Cahill v Tomkins t/as Prime Real Estate [2014] QCAT 104

CITATION: Cahill v Tomkins t/as Prime Real Estate [2014] QCAT 104 PARTIES: Damien Edward Cahill (Applicant) v Mr Cecil Tomkins t/as Prime Real Estate (Respondent) APPLICATION NUMBER: GAR210-12 MATTER TYPE: General administrative review matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Paratz DELIVERED ON: 21 March 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. The time for the filing of a claim against the claim fund by Damien Edward Cahill is extended to the date upon which he lodged his claim, being 19 March 2012, pursuant to section 511 of the Property Agents and Motor Dealers Act 2000. 2. I refer the claim to the Chief Executive for processing. CATCHWORDS: Where real estate agent made representations to buyer about the meaning and operation of a deposit bond – whether misrepresentation gives rise to a claim against the claim fund – where application for extension of time to lodge claim – whether applicant has any realistic prospects of success Property Agents and Motor Dealers Act 2000 (Qld) APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). -- 1 of 12 -- 2 REASONS FOR DECISION [1] Damian Edward Cahill, David Sutton and Sandra Joanne Sutton (‘the buyers’) are seeking to obtain compensation from the Fund maintained under the Property Agents and Motor Dealers Act 2000 (the Act). Sandra Sutton is the mother of Mr Cahill. [2] These matters have had a long and protracted history. There are two files, one is an application by Mr Cahill (GAR210-12), the other is an application by the Suttons (OCR221-12). The applications have not yet progressed past the initial procedural hurdles. The circumstances and arguments are for all purposes effectively identical. I will deliver separate Reasons and Decisions on each file, but they are also effectively identical, only with necessary identification and detail modifications. [3] Mr Tomkins was a Real Estate Agent (‘the agent’). He was involved in transactions whereby Mr Cahill and the Suttons signed contracts to purchase lots off the plan in 2008 in a residential unit development on the Gold Coast known as “Elston” at the corner of Hamilton Avenue and Surfers Paradise Boulevard. They allege that actions of Mr Tomkins, and loss suffered by them, give rise to their entitlement to claim on the fund. [4] Mr Cahill entered into contracts to buy two units on Level 3 - Lot 22 for $468,000 and Lot 23 for $469,000. The contracts were entered into on 25 January 2008. Arrangements were made for the 10% deposit of $46,800 and $46,900 to be provided by means of a Deposit Bond provided by QBE Insurance (Australia) Limited by its authorised agent Deposit Access Pty Ltd. The deposit bonds were issued on 28 February 2008. [5] QBE Insurance (Australia) Limited (QBE) paid the lot 22 Deposit Bond premium of $4,845 to Deposit Access Pty Ltd on 5 February 2008. QBE Insurance (Australia) Limited (QBE) paid the lot 23 Deposit Bond premium of $4,845 to Deposit Access Pty Ltd on 5 February 2008. [6] The Contracts were due to settle on 14 August 2009. Mr Cahill failed to complete the contracts. On 24 August 2009, Ramsden Bow Lawyers, acting for the Vendor, made demand upon QBE Insurance for payment of the Deposit, referring to clause 21.1 of the Contract which provided as follows:- 21.1 The seller may at its sole discretion accept a bank guarantee or other form of acceptable security in the amount of the deposit from the Buyer instead of the Deposit. If the seller becomes entitled to the Deposit because of the default of the Buyer, the Seller may demand payment of the deposit from the provider of the bank guarantee without reference to the Buyer. [7] On 14 December 2010 QBE paid the amount of $46,800 to the Vendor under the lot 22 bond. On 14 December 2010 it paid the amount of $46,900 to the Vendor under the lot 23 bond. -- 2 of 12 -- 3 [8] QBE instituted proceedings against Mr Cahill in the Local Court of NSW. An amended Statement of Claim was filed on 22 July 2011. The claim was for $101,233.38 being $95,879.76 for Claim plus interest and fees and costs. [9] Mr Cahill filed an amended defence to the action dated 18 July 2011. It alleged that Mr Cahill was induced to request the bond on the basis of misrepresentations of Mr Tomkins made for himself and on behalf of the vendor and QBE, and that the conduct of QBE was deceptive and misleading and otherwise unconscionable and unfair. [10] Mr Cahill was represented in those proceedings by Synergy Group Legal Pty Ltd. He alleged that the misrepresentations were to the effect that:1 (a) the deposit bond was a requirement to facilitate the transaction; (b) the transaction was an option to