Elders Insurance Limited v Insurserv Australia Pty Limited and Anor [2011] QCAT 656

CITATION: Elders Insurance Limited v Insurserv Australia Pty Limited and Anor [2011] QCAT 656 PARTIES: Elders Insurance Limited v Insurserv Australia Pty Limited Scott Andrew Hallewell APPLICATION NUMBER: OCL189-10 MATTER TYPE: Other civil dispute matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Sandra G Deane, Member DELIVERED ON: 14 November 2011 DELIVERED AT: Brisbane ORDERS MADE: [1] Pursuant to section 488 of the Property Agents and Motor Dealers Act 2000, the claim is allowed in the sum of $59,997.68. [2] Pursuant to section 489 of the Property Agents and Motor Dealers Act 2000, at the expiration of the appeal period the Chief Executive must pay to Elders Insurance Limited the sum of $59,997.68 from the Claim Fund, and if there is an appeal, payment must not be made until after the appeal is finally decided. [3] Pursuant to section 488(3)(c) of the Property Agents and Motor Dealers Act 2000 the Respondents, Insurserv Australia Pty Limited and Mr Scott Andrew Hallewell are named as the persons liable for the financial loss of Elders Insurance Limited. [4] Upon payment from the Claim Fund and pursuant to sections 490 and 530 of the Property Agents and Motor Dealers Act 2000, the Respondents, Insurserv Australia Pty Limited and Mr Scott Andrew -- 1 of 7 -- 2 Hallewell are jointly and severally liable to reimburse the Claim Fund by paying the sum of $59,997.68 to the Chief Executive of Employment, Economic Development and Innovation. CATCHWORDS: PROPERTY AGENT AND MOTOR DEALER ACT – claim against fund – whether a commercial agent – meaning of ‗debts‘ – whether liquidated sums only – natural and ordinary meaning preferred – failing to account in relation to monies recovered – whether relevant person – receiver appointed Property Agents and Motor Dealer Act 2000, ss 10, 339, 344, 385, 417, 469, 470, 476, 488, 490, 530, 573 APPEARANCES and REPRESENTATION (if any): This matter was heard on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009. REASONS FOR DECISION Background [1] Elders Insurance made a claim against the statutory fund (the Claim Fund) established under the Property Agents and Motor Dealers Act 2000 (the Act) for financial loss in relation to its dealings with Insurserv Australia Pty Ltd and Mr Scott Andrew Hallewell. [2] Insurserv was a company which provided services to insurance companies. Those services involved recovering amounts payable to insurance companies. Mr Hallewell was a director of Insurserv. [3] On 3 April 2009, pursuant to section 417 of the Act, a Receiver was appointed over Insurserv‘s trust accounts. [4] On 6 May 2009 Insurserv was ordered to be wound up. [5] Both of the Respondents are parties whose actions are alleged to give rise to the claim. [6] In December 2010 the Office of Fair Trading (OFT) referred the claim to the Tribunal for determination.1 11 Section 476(1) of the Act requires that the Chief Executive refer the claim to the Tribunal if it exceeds $10,000.00. -- 2 of 7 -- 3 [7] The Tribunal received a copy of the OFT claim file which included material from Elders and the Receiver‘s Reports dated 10 September 2010, 9 December 2010 and 12 August 2011. Law [8] Section 488 of the Act provides that the Tribunal may allow a claim for compensation only if it is satisfied, on the balance of probabilities: a) that an event mentioned in section 470(1) of the Act happened; b) the claimant suffered financial loss because of the happening of the event. [9] The events are actions by a relevant person. [10] Section 469 of the Act provides that relevant person includes a licensee, former licensee, a person who is not a licensee but who acts as a licensee and a person having charge or control of a licensee‘s registered office or business. [11] Further pursuant to section 488 of the Act the Tribunal must also take into account any amount the claimant might reasonably have received or recovered if not for the claimant‘s neglect or default and any amount ordered to be paid to the claimant as compensation to the claimant under sections 530A, 572D or 592A of the Act. [12] If the Tribunal allows the claim wholly or partly it must decide the amount of the loss and name the person liable. [13] Section 530 of the Act provides that the Tribunal may make the following orders in relation to a claim against the fund— a) an order allowing the claim, wholly or partly, or rejecting the claim; b) an order stating that a named person is liable for a claimant's financial loss and the amount of the loss; c) an order about recovery of an amount payable in relation to a claim; d) an order that no amount is recoverable in relation to a claim. [14] Section 385(4)(b) of the Act provides that a licensee must pay trust monies less any appropriate