Chief Executive, Department of Justice and Attorney General v Peterson Management Services Pty Ltd [2016] QCATA 163

CITATION: Chief Executive, Department of Justice and Attorney General v Peterson Management Services Pty Ltd [2016] QCATA 163 PARTIES: Chief Executive, Department of Justice and Attorney General (Appellant) v Peterson Management Services Pty Ltd (Respondent) APPLICATION NUMBER: APL527-15 MATTER TYPE: Appeals HEARING DATE: 8 August 2016 HEARD AT: Brisbane DECISION OF: Justice Carmody Dr J R Forbes, Member DELIVERED ON: 24 October 2016 DELIVERED AT: Brisbane ORDERS MADE: 1. The appeal is allowed. 2. The dismissal of the charges in relation to general cleaning services, the Foxtel service and the charging of commission on Wotif bookings is set aside and in lieu thereof findings of disciplinary breaches in those three cases are entered. 3. These proceedings are remitted to the primary tribunal for determination of appropriate sanctions and the appellant’s application for costs. CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – WHAT IS – where a letting agent charged fees -- 1 of 10 -- 2 for certain services – whether the Property Agents and Motor Dealers Act 2000 (Qld) (now repealed) requires a letting agent’s appointment to distinguish and specify fees and nett receipts of rent – where the subject appointment did not so specify – whether the appeal should be allowed STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – PARTICULAR WORDS AND PHRASES – GENERALLY – whether the tribunal interpreted certain terms in the Property Agents and Motor Dealers Act 2000 (Qld) correctly – where the statute should be interpreted so as to protect consumer rights – whether the letting agent’s actions fall within or outside the statutory requirements Acts Interpretation Act 1954 (Qld) s 14A Consumer Rights Act 2015 (UK) s 83 Estate Agents Act 1980 (Vic) s 49A Property Agents and Land Transactions Act 2005 (Tas) s 18 Property Agents and Motor Dealers Act 2000 (Qld) ss 10, 133, 139, 140, 141, 496, Sch 2 Property Occupations Act 2014 (Qld) s 104 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 142 Real Estate and Business Agents Act 1978 (WA) s 60 Real Estate and Business Agents (General) Regulations 1978 (WA) s 6BA Adamson v Queensland Law Society Incorporated [1990] 1 Qd R 498 Bowen, Re [1996] 2 Qd R 8 Chief Executive, Department of Justice and Attorney General v Peterson Management Services Pty Ltd [2015] QCAT 473 CIC Insurance Ltd v Bankstown Football Club (1997) 187 CLR 384 Murphy v Farmer (1988) 165 CLR 19 -- 2 of 10 -- 3 NSW Bar Association v Evatt (1968) 117 CLR 177 Police Service Board v Morris (1985) 156 CLR 397 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Smith v Corrective Services Commission (NSW) (1980) 147 CLR 134 Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 APPEARANCES and REPRESENTATION: APPELLANT: Mr C Cater for the Chief Executive RESPONDENT: Mr B Kidston of Counsel instructed by Mahoneys REASONS FOR DECISION Carmody J [1] This is the chief executive’s appeal from order 2 made by the tribunal in Chief Executive, Department of Justice and Attorney General v Peterson Management Services Pty Ltd.1 The question to be decided is whether the respondent, a real estate agent providing management services for a body corporate, is liable to disciplinary action for illegally retaining a reward exceeding the amount stated in a prescribed form of appointment.2 [2] An occupation regulation tribunal ruled that the respondent’s actions were not grounds for disciplinary proceedings because they were not demonstrably contrary to legal requirements. The PAMDA scheme [3] The now-repealed Property Agents and Motor Dealers Act 2000 (Qld) (PAMDA) regulated the provision of services by real estate agents in a way that sought an appropriate balance between the competing needs of consumer protection and free market enterprise. 1 [2015] QCAT 473. 2 Property Agents and Motor Dealers Act 2000 (Qld) (PAMDA) ss 140,141(1),(3). -- 3 of 10 -- 4 [4] Section 133(1) PAMDA made an appointment complying with the requirements of s 133(3) (in Form 20a) a precondition to performing a body corporate management service. A valid Form 20a had to state:3 (a) the service to be performed by the real estate agent and how it is to be; and (b) in the way prescribed under a regulation, that fees, charges and commission payable for the service are negotiable up to any amount that may be prescribed under a regulation; and (c) … (i) the fees, charges and any commission payable for the service; and (ii) the expenses, including advertising and marketing expenses, the agent is authorised to incur in connection with the performance of each service or category of service; and (iii) the source and the estimated amount or value of any rebate, discount, commission