purchase which Cecil Tomkins undertook to novate prior to completion; (c) the only monies which the Defendant had to pay was the fee accompanying the bond (which was duly paid by the Defendant); (d) Cecil Tomkins had done this many times successfully for the plaintiff and developers of real property under construction benefiting himself and other clients; (e) In this development, Cecil Tomkins was doing this with at least 3 other Buyers; (f) Cecil Tomkins was experienced and knowledgeable in such matters and the defendant did not need independent legal or financial advice; and (g) In any event, the legal liability of the defendant was limited to the deposit Bond fee paid by the defendant. [11] An application was apparently to be made to join Cecil Tomkins and Deposit Access Pty Limited to the proceedings on 1 November 2011,2 and a Cross-Claim against those parties by Mr Cahill was filed on 17 November 2011.3 It is unclear what happened to that application and cross-claim. [12] Judgment was given for QBE against Mr Cahill on 29 February 2012 as per a Consent Order for the amount of $157,711.93. [13] It appears that the units were resold by the Vendor at a higher price, so no claim was made against Mr Cahill by the Vendor in that respect. [14] Synergy Group Legal Pty Ltd forwarded a letter to the Office of Fair Trading dated 16 March 2012 enclosing a PAMD Form 50 “Claim against the claim fund” signed by Mr Cahill on 22 February 2012. The form provided that the event alleged to give rise to the claim occurred on 5 February 2008, and that Mr Cahill became aware of the loss on 1 Amended Defence 18 July 2011, [2] and [10]. 2 Letter Synergy Group Legal Pty Ltd to Turks Legal 24 October 2011. 3 Mr Cahill’s bundle of documents p 659. -- 3 of 12 -- 4 30 March 2011. The respondents were named as Cecil Tomkins and Prime Real Estate Pty Ltd. The claim was lodged on 19 March 2012. [15] The Office of Fair Trading (‘OFT’) responded by a letter dated 2 May 2012 to Synergy Group Legal Pty Ltd rejecting the claim on grounds that: From the information that you have provided in support of your claim, the actions of the respondents in relation to this claim do not constitute a breach of section 470 of the Act which would give rise to a valid claim against the claim fund. Specifically the actions specified on the Claim form and in your supporting documentation do not reveal a misrepresentation in regards to the property by the respondents. (and) Also in your claim you stated that the event alleged to give rise to the claim occurred on 5 February 2008 and that you became aware of your financial loss on 30 March 2011. Your claim has been assessed as being made outside the time limitations pursuant to section 472 of the Act. [16] A PAMD Form 52 “Claim out of time notice” dated 24 May 2012 was issued by the OFT. An application was filed in the Tribunal on 8 June 2012 submitting that the claim was within time, and seeking any necessary extension of time. [17] Mr Cahill then engaged new lawyers in July 2012, known as Australasian Lawyers and Consultants. [18] The Tribunal considered the application for an extension of time in which to lodge a claim against the fund by a written judgment dated 2 October 2012. The learned Senior Member referred to the proceedings in New South Wales, noting that Mr Cahill commenced proceedings in July 2011 which was within the time that he could have claimed against the fund, and that by s 472(3) of the Act a person can make a claim against the fund within three months after the proceeding in court ends. [19] The reasons then concluded that: [7] The material filed indicates that the last action in the New South Wales proceeding occurred on 2 March 2012. Mr Cahill lodged his claim on 19 March 2012. The claim was filed within time. Conclusion [8] The application for an extension of time is not necessary because Mr Cahill filed his claim within 3 months of legal proceedings being concluded. Those legal proceedings were filed within the time he was permitted to make a claim. The application for an extension of time is therefore refused because it is unnecessary. The Chief Executive should reconsider Mr Cahill’s claim. [20] The OFT took this decision as a refusal of the application to extend time absolutely, and in a letter to the Sutton’s solicitor dated 9 October 2012 referred to s 511(2) of the Act which states that no appeal lies against the tribunal’s decision with respect to the decision to extend time, and that -- 4 of 12 -- 5 consequently their client had no further recourse against the Claim Fund and the matter had been closed. [21] The Solicitors for the claimants then responded on 11 October 2012 saying that was a