transaction fees within 42 days to the person entitled to those monies after the person first had a right to the balance. This section is contained in Chapter 12, Part 1 of the Act. [15] Section 573 of the Act applies if a licensee, in the performance of the activities of a licensee, receives an amount belonging to someone else. A licensee who dishonestly converts the amount to the licensee‘s own or someone else‘s use commits a crime. Evidence and Submissions -- 3 of 7 -- 4 [16] Elders Insurance relied upon the file of material provided by the OFT and the Receiver‘s Reports. [17] Mr Hallewell relies on an affidavit sworn 27 April 2011. [18] The evidence before the Tribunal is as follows: a) Mr Hallewell was appointed a director of Insurserv on 5 June 2000 and remained a director at all relevant times. From 6 October 2006 until 14 October 2009 Mr Hallewell was the sole director and secretary of Insurserv; b) Mr Hallewell held a Commercial Agent Principal‘s Licence from 5 September 2005 until 19 October 2008; c) Insurserv held a Commercial Agent‘s Licence from 5 September 2005 until 19 October 2010; d) Mr Hallewell was the person in charge of Insurserv‘s business; e) Elders Insurance entered into a contract with Insurserv for certain services involving recovering amounts payable to Elders Insurance for the period 1 February 2004 until 31 January 2008; f) Insurserv were entitled to claim fees based on amounts recovered and to recover certain expenses; g) Funds recovered on Elders Insurance‘s behalf were banked to Insurserv‘s trust accounts and were to be remitted to Elders Insurance on a monthly basis; h) Insurserv operated 2 trust accounts; i) Elders Insurance claimed unremitted trust moneys recovered on its behalf held by Insurserv and not remitted in accordance with the terms of the contract or the Act; j) As at the Receiver‘s appointment the balance of the trust accounts was $95,906.88 and there were insufficient funds to satisfy all claims if the Tribunal accepts the Receiver‘s calculations; k) The Receiver has verified and quantified the amount owing to Elders Insurance in the sum of $59,997.68. In doing so the Receiver deducted commission which was payable by Elders Insurance to Insurserv under the contract from the claimed amounts. [19] Mr Hallewell submits that: a) the Act does not apply to these circumstances as: i) Insurserv was not in the business of carrying out activities of a Commercial Agent but rather was engaged by Elders Insurance to undertake insurance claims management services; ii) Insurserv was not expressly appointed under section 344 of the Act; iii) he did not engage in activities of a Commercial Agent in connection with the business of Insurserv for the same reason; -- 4 of 7 -- 5 iv) Insurserv was an independent contractor and not an agent. b) Insurserv‘s trust accounts were not subject to the Act. c) This Tribunal has no jurisdiction, the application should be dismissed and an order for costs made against the OFT or Elders Insurance. Discussion and Decision [20] The claim may be allowed, either partly or wholly, only if, on the balance of probabilities, an event described in section 470(1) of the Act happened, and the claimant suffered financial loss because of the happening of the event. Further, if the claim is allowed wholly or in part, the matters referred to in section 488(3) of the Act must be considered. Was there an event? [21] The Tribunal accepts that moneys were paid into Insurserv‘s two trust accounts and were not paid to Elders Insurance when it became entitled to the funds less amounts Insurserv was entitled to deduct. These amounts were not available to be paid to Elders Insurance as the total of the trust account balances was less than the amount which ought to be paid to Elders Insurance and others with claims against the trust accounts. [22] The Tribunal accepts that this would be a contravention of Chapter 12, Part 12 if committed by a Relevant Person. [23] Insurserv was a licensee at the relevant times. Mr Hallewell was a licensee during part of the relevant time and for the part where he did not hold a license he was a former licensee or in any event in charge of a licensee‘s business and therefore deemed a licensee. [24] Mr Hallewell contends that neither Insurserv nor he was undertaking the role of a commercial agent in respect of this transaction with Elders Insurance and therefore there was no contravention of the Act. [25] The contract provided that Insurserv was authorised to act as an agent of Elders Insurance ―in claims recovery matters as well as debt recovery matters‖3 and ―to make demands for monies due and payable‖.4 [26] Section 339 of the Act sets out authorised activities under a commercial agent‘s licence. Relevantly a commercial agent is authorised to collect or request payment of debts as an agent for another party for reward. [27] It is clear that Insurserv was appointed by Elders Insurance to perform services on behalf and for the benefit of Elders Insurance and that this was for reward. [28] The term ‗debts‘ is not defined in the Act. 2 Section 385 of the Act. 3 Clause 17(ii)(c). 