or benefit that the agent may receive in relation to any expenses that the agent may incur in connection with the performance of the service; and (iv) any condition, limitation or restriction on the performance of the service; and (d) when the fees, charges and any commission for the service become payable; … [5] PAMDA also imposed restrictions on retaining undisclosed amounts. Section 140(1)(c), for example, prohibited a estate agent from being rewarded for the performance of an activity unless, at the time the activity was performed without being properly appointed by the person to be charged. In addition, s 141 disallowed retention of a reward or expense for the performance of an activity as a real estate agent that is more than the amount of the reward stated in the appointment given under s 133 viz., in the Form 20a or under the regulation. [6] A real estate agent who improperly retained a reward or expense for the performance of an activity in breach of PAMDA was liable to a pecuniary penalty, and in addition to any other liability,4 to face disciplinary proceedings.5 [7] The terms ‘expense’ and ‘service’ were not defined in PAMDA, but ‘reward’ meant “remuneration of any kind including, for example, any fee, commission or gain”. 3 Ibid s 133(3). 4 PAMDA ss 140(2), 141(6). 5 Ibid s 496(1)(b)(i). -- 4 of 10 -- 5 The context [8] The respondent real estate agency had a contract with unit owners in a resort to provide property letting services under a PAMDA Form 20a. [9] The appellant alleges the respondent is liable to disciplinary action for breaching PAMDA by secretly retaining an undisclosed reward or expense for general cleaning and Foxtel access, contrary to s 141(6) (grounds 1 and 3), claiming commission for Wotif worked out on an amount in excess of the actual amount collected in contravention of s 140(2) (ground 4). [10] The first ground asserts that, although the agreed fee was correctly stated in the Form 20a, the amount the respondents retained an undisclosed ‘reward’ because the cleaning costs were sometimes less than the fee charged to lot owners. [11] The third ground is that the respondent charged lot owners more for Foxtel than the amount actually paid for each subscription without authority. It also notified lot owners of an increased Foxtel fee in 2011 without giving them the chance of renegotiating or opting out of it. [12] The fourth ground is that respondent charged a commission, contrary to Part 5.1 of the Form 20a which described the commission payable as a “worked out only on the amount of rent or leasing fee actually collected”, because the retained amount was based on the gross, instead of net, amount paid to Wotif. [13] In my respectful opinion, on Dr Forbes’ detailed analysis, and for the reasons he gives, the respondent clearly retained undisclosed receipts in each alleged instance contrary to ss 139, 140 and 141 PAMDA and, as a result, is liable to disciplinary action. The matter is remitted to the tribunal for reconsideration. Dr J R Forbes, Member [1] The parties agree that this is an appeal, as a matter of right, on a point of law.6 The appellant (“the Crown”) submits that, at first instance, the presiding Member misinterpreted the Property Agents and Motor Dealers Act 2000 (the Act), now repealed, in dismissing 3 disciplinary charges against the respondent real estate agent (“Peterson”). They related to Peterson’s arrangements, on behalf of certain home unit owners, for letting and cleaning services at the Rocks Resort at Currumbin. 6 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 142(3)(b). -- 5 of 10 -- 6 [2] Peterson concedes that a fourth charge, for window cleaning, is well founded. There is simply no reference to this item in the respondent’s Form 20a7, which implements ss 133-137 of the Act. [3] However, the primary tribunal found no breach of the Act, and hence no disciplinary ground, with respect to the room cleaning services, the provision of Foxtel’s television services, or the charging of commission on rent collected by Peterson’s agent, the travel and accommodation service known as Wotif. [4] The sole defence presented by Peterson at first instance was that its Form 20a complies with the Act, particularly section 133 thereof. More pertinent, it was the only issue on appeal. It is not for an appeal tribunal to speculate about other defences that might have been invoked, but were not. It may be that some such submissions may be available, on mitigation at least, when this matter returns to the primary decision maker, but that is not a matter than need be considered here. [5] Section 133 provides that for every service performed by an estate agent there must be an appointment in writing stating, inter alia, (i) the fees, charges and any commission payable for the service and (ii) the