David Hambleton as joint and several Liquidator of Sky 5 Pty Ltd and Anor v Tuxford (No.2) [2011] QCAT 553

CITATION: David Hambleton as joint and several Liquidator of Sky 5 Pty Ltd and Anor v Tuxford (No.2) [2011] QCAT 553 PARTIES: David Hambleton as joint and several Liquidator of Sky 5 Pty Ltd (First Applicant) Francis Rashu (Second Applicant) v Stanley Gordon Tuxford APPLICATION NUMBER: OCL020-11 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] Leave is granted to Francis Rashu to be joined as an applicant. [2] To the extent necessary the time limit fixed for making a claim by Francis Rashu under the Property Agents and Motor Dealers Act 2000 is extended. [3] Pursuant to section 530 of the Property Agents and Motor Dealers Act 2000, the Chief Executive of the Department of Employment, Economic Development and Innovation pay to Francis Rashu the sum of $19,847.10. [4] Pursuant to section 489 of the Property Agents and Motor Dealers Act 2000, the Chief Executive shall not pay the amount until the end of the period allowed for appeal, and if there is an appeal, until the appeal is finally decided. [5] Pursuant to section 488(3)(c) of the Property Agents and Motor Dealers Act 2000 the respondent Mr Tuxford is the person who contravened in terms -- 1 of 8 -- 2 of section 470(1) and who is liable for the financial loss of the second applicant. [6] Upon payment of the sum of $19,847.10 from the Claim Fund to Francis Rashu, the respondent Mr Tuxford is liable to reimburse the Claim Fund by paying the sum of $19,847.10 to the Chief Executive of Employment, Economic Development and Innovation CATCHWORDS: PROPERTY AGENTS AND MOTOR DEALERS – Claim against the fund by liquidator – whether an event which caused financial loss – whether neglect or default of claimant reduces amount payable – joinder of purchaser who suffered loss – extension of time Property Agents and Motor Dealers Act 2000, ss 469, 470, 476, 488, 530, 574 Queensland Civil and Administrative Tribunal Act 2009, ss 42, 61 APPEARANCES and REPRESENTATION (if any): These matters were heard on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009. REASONS FOR DECISION Background [1] The Tribunal has received a number of claims against the claim fund set up under the Property Agents and Motor Dealers Act 2000 (the Act) with the Department of Employment, Economic Development and Innovation (―OFT‖) involving Mr Tuxford and Mr Hutchinson. The claims essentially arise from allegations against Mr Tuxford and Mr Hutchinson in similar circumstances although amounts claimed differ. These claims were referred by OFT to this Tribunal for determination.1 Mr Tuxford and Mr Hutchinson have chosen not to participate in the Tribunal proceedings. [2] Many of the claims are made by Mr Hambleton as liquidator of Sky 5 Pty Ltd in respect of claims admitted in the liquidation and in respect of which some dividends have been paid. [3] This claim for $30,000 is made in respect of a contract entered into by Francis Rashu (―the Purchaser‖). 1 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 8 -- 3 [4] In late 2007 but before 30 November 2007 the Purchaser signed a contract to purchase lot 13 Waverley Views Estate, Pimpama from an entity described as Sky Pty Ltd (―the Contract‖) as a result of discussions with Mr Tuxford. [5] On 30 November 2007 the Purchaser paid a deposit in the sum of $30,000 in respect of the Contract. [6] Mr Tuxford directed the Purchaser to pay the deposit to a bank account and represented that the bank account was in the name Operation Homebuy. [7] Under the Contract the Deposit Holder was stated to be Sky Pty Ltd and the Agent was left blank. [8] There is no evidence before the Tribunal as to the directorships or shareholding of Sky Pty Ltd or whether an entity in that name actually existed. [9] OFT investigations revealed that the bank account into which the deposit moneys were paid was not an account in the name represented but rather was an account in the name Eco Smart Homes, a business carried on by K & K Development Group Pty Ltd. [10] The Purchaser gave evidence that at the time he was requested to pay the deposit moneys he knew that the business Operation Homebuy was a business operated by Mr Tuxford. [11] An external administrator was appointed to Sky 5 Pty Ltd effective 30 April 2008. Subsequently liquidators were appointed. [12] The Purchaser lodged a proof of debt in the liquidation which has been accepted. The liquidator has therefore acknowledged that the vendor was Sky 5 Pty Ltd and that Sky 5 Pty Ltd defaulted on the Contract. [13] The Purchaser