4 Cl 17(ii)(d). -- 5 of 7 -- 6 [29] Mr Hallewell contends that ‗debts‘ mean liquidated sums, that the amounts requested to be paid on behalf of Elders were not liquidated and therefore the requirements of section 339 of the Act are not satisfied. Mr Hallewell has not referred this Tribunal to any decision of the Tribunal or a former tribunal or a Court relating to the definition of ‗debts‘ in the context of the Act. [30] In view of the objects of the Act5 and given that many terms are defined in the Act, the fact that ‗debts‘ is not defined suggests that it is to be interpreted having regard to its natural and ordinary meaning. I am not satisfied that a narrow technical interpretation is required. I find that the preferred construction of ‗debt‘ is ―a sum of money owed. [31] I therefore find that on the balance of probabilities Insurserv and Mr Hallewell were relevant persons involved in a contravention of Chapter 12, Part 1 and therefore an event within the meaning of section 470(1) of the Act occurred. [32] Mr Hallewell contends that the trust accounts were not subject to the Act. There is evidence that the Westpac Trust Account was intended by Insurserv to be subject to the Act. There were relevant notifications to OFT during the period October to November 2006. [33] If the trust accounts were not opened and operated in accordance with the Act this appears to be a further breach of the Act by Insurserv. [34] Mr Hallewell also contends that as the contract did not expressly provide that Insurserv was appointed under the Act it was not intended to be governed by the Act. In the circumstances I do not accept that overrides the other matters which lead to a finding that Insurserv performed the authorised activities of a commercial agent. This appears to be a further breach of the Act by Insurserv. [35] There were insufficient funds in the trust accounts to meet all claims. Mr Hallewell does not give evidence in relation to the circumstances of the shortfall. [36] On the balance of probabilities I find that Insurserv, as licensee, received amounts belonging to someone else and has in contravention of section 573 of the Act dishonestly converted the amounts to the licensee‘s own or someone else‘s use. Did the Event Cause Financial Loss? [37] If Insurserv had accounted to Elders Insurance in accordance with the contract or Act then Elders Insurance would have received the amounts recovered less commission. [38] Accordingly the Tribunal finds that Elders Insurance suffered financial loss as a consequence of the events. 5 Section 10 of the Act. -- 6 of 7 -- 7 Section 488(3) Matters [39] The Tribunal is satisfied that there has been no relevant neglect or default by Elders Insurance identified and there is no evidence that any amounts of compensation have been ordered to be paid under sections 530A, 572D or 592A of the Act. [40] The Tribunal accepts that Elders Insurance has suffered a financial loss in respect of loss of the amounts to be remitted in the sum of $59,997.68. Section 490 Matters [41] The Tribunal accepts that Insurserv and Mr Hallewell contravened the Act and are therefore responsible for the financial loss. [42] The Tribunal is satisfied that Insurserv and Mr Hallewell either in his own right or as an executive officer of Insurserv are persons liable for the financial loss. [43] In view of the above findings Mr Hallewell‘s application to strike out and for costs must necessarily fail. Orders [1] Pursuant to section 488 of the Property Agents and Motor Dealers Act 2000, the claim is allowed in the sum of $59,997.68. [2] Pursuant to section 489 of the Property Agents and Motor Dealers Act 2000, at the expiration of the appeal period the Chief Executive must pay to Elders Insurance Limited the sum of $59,997.68 from the Claim Fund, and if there is an appeal, payment must not be made until after the appeal is finally decided. [3] Pursuant to section 488(3)(c) of the Property Agents and Motor Dealers Act 2000 the Respondents, Insurserv Australia Pty Limited and Mr Scott Andrew Hallewell are named as the persons liable for the financial loss of Elders Insurance Limited. [4] Upon payment from the Claim Fund and pursuant to sections 490 and 530 of the Property Agents and Motor Dealers Act 2000, the Respondents, Insurserv Australia Pty Limited and Mr Scott Andrew Hallewell are jointly and severally liable to reimburse the Claim Fund by paying the sum of $59,997.68 to the Chief Executive of Employment, Economic Development and Innovation. -- 7 of 7 --