipulated” the accounts; (2) he had engaged various professional persons and software providers who confirmed that the trust account was “balanced”; and (3) software difficulties. [26] For a number of reasons, I do not accept that Mrs Cannon was responsible for the breaches. [27] First, the breaches commenced occurring before Mrs Cannon became involved in operation of the trust account. [28] Second, Mr Simmons’ assertion that he did not have access to the trust account after Mrs Cannon was given the token to operate the account is not supported by the evidence. Evidence from the bank shows that there were transactions in the relevant period that were not conducted using the token. [29] Third, the transfers from the trust account in question have as their destination accounts operated in the name of Mr and Mrs Simmons. There is no motive suggested or that could sensibly be postulated for Mrs Cannon to wrongly transfer monies to Mr Simmons. [30] Fourth, both Mrs Cannon and Mr Cannon have given statements confirming that they did not make payments from the trust account to the personal or business accounts of Mr or Mrs Simmons. There has been ample opportunity for Mr Simmons to challenge this evidence in cross- examination, as this proceeding was listed for an oral hearing on more than one occasion, but he has not taken the opportunity to do so. [31] In any case, it is Mr Simmons who is responsible, as the licensee and account holder, for the proper operation of the trust account. [32] In relation to the assertion that Mr Simmons engaged various professionals to take care of the accounts, and had software difficulties, several factors are relevant. [33] First and foremost, as already noted, it is Mr Simmons who is responsible for ensuring that trust account is operated properly according to law; engaging third parties does not relieve Mr Simmons of responsibility for his obligations. [34] Second, the assertion that the trust account was in order in October 2012 or that Mr Simmons thought it was in order (if that is what he suggests), based on comments of the professionals he engaged, is not supported by any corroborating evidence. -- 7 of 11 -- 8 [35] It is true that a letter from EzyRez dated 10 November 2012 opens with the statement “I have balanced October 2012 for you”. But it also lists a number of “Balancing Concerns” and concludes: “It is strongly advised and recommended that your Auditor and/or Accountant looks at the Balancing Concerns”. [36] Further, ensuring that a trust account is being operated according to law is not a difficult task. Conceptually, the law is straightforward: you must not use trust account funds for your own personal or business purposes, and you must not transfer money for your fees until you have paid the client the funds to which they are entitled net of fees. That these rules were not being observed would have been obvious if Mr Simmons had reviewed the bank statements for the trust account. Conclusion in relation to grounds Contraventions of PAMDA trust account provisions [37] Based on the evidence outlined above, and mindful of the grave consequences for Mr Simmons of an adverse finding, I am comfortably satisfied3 that Mr Simmons contravened the PAMDA trust account requirements on various occasions over the period May 2012 to October 2012. In particular, that he withdrew funds for fees before the clients’ entitlements net of fees had been paid and that he withdrew over $12,000 of funds to which he was not entitled. [38] Having regard to the amounts and frequency of withdrawals, and their lack of correlation with earned fee amounts, the inference is inescapable that Mr Simmons either intentionally withdrew funds to which he was not entitled or at the least was recklessly indifferent to whether he was so entitled, and applied them to his own purposes. Again bearing in mind the grave consequences for Mr Simmons, I am comfortably satisfied in so finding. Claim on the claim fund [39] It is also clearly established that a significant claim on the claim fund arose as a direct result of Mr Simmons’ failure to operate the trust fund according to law and to comply with his contractual and fiduciary obligations in the conduct of the letting agency business. 3 Briginshaw v Briginshaw (1938) 60 CLR 336 -- 8 of 11 -- 9 Not a suitable person to hold a licence [40] In a broadly analogous case – The Chief Executive, Department of Tourism, Fair Trading & Wine Industry Development v John Cornwell4 – the former Tribunal observed: I regard Mr Cornwell’s offences as most serious. The provisions in the legislation relating to trust accounts are designed to protect the public and to facilitate proper monitoring by authorities. Failure to comply with those provisions affects both the standing of the industry and the confidence the public has in licensees engaged in that industry. It is not conduct that would be acceptable in the real estate industry. Conduct such as Mr Cornwell’s goes right to the core of the honesty and integrity that is required in the industry. The seriousness of the breaches is reflected by the fact the PAMD Act provides, in the event of successful prosecution, a maximum penalty of 200 penalty units or three years imprisonment. [41] These considerations apply to Mr Simmons whose multiple breaches of his obligations, and abuse of his position of trust, were neither trivial nor isolated. I conclude that he is not a suitable person to hold a licence. [42] Accordingly, all of the grounds in the Chief Executive’s application have been made out. What orders should the Tribunal make? [43] Section 186(1) of the Act provides that the Tribunal may make one or more of the following orders against a person in relation to whom the Tribunal finds grounds exist to take disciplinary action under