has been paid the sum of $10,152.90 being a dividend of $0.33843 in the dollar. [14] The deposit had not been placed into a trust account, had been disbursed and was not available to be refunded to the Purchaser. Licence and Corporate and Business Name Details [15] Mr Tuxford held a Real Estate Agent Principal‘s Licence from 29 October 2004 and valid until 29 October 2010. [16] Mr Tuxford commenced carrying on business under the business name Operation Homebuy (Australia) on 1 July 2004. The business name registration was renewed in August 2007. -- 3 of 8 -- 4 [17] Mr Hutchinson held a Real Estate Agent Principal‘s Licence from 17 April 2002 which expired 17 April 2008 and a real estate corporation licence from 17 April 2002 which expired 17 April 2007. [18] Sky 5 Pty Ltd and other Sky corporate entities appointed Mr Tuxford as their agent by a PAMD Form 22a dated 18 June 2006 in respect of Lots 1 – 98 ―Waverley Views‖, Pimpama. [19] Mr Hutchinson was appointed a director of Sky 5 Pty Ltd on 22 November 2004 and remained a director at all relevant times. Mr Hutchinson was one of two equal shareholders of Sky 5 Pty Ltd at all relevant times. [20] Sky 5 Pty Ltd did not hold a real estate corporation licence and did not maintain a trust account under the Act. [21] Mr Hutchinson was appointed a director of K & K Development Group Pty Ltd on 23 April 2007 and remained a director at all relevant times. Mr Hutchinson was one of two equal shareholders of K & K Development Group Pty Ltd at all relevant times. [22] Liquidators were appointed to K & K Development Group Pty Ltd on 20 June 2008. The report to creditors dated 8 August 2008 stated that there were no assets owned by the company. [23] Mr Hutchinson and his daughter, Emma Hutchinson, and Sky 1 Pty Ltd commenced carrying on business under the business name Sky Group of Companies on 1 April 2004 and ceased to carry on such a business on 1 August 2006. From that time the business was registered as being carried on by Haloom 1 Pty Ltd. There is no evidence before the Tribunal as to the directorships or shareholding of Haloom Pty Ltd. [24] K & K Development Group Pty Ltd commenced carrying on business under the business name Eco Smart Homes on 2 May 2007 and ceased to carry on such a business on 26 July 2009. [25] Land Equity Pty Ltd entered into contracts with Sky 5 Pty Ltd and other Sky corporate entities for the sale of land in the Waverley Views Estate which was required to be subdivided. [26] Sky 5 Pty Ltd entered into contracts with various persons to ‗on-sell‘ lots in the Waverley Views Estate. These on-sale contracts were effectively subject to the plan of subdivision registering and settlement of the relevant Land Equity and Sky 5 contract. [27] Land Equity gained registration of the relevant lots in April 2009. Claim [28] Mr Hambleton as liquidator of Sky 5 Pty Ltd claims loss suffered by Sky 5 Pty Ltd‘s inability to complete contracts with Land Equity and therefore the resulting liability to return the deposits to creditors of Sky 5 Pty Ltd in respect of contracts for the sale of land at Waverley Views Estate. -- 4 of 8 -- 5 Law [29] 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. [30] The events are actions by a relevant person. [31] Section 469 of the Act provides that relevant person includes a licensee, former licensee and a person who is not a licensee but who acts as a licensee. [32] 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. [33] If the Tribunal allows the claim wholly or partly it must decide the amount of the loss and name the person liable. [34] 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. Discussion and Decision [35] A 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? [36] Section 470(1)(d) of the Act provides that a person may claim against the fund where the person suffers loss because of a contravention of section 11 of the Land Sales Act 1984 by a licensee appointed by the owner of land to which that Act applies or a relevant person employed by the licensee. [37] Mr Tuxford was a licensee appointed by Sky 5 Pty Ltd, the vendor, and contravened section 11 of the Land Sales Act 1984 in failing to ensure the contract provided for an appropriate deposit holder. -- 5 of 8 -- 6 [38] Section 574(1) of the Act provides that a licensee must not represent in any way to someone lese anything that is false or misleading in relation to the sale of property. [39] Mr Tuxford contravened section 574 of the Act as he represented to the Purchaser that the bank account was in the name of Operation Homebuy. The representation was false