misunderstanding of the Tribunal’s decision, because their client was always within time. [22] The OFT responded with a lengthy letter on 19 October 2012 canvassing many issues and concluding that:- The Chief Executive has reconsidered your clients claim as per the reasons provided by QCAT and confirms your client’s application remains out of time. As such, the Chief Executive is powerless to progress your clients claim. Please advise this office if your client will be seeking to revisit the QCAT decision within 14 days of the date of this letter, otherwise the Chief Executive will consider the matter finalised. [23] Mr Cahill then filed an Application in the Tribunal on 2 July 2013 seeking that the application be confirmed as within time. The matter came before me on 2 October 2013 when I ordered that the decision of the Tribunal made on 2 October 2012 in relation to the Application for extension of time be renewed pursuant to s 133 of the QCAT Act, in order to allow the problems with interpreting the Tribunal’s decision to be determined. [24] I gave directions for the filing of consolidated material and submissions, and for the application to be determined on the papers after 29 November 2013 if no application for an oral hearing was made. No application for an oral hearing was made, and this application is now being determined on the papers. This is the renewed decision on the Application for extension of time. [25] Submissions were filed accordingly on behalf of Mr Cahill and the Suttons on 4 November 2013 by Australasian Lawyers and Consultants. I note particularly the following paragraphs:- 3. Tomkins misrepresented the nature of the bonds and the purpose for which they would apply regarding the purchase of this real estate and many other things about the nature of the real estate which are detailed at length in this material. It is the misrepresentation about the position overall to induce the Suttons and Mr Cahill to act to their detriment, and engage in the purchase of this real estate according to the scheme by which Tomkins was able to extract advanced commission payments from the seller, without properly accounting which seem most germane. 7. As a licensed real estate agent engaging in such misrepresentation and failing to appropriately deal with the instrument of the deposit (which is no less a matter of trust keeping), Tomkins has breached the Property Agents and Motor Dealers Act 2000 (as amended) and recourse is sought from the Fund provided that the Commissioner is persuaded following this review. 8. For present purposes, the critical argument is about the timing of the claims. The Tribunal has considered and made orders in this regard; however, this has been questioned by the Commissioner; and needs -- 5 of 12 -- 6 to be determined. The Applicants continue to argue the case under Section 372(3) that the claim was made on 19 March 2012 following cessation of the NSW proceedings on 28 February 2012. However, there is some technical debate in this regard and probably the most striking feature of it is that, in reality, the financial loss complained of, was not realised until the NSW judgments entered on 5 March 2012. I note that the claim was made within one (1) month thereof so the argument remains still that the claim always was within time. [26] The Chief Executive filed submissions on 27 November 2013. Those submissions canvass the issues as to time, and also canvass the merits of Mr Cahill’s claim, arguing that the claim is hopeless and bound to fail and as such the extension of time ought to be refused. Is the claim within time due to the date of ending of a proceeding? [27] The Chief Executive submits that the matter is not within time as regards a proceeding. It refers to s 472 of the Act and argues that s 472(3) requires that the applicant must start a proceeding, not defend one. It points out that QBE commenced a proceeding against the applicant to recover QBE’s loss. [28] I see merit in the Chief Executive’s argument in this regard. The section clearly apprehends that an Applicant would be seeking to recover loss directly from the Respondent to the claim in proceedings in a court, and was pursuing that claim before turning to claim against the fund. In this matter there was no claim by Mr Cahill against Mr Tomkins for any loss he had suffered at the inception of the proceedings. [29] A Statement of Cross-Claim was filed by Mr Cahill on 17 November 2011. It did not make any direct claim against Mr Tomkins. It sought that Mr Tomkins pay any amounts that QBE might recover against Mr Cahill. It did make a direct claim against Deposit Bond Access Pty Ltd for it to repay the sum of $9,690.00. [30] Section 472 (3) provides as follows:- However if the person starts a proceeding in a court to recover the person’s financial loss within the time permitted to make a claim under subsection (2), the person may make the claim within 3 months after the proceeding in the court ends. [31] The question then becomes, did Mr Cahill start proceedings to recover his financial loss, and if so when did he do so? [32] Mr Cahill could not be said to have commenced a proceeding in a court to recover his financial loss when QBE initiated the NSW court proceedings against him (which would have been a date before the date of the Amended Statement of Claim on 22 July 2007). That was a claim against him, not by him. [33] It is arguable that filing a Cross-Application amounted to commencing proceedings to recover a financial loss. At the time of filing the cross- -- 6 of 12 -- 7 application there was no financial loss, however those were the appropriate proceedings in which to make such a claim. If Mr Cahill had waited until the completion of the NSW proceedings whereby he was found liable to pay QBE the value of the deposit, and had then sought to commence new proceedings against Mr Tomkins to recover that financial loss, he would have had to relitigate many of the same issues and evidence. The Commissioner appears to give credence to this argument, and said in its letter of 19 October 2012 that:4 Therefore the earliest time that your client can assert that he commenced proceedings in a court to recover his loss is the date the cross claim was filed which appears to be on or after 25 October 2011. [34] Section 472(2) provides two options as to time in respect of financial loss. That section provides as follows:- (2) A person may make the claim against the fund only if the person makes the claim within the earlier of the following – (a) 1 year after the person becomes aware that the person has suffered financial loss because of the happening of an event mentioned in section 470(1); (b) 3 years after the happening of the event that caused the person’s financial loss. [35] When did Mr Cahill become aware that he had suffered financial loss? The Commissioner submits5 that ‘the Applicant’s alleged loss could not arise until consent judgment was entered in the NSW proceedings on 3 April 2012’. Mr Cahill makes a similar submission6 that ‘.. probably the most striking feature of it is that, in reality, the financial loss complained of, was not realised until the NSW judgments entered on 5 March 2012’. [36] I accept the position that both parties agree to, that Mr Cahill’s financial loss did not arise or crystallise, and that he did not suffer financial loss, until the date of the judgment against him by QBE whether that was on 5 March 2012 or 3 April 2012. Mr Cahill therefore had 1 year after which of those is the correct dates to make a claim against the fund in respect of s 472(2)(a). That date would be 5 March 2013 or 3 April 2013. [37] The second alternate of s 472(2)(b) is in relation to the date when the event that caused the financial loss arose. The event that caused the financial loss is the date when the Deposit Bond was entered into, which was 5 February 2008. Three years after the event would therefore be 5 February 2011. [38] The claim was dated 22 February 2012, and lodged on 19 March 2012. 4 Letter OFT to Synergy group legal Pty Ltd 19 October 2012, p 2. 5 Submissions filed 27 Nov 2013 at [12]. 6 Submissions filed 4 Nov 2013 at [8]. -- 7 of 12 -- 8 [39] Whilst there is discrepancy as to the actual dates in the various submissions and correspondence, the relevant dates therefore appear to be on or about:  Date that is three years after the happening of the event – 5 February 2011  Date that proceedings to recover financial loss started – 25 October 2011  Date of claim to OFT – 19 March 2012  Date that is one year after Mr Cahill became aware that he suffered financial loss – 5 March 2013  Date that proceedings to recover financial loss ended - 03 April 2012 [40] The earlier of the two options in s 472(2) is the date that was three years after the event, which was 5 February 2011. [41] Applying these dates to s 472(3) as to court proceedings, then the date that Mr Cahill started his proceedings to recover his financial loss (25 October 2011) was not within three years of the happening of the event (5 February 2011). [42] As the proceedings were not commenced within s 472(2), then the exception in s 472(3) as to the ending of the proceedings will not apply. Is the claim within time in relation to financial loss? [43] The previous discussion reveals that the claim was not made within time in relation to awareness or suffering financial loss under s 