the Act: (a) an order reprimanding the person; (b) an order that the person pay to the State, within the period stated in the order, a fine of not more than— (i) for an individual—200 penalty units; or (ii) for a corporation—1000 penalty units; (c) an order that the person pay compensation (inclusive of any commission to which the person is not entitled) to someone else who has suffered loss or damage because of the act or omission that resulted in the finding; (d) that the person be disqualified permanently, or for the period stated in the order, from holding a licence or registration certificate; (e) another order QCAT considers appropriate to ensure the person complies with this Act. 4 [2005] QCCTPAMD 49 , [10]. -- 9 of 11 -- 10 [44] The Chief Executive submitted that the Tribunal should make orders reprimanding Mr Simmons; requiring him to pay a fine of $3,000.00 within 3 months; and disqualifying Mr Simmons from holding a property agent licence, resident letting agent licence or certificate of registration as a real estate salesperson for 10 years.5 [45] For comparative purposes, the Chief Executive drew attention to the following cases: a) The Cornwell case6 – The licensee withdrew $36,612.39 from a trust account in 5 withdrawals over 11 days, repaying the money within approximately 2 months; co-operated fully; acknowledged the breaches; and expressed remorse. The claim fund suffered no loss. The penalty imposed was a 10-year disqualification (from holding a licence but not as a salesperson) and a $3,000.00 fine. b) The Jury case7 – The licensee withdrew $27,006.51 in 38 withdrawals over 13 months, repaying the withdrawals by not withdrawing commissions. The licensee expressed remorse, pleaded guilty at an early stage and co-operated fully. The penalty imposed was a 15-year disqualification and a $2,000.00 fine. c) The Magnussen case8 – The licensee recklessly, but not dishonestly, deposited $4,170.00 being the balance of a deposit to her personal account instead of depositing it to the trust account. A trust account cheque sent to the vendor was dishonoured. The amount was fully reimbursed. The licensee co-operated and accepted responsibility. The penalty imposed was disqualification from holding a real estate agent licence for 5 years (but not prohibition from employment as a salesperson, subject to disclosure of the breach to prospective employers), along with a fine the quantum of which does not appear in the report. 5 The Chief Executive abandoned a claim for compensation for the claim against the claim fund, as that amount was included as a claim against Mr Simmons’ bankrupt estate. 6 The Chief Executive, Department of Tourism, Fair Trading & Wine Industry Development v John Cornwell [2005] QCCTPAMD 49. Chief Executive, Department of Justice and Attorney-General v Sparkling Property Developments Pty Ltd Christine Jayne Jury [2014] QCAT 24. 8 The Chief Executive, Office of Fair Trading, Department of Justice and Attorney- General v Magnussen [2008] CCT PD001-08. -- 10 of 11 -- 11 [46] In contrast to these cases, Mr Simmons has not accepted full responsibility for his actions and has shown no remorse. His breaches are serious in nature, occurred over a period of months and resulted in a significant claim upon the claim fund. [47] It is clear that a period of disqualification from holding a licence is appropriate and that it should cover both the type of licence held by Mr Simmons – a resident letting agent licence – and a property agent licence holders of which are entrusted with similar obligations in relation to trust accounts. [48] However, as s 120 provides that a person who is disqualified from holding a licence cannot obtain registration as a real estate salesperson, I have considered whether it is appropriate for Mr Simmons to be disqualified from holding a certificate of registration as a real estate salesperson. That registration may not bring with it the same level of risk to the community. Nevertheless, trustworthiness is an important community expectation for real estate salespersons. This case is different to those cited by the Chief Executive9 where no losses were suffered and the licensees accepted and were remorseful for their wrongdoing. The seriousness and number of the breaches, and Mr Simmons’ lack of remorse, indicate that the community could not be confident that he would display trustworthiness as a real estate salesperson. [49] Although I consider that the orders requested by the Chief Executive are, in comparison to the cases outlined above, at the low end of the range that might be applied in this case, I will make those orders.10 I do so with some hesitation in view of the seriousness of the breaches and the lack of evident remorse. [50] I take into account the financial and marital stress Mr Simmons was under and that there is no evidence of any breaches occurring before the period in which that stress and the subject breaches occurred. Also, although the Chief Executive’s submissions do not suggest a date from which the ten year disqualification should commence, and some five years have now passed since the breaches occurred during which Mr Simmons has not held a licence, the ten period of disqualification will commence from the date of the order. [51] Upon expiry of the period of disqualification, if he were to apply it would be a matter for judgement of the Chief Executive whether Mr Simmons is, at that time, a suitable person to hold a licence or certificate of registration as a real estate salesperson.11 9 See paragraph 45 above. 10 These include disqualification as a real estate salesperson, although s 120 may have the same practical effect if the order were limited to disqualification from holding licences. 11 The Act, s 36 and s 121 respectively. -- 11 of 11 --