or misleading and was made in relation to the sale of property. [40] Mr Gregory Fulton, a former employee of Mr Hutchinson gave evidence that Mr Hutchinson handled all financial aspects of the Waverley Views Estate property sales and that all matters associated with any sales or contracts of the Waverley Views Estate were handled directly between Mr Tuxford and Mr Hutchinson. [41] There is insufficient evidence to find that: a) Mr Hutchinson was acting as a relevant person in relation to the sale of this lot at Waverley Views Estate. b) Sky 5 Pty Ltd was a relevant person under the Act. c) K & K Development Group Pty Ltd was a relevant person under the Act. Did the Event Cause Financial Loss? [42] If the deposit had been deposited to an appropriate trust account the moneys would have been available to be repaid to the Purchaser when the Contract did not complete. [43] If Mr Tuxford had not made a false or misleading representation the monies would not have been deposited to K & K Development Group Pty Ltd‘s bank account and been available to be applied to its the benefit. [44] Accordingly the Tribunal finds that Sky 5 Pty Ltd, and the Purchaser suffered financial loss as a consequence of the events. Taking into account the amounts paid to the Purchaser in the liquidation his loss stands at $19,847.10. Section 488(3) Matters [45] In relation to the claim by Sky 5 Pty Ltd , I find that Sky 5 Pty Ltd would not have suffered any loss but for the neglect or default of Sky 5 Pty Ltd. [46] On the balance of probabilities Mr Hutchinson as agent for Sky 5 Pty Ltd directed Mr Tuxford to request the Purchaser to pay the deposit moneys to K & K Development Group Pty Ltd‘s bank account. [47] Mr Hutchinson was a licensed real estate agent and was in a position to know what steps ought to be taken by companies of which he was a director to ensure deposits were secured pending completion of contracts for sale, where the company was the named vendor. -- 6 of 8 -- 7 [48] Sky 5 Pty Ltd failed or neglected to ensure that the contract entered into by it provided in accordance with section 11 of the Land Sales Act 1984 for an appropriate deposit holder. [49] Sky 5 Pty Ltd failed or neglected to ensure that the amounts due to it were deposited to an appropriate trust account. [50] In written submissions received from OFT on 4 August 2011 OFT submits that: a) the appropriate claimant in this proceeding should be the Purchaser; b) it does not oppose the Tribunal extending time to allow the Purchaser to make a claim. [51] In written submissions received from the liquidators on 4 August 2011 the liquidators submit that if the Tribunal is against their submissions that the claim should be allowed then the Tribunal should exercise its powers to substitute the Purchaser as claimant. [52] In these circumstances I order that the Purchaser is joined as an applicant2 and to the extent necessary I extend the time limit fixed for making a claim by the Purchaser under the Act.3 [53] There is no evidence of any default or neglect on the part of the Purchaser or that any amounts of compensation have been ordered to be paid under sections 530A, 572D or 592A of the Act. Section 490 Matters [54] Mr Tuxford contravened the Act and is therefore responsible for the financial loss. [55] There is insufficient evidence to find that Mr Hutchinson contravened the Act. Orders [1] Leave is granted to Francis Rashu to be joined as an applicant. [2] To the extent necessary the time limit fixed for making a claim by Francis Rashu under the Property Agents and Motor Dealers Act 2000 is extended. [3] Pursuant to section 530 of the Property Agents and Motor Dealers Act 2000, the Chief Executive of the Department of Employment, Economic Development and Innovation pay to Francis Rashu the sum of $19,847.10. [4] Pursuant to section 489 of the Property Agents and Motor Dealers Act 2000, the Chief Executive shall not pay the amount until the end of the period 2 Section 42 QCAT Act. 3 Section 61 QCAT Act. -- 7 of 8 -- 8 allowed for appeal, and if there is an appeal, until the appeal is finally decided. [5] Pursuant to section 488(3)(c) of the Property Agents and Motor Dealers Act 2000 the respondent Mr Tuxford is the person who contravened in terms of section 470(1) and who is liable for the financial loss of the applicants. [6] Upon payment of the sum of $19,847.10from the Claim Fund to Francis Rashu, the respondent Mr Tuxford is liable to reimburse the Claim Fund by paying the sum of $19,847.10 to the Chief Executive of Employment, Economic Development and Innovation. -- 8 of 8 --