472(2), as the date that Mr Cahill started his proceedings to recover his financial loss (25 October 2011) was not within three years of the happening of the event (5 February 2011). Is an extension of time required? [44] The claim is therefore out of time under any of the provisions of s 472, and an extension of time would be required under s 511 for the claim to proceed. Should an extension of time be allowed? [45] Section 511 provides that the tribunal may extend the time within which to file the claim if the tribunal is satisfied that: 511(b) it is appropriate to extend time having regard to – (i) the reasons for not making the claim or seeking the review within the time allowed; and (ii) the application generally; and (iii) for a claim, the relative hardship that an extension of time or a refusal to extend time would place on the claimant or respondent; and (iv) the justice of the matter generally -- 8 of 12 -- 9 [46] The Chief Executive argues that even if the claim is within time, that it should not be allowed to proceed as it has no merits and is doomed to fail. The reasons put forward for that proposition are also relevant to the appropriateness of extending time. Section 511(b)(i) Reasons for not making the claim within the time allowed [47] The Chief Executive does not take any issue with this limb as Mr Cahill’s alleged loss could not arise until consent judgment was entered in the NSW proceedings on 3 April 2012.7 [48] Mr Cahill does not specifically say why a claim was not made until 19 March 2012. However, he was engaged in legal proceedings in NSW until after that date, as the Chief Executive notes, so it understandable that he would have been pre-occupied with those proceedings and looking to see how they resolved before seeking the alternate possible source of recovery of making a claim against the fund. [49] I am therefore satisfied that Mr Cahill has a satisfactory explanation as to why the claim was not made within time. Section 511(b)(ii) The application generally [50] This matter has generated a great volume of submissions already. Many of the submissions on behalf of Mr Cahill are framed in generalities and without reference to specific provisions of the Act. There is frequent reference to an alleged scheme by Mr Tomkins to obtain commission earlier than would normally apply on a sale. [51] In order to ultimately succeed in his claim against the fund, Mr Cahill will have to identify what provisions of the Act he is claiming within, and establish the factual foundation for his claim. There are considerable difficulties facing him in doing so, and it is by no means clear that he would ultimately be able to do so. [52] The Chief Executive refers to the comment of the Tribunal in Potter v Klar Pty Ltd & Ors8 that ‘if the claim is hopeless or bound to fail, there would be no utility in extending the time’. This sentiment would apply in a clear case where the Applicant has no realistic prospect of success. However, Tribunals or Courts are generally slow to deny a citizen their “day in court”. The risk for the applicant is that he may incur significant legal costs and be unsuccessful, and may also run the risk of a costs order being made against him. [53] The Chief Executive refers to the following obstacles and arguments facing Mr. Cahill:-  He is well outside the time limits for making a claim relating to marketeering contraventions in s 472A. 7 Submissions of Chief Executive filed 27 Nov 2013 at [12]. 8 [2008] CCT PE008-07. -- 9 of 12 -- 10  A claim under s 574 as to false representations is not made out as none of the representations regarding the valuation of the property on completion, the ready availability of finance, and the ability to resell the property prior to completion, appear to be false.  Mr Cahill asserts that false representations were made as to how the deposit bond worked at law, but the Act only covers false representations about property.  Mr Cahill was provided with a Form 30c warning statement that warned him to seek independent legal advice and an independent valuation, some 15 days before he signed the Deposit Bond.  