expenses, including advertising and marketing expenses that the agent is authorised to incur in connection with the performance of each service or category of service.8 [6] In the present case, the Form 20a sets out a global sum for cleaning services, “Foxtel” and a percentage for collections of rent – for example: “Clean and services 1 bedroom $64.90”. Those charges are not subdivided, as prescribed, into amounts for “fees, charges and any commission”, on the one hand9, and expenses incurred in providing the subject services, on the other.10 [7] The appellant’s case is that the respondent was bound to particularise the charges for cleaning and “Foxtel”, and its fees relating to receipt of rent (as distinct from Wotif’s commission for collecting same), its failure to do so warrants affirmative findings on the three contested disciplinary charges. [8] Peterson, for its part, contends that, on agreed facts, and the true interpretation of section 133 and complementary sections 139, 140 or 141, no breach of the Act, and therefore no disciplinary breach, has occurred. 7 Statutory form entitled “Appointment of Agent – Letting and Property Management”. 8 PAMDA s 133(3)(c). 9 Ibid 133(3)(i). 10 Ibid 133(3)(c)(ii). -- 6 of 10 -- 7 [9] According to section 140, an agent may not sue for, recover or retain a reward or expense unless he has holds an appointment that is strictly compliant with section 133. Section 139 prohibits a commission for letting property or collecting rents that is calculated on an amount greater than the rent actually collected on his principal’s behalf. [10] A breach of section 139 or 140 is an offence punishable by a fine not exceeding 200 penalty units.11 At the same time, it is a breach of discipline.12 [11] The respondent contends that the Act does not forbid profit, and that the profitable portion of an agent’s fee cannot be precisely stated because it may vary from time to time as the latter’s business overheads (as distinct from external expenses paid to third parties, such as the cleaners or Foxtel in this case) may vary from time to time. Each of those propositions may be accepted, but they do not resolve the issue. A fallacy lurks in the advocate’s lateral glide from the language of the Act – “fees”, “charges”, “commission” - to the concept of profit. But in no material part of the Act does that term or concept appear. The legislation does speak of “reward” in section 141, but that involves a distinction without a difference, because by statutory definition “reward” includes “remuneration of any kind, including, for example, any fee, commission or gain.13 [12] The term “fee” receives no special definition in the Act, and as a matter of common parlance, it is not necessarily synonymous with personal profit. Lawyers, medical practitioners and accountants, as well as realtors, have overheads (as distinct from outlays to outsiders) that affect their profit margins, but the amount charged for their services (including overheads absorbed) is generally called their “fee”. There is no suggestion in the Act, or in the case for the appellant, that in a Form 20a an agent must dissect his fees into business overheads and nett profit. [13] There was some disputation about proper notice of rises in fees or third party expenses from time to time. The respondent argued that it would be unduly burdensome, and absurdly so, to require a fresh Form 20a to be prepared on every such occasion, as suggested by the appellant. Provided that the original appointment foreshadows such changes, and the client accepts a timely letter from the agent, that notice may serve as an appropriate amendment to the original form of appointment.14 I respectfully agree with the Member’s acceptance of this procedure. 11 PAMDA s 140(2). 12 Ibid s 496(1)(b)(i). 13 Ibid Schedule 2. 14 Reasons for Decision 25 November 2015 paragraphs [95]- [96]. -- 7 of 10 -- 8 [14] No doubt the relevant provisions are aimed, inter alia, at the mischief of “kickbacks” or secret commissions. But that does not exhaust their effect. In my view, the consumer-protection policy of the Act15 extends to separate disclosure of just how much the agent charges for his services, as distinct from any payment to a third party. Fees may be fair, but nevertheless substantial and worthy of scrutiny. Here, while the respondent’s payment to the cleaner of a 1 bedroom unit was $30, the total charge to the client was $64.90 – more than twice the cleaner’s remuneration. No doubt part of the increment of $34.90 may represent business overheads rather than profit, but it is a policy of the Act that clients should have ready access to such information, however indifferent some of them may be to Parliament’s solicitude, and however cheerfully they pay. At common law a one-figure price may suffice, but it would