Mr Cahill appears to be suggesting that he suffered loss because the Deposit Bond was paid to a Solicitor’s Trust account, and should not have been released. It is suggested that this may give rise to a claim against the solicitor but not against the claim fund. [54] In summary the Chief Executive submits on this head that:9 In the circumstances, it is submitted that there is no relevant event that caused the Applicant’s alleged loss. Alternatively, if an event could be established, the applicant’s actions/omissions to avoid settlement denied the potential for the representations to become true noting that it appears from the Applicant’s evidence that as a minimum the alleged representation that the properties value would increase appears to have been realised in the on sale of the property. [55] It is submitted on behalf of Mr Cahill that:10 The various facts amounting to a breach of (s 574(1) as to false or misleading representations in relation to the sale of a property) are canvassed extensively in the material lodged to date. However, in summary, the respondent misrepresented the sale of the property to the applicant and the process by which it could be purchased by them, to such an extent that they would not have purchased the property had the true position been known; and would not have suffered the loss which they have. [56] The misrepresentation that is complained of appears to relate to the operation of the Deposit Bond. In essence Mr Cahill appears to be saying that he was not aware that the Bond could be called upon by the Vendor and be forfeited to it, and that the provider of the Bond would then seek redress from him. This will then become a question of law as to whether this is a representation as to sale of property under s 574(1). [57] Many of the submissions made on behalf of Mr Cahill revolve around propositions that he should be able to claim from the fund on the basis of public policy. Whilst such arguments are understandable, they still have to come within the legislative framework of the Act. An example is this submission:11 9 Submissions of Chief Executive filed 27 Nov 2013 at [26]. 10 Affidavit Ricardo Viana dated 1 November 2013 at [8]. 11 Affidavit Ricardo Viana dated 1 November 2013 at [14(b)(iv)]. -- 10 of 12 -- 11 In my submission, justice in the matter generally would dictate that the Applicant please be given an extension of time to enable their claim to be determined by the Commissioner for relief; and for action to be taken against the Respondent and generally as may be determined to ensure that this type of thing does not happen again to people in the position of the Applicant. [58] I have doubts as to whether Mr Cahill will ultimately be able to overcome the hurdles highlighted by the Chief Executive, and I would urge him to consider further action carefully as to its utility. That said, I am reluctant to deny him the opportunity to pursue his claim if he seeks to do so, and considers he can establish it within the Act. Section 511(b)(iii) Relative hardship an extension would place on the claimant or respondent [59] Mr Tomkins has not filed any material in response to the application for an extension of time. He has therefore not raised any issue of hardship that an extension may cause him. [60] Mr Cahill points to the substantial financial loss he has suffered, and says he will suffer hardship if he does not recover this. [61] The Chief Executive doubts that Mr Cahill will suffer hardship and points to the letter supporting his application for the Deposit Bond written by his accountant on 6 February 2008 that “the proposed commitment for lots 22 and 23, Elston Grandsurf resort, Surfers Paradise, 4217, of $469,000 for each unit, will not create undue hardship” as evidence that Mr Cahill should be able to absorb the financial loss occasioned by the Deposit Bond. [62] Whether Mr Cahill was being prudent in committing himself to purchase of two units is not revealed on the material, but it is clearly submitted on his behalf that he has suffered hardship by the financial loss. For the current purposes I am prepared to accept that as a reasonable proposition. Section 511(b)(iv) The justice of the matter generally [63] The Chief Executive submits that this matter is more akin to a case of the buyer attempting to avoid his contractual obligations and the subsequent termination penalties. [64] Mr Cahill for his part argues strongly that he was misled by gross misrepresentation, and bases much of his material on grounds of justice. [65] For similar considerations as discussed above as to the application generally, I am disposed to allow Mr Cahill to pursue his claim which he sees as just, whilst again cautioning him to be realistic about doing so. -- 11 of 12 -- 12 Conclusion [66] For the reasons discussed, I am satisfied that the requirements of s 511 are made out, and allow the extension of time, although I do so with the notes of caution I have made. [67] I order that the time for the filing of a claim against the claim fund by Mr Cahill is extended to the date upon which he lodged his claim, being 19 March 2012, pursuant to section 511 of the Property Agents and Motor Dealers Act 2000; and refer the claim to the Chief Executive for processing. -- 12 of 12 --