be surprising if this elaborate legislation gave consumers no better access to price signals than if it had never been enacted. [15] In analysing and interpreting s 133 as above, its context, policy and a sense of fairness appear to be surer guides to its meaning than exquisite semantic dissection.16 Section 133 is not arcane; it deserves to be free from obfuscation. There is no inconvenience or logical improbability to forestall the conclusion that the Act seeks to achieve a clear statement of a letting agent’s personal fees, as distinct from external expenses.17 That interpretation best promotes a purpose of the Act.18 The very absence of direct authority suggests that, hitherto, the interpretation of s 133 has not given rise to the obscurities or complexities suggested by this respondent. Another possibility is that, hitherto, officialdom has been less vigilant than in this case. [16] There is no such ambiguity in the subject provisions as to attract the principle that penal statutes are to be interpreted in favour of the subject.19 Besides, these proceedings are disciplinary, not criminal in character. As such, they involve a different standard of proof20 and legal policy21. 15 PAMDA s 10(1)(a). 16 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381. 17 As observed in CIC Insurance Ltd v Bankstown Football Club (1997) 187 CLR 384 at 408. 18 Acts Interpretation Act 1954 s 14A. 19 cf Smith v Corrective Services Commission (NSW) (1980) 147 CLR 134 at 139; Murphy v Farmer (1988) 165 CLR 19 at 28–29. 20 Adamson v Queensland Law Society Incorporated [1990] 1 Qd R 498; Re Bowen [1996] 2 Qd R 8 at 11. 21 Protective of public and profession, rather than punitive or retributive: NSW Bar Association v Evatt (1968) 117 CLR 177 at 183-184; Ziems v Prothonotary of the Supreme Court of NSW (1957) 97 CLR 279 at 286 per Dixon CJ; Police Service Board v Morris (1985) 156 CLR 397 at 412. -- 8 of 10 -- 9 [17] Queensland’s s 133 is not unique. Similar provisions, requiring a dissection of fees or commissions from expenses paid to others, exist in several other Australian States.22 None of them appears to have raised difficulties of interpretation that are reflected in judicial decisions. [18] Before the primary tribunal, counsel for the responded submitted: “All [the client] needs to know is ‘How much do I have to pay?’”23 regardless of the profit taken.24 This broad-brush approach is reflected in the Member’s comment that it suffices if the client knows that he has to pay “whatever [is] set out in the [Form 20a] schedule”.25 But with respect, the purpose of the Act is more aptly described in the Member’s reasons for decision: “The intent is that a consumer is fully aware of the nature and amount of the charge.”26 Here the word “nature” presumably refers to something more informative than a bald total price, namely a “distinct separation ... between an expense and an amount received as a personal payment to the agent.”27 This policy reappears in the new Act28 and in recent amendments to the UK Consumer Rights Act 2015.29 No doubt a diligent consumer, given only a global price, is free to shop around,30 but the Act demands more. Whether or not a particular customer wants more, the Act insists that he have it. Perhaps some consumer protection laws are overweening, but that is beside the point. [19] In the premises, the primary tribunal’s dismissal of the charges relation to general cleaning services, the Foxtel service and the charging of commission on Wotif bookings is erroneous in point of law. Those findings should be set aside, and in lieu thereof findings of disciplinary breaches in those three cases should be entered. [20] These proceedings should be remitted to the primary tribunal to be further dealt with in accordance with the following orders, and for determination of appropriate sanctions. ORDERS 1. The dismissal of the charges relation to general cleaning services, the Foxtel service and the charging of commission on Wotif bookings 22 Real Estate and Business Agents Act 1978 (WA) s 60(2); Real Estate and Business Agents (General) Regulations 1978 (WA) s 6BA; Property Agents and Land Transactions Act 2005 (Tas) s 18(2); Estate Agents Act 1980 (Vic) s 49A(1). 23 Transcript of hearing 6 July 2015, page 82 line 43. 24 Ibid page 82 line 34. 25 Ibid page 108 lines 7-8. 26 Reasons for decision at [55], emphases added. 27 Ibid at [74]. 28 Property Occupations Act 2014 s 104(3)(c)(ii) and (iv). 29 Consumer Rights Act 2015 (UK) s 83. 30 As suggested in Reasons for decision at [58]. -- 9 of 10 -- 10 are set aside and in lieu thereof findings of disciplinary breaches in those three cases are entered. 2. These proceedings are remitted to the primary tribunal for determination of appropriate sanctions and the appellant’s application for costs. -- 10 of 10 --