David Hambleton as joint and several Liquidator of Sky 5 Pty Ltd and Anor v Tuxford and Ors (No.3) [2011] QCAT 554

CITATION: David Hambleton as joint and several Liquidator of Sky 5 Pty Ltd and Anor v Tuxford and Ors (No.3) [2011] QCAT 554 PARTIES: David Hambleton as joint and several Liquidator of Sky 5 Pty Ltd (Applicant OCL021-11) Angus John McDonald (Applicant OCL022-11) v Stanley Gordon Tuxford Kevin George Hutchinson Sky 1 Pty Ltd (in liquidation) Sky 5 Pty Ltd (in liquidation) APPLICATION NUMBER: OCL021-11 / OCL022-11 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] 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 the applicant, Angus McDonald the sum of $131,856.11. [2] 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. [3] 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 applicant, -- 1 of 8 -- 2 Angus McDonald. [4] Upon payment of the sum of $131,856.11 from the Claim Fund to Angus McDonald, the respondent Mr Tuxford is liable to reimburse the Claim Fund by paying the sum of $131,856.11 to the Chief Executive of Employment, Economic Development and Innovation. CATCHWORDS: PROPERTY AGENTS AND MOTOR DEALERS – Claim against the fund by liquidator and purchaser – whether an event which caused financial loss – whether neglect or default of claimant reduces amount payable Property Agents and Motor Dealers Act 2000, ss 469, 470, 476, 488, 492, 530 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. In some instances claims have been made by the liquidator and by the purchaser in respect of the same contracts for the sale of land. [3] The claim in OCL021-11 is for $190,000 and made by the liquidator in respect of five contracts entered into by Angus McDonald (―the Purchaser‖). [4] The claim in OCL022-11 is made by the Purchaser in respect of the same five contracts. The Purchaser originally sought payment from the fund of 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 $227,851.81 being $190,000 for deposits paid, interest in the sum of $31,694 and $6,157.81 in respect of legal costs incurred in 2008. [5] On or about 12 April 2011 the Purchaser sought to amend his claim for interest to an amount of $77,460.55 as at that date pursuant to rule 283 of the Uniform Civil Procedure Rules 1999. [6] The Purchaser‘s amended claim was stated to be in the amount of $273,618.36. [7] On 22 June 2007 the Purchaser paid a cash deposit in the sum of $50,000 in respect of a contract to purchase lot 11 Waverley Views Estate, Pimpama from Sky 5 Pty Ltd (―the Lot 11 Contract‖). The deposit was paid into a bank account in the name of Sky 1 Pty Ltd at the direction of Mr Tuxford. [8] On 14 December 2006 the Purchaser paid a cash deposit in the sum of $10,000 in respect of a contract to purchase lot 74 Waverley Views Estate, Pimpama from Sky 5 Pty Ltd (―the Lot 74 Contract‖). The deposit was paid into a bank account in the name of Sky 1 Pty Ltd at the direction of Mr Tuxford. [9] On 14 December 2006 the Purchaser paid a cash deposit in the sum of $50,000 in respect of a contract to purchase lot 95 Waverley Views Estate, Pimpama from Sky 5 Pty Ltd (―the Lot 95 Contract‖). The deposit was paid into a bank account in the name of Sky 1 Pty Ltd at the direction of Mr Tuxford. [10] On 8 February 2007 the Purchaser paid a cash deposit in the sum of $30,000 in respect of a contract to purchase lot 77 Waverley Views Estate, Pimpama from Sky 5 Pty Ltd (―the Lot 77 Contract‖). The deposit was paid into a bank account in the name of Sky 1 Pty Ltd at the direction of Mr Tuxford. [11] On 8 March 2007 the Purchaser paid a cash deposit in the sum of $50,000 in respect of a contract to purchase lot 96 Waverley Views Estate, Pimpama from Sky 5 Pty Ltd (―the Lot 96 Contract‖). The deposit was paid into a bank account in the name of Sky 1 Pty Ltd at the direction of Mr Tuxford. [12] Under each of the Contracts the Deposit Holder was stated to be Sky 5 Pty Ltd and the Agent was stated to be ―N/A‖. [13] Mr Tuxford witnessed the Purchaser‘s signature and the Vendor‘s signature on each of the Contracts. [14] Mr Hutchinson appears to have signed each of the Contracts on behalf of the Vendor. [15] The Purchaser gave evidence that: a) he met Mr Hutchinson at the home of Mr Tuxford in December 2006; b) Mr Tuxford told him that Mr Hutchinson was a director of Sky 1 Pty Ltd and a real estate agent; -- 3 of 8 -- 4 c) Mr Tuxford and Mr Hutchinson put pressure on him to pay funds into a company named Sky 1 Pty Ltd to secure the purchases; d) Mr Tuxford accompanied him to the bank on 14 December 2006 while he made the bank transfer in respect of Lots 74 and 95; e) he incurred legal costs in the sum of $6,157.81 during the period April to June 2008. [16] An external administrator was appointed to Sky 5 Pty Ltd effective 30 April 2008. Subsequently liquidators were appointed. [17] Sky 5 Pty Ltd defaulted on all Contracts. [18] The deposits had not been placed into a trust account, had been disbursed and were not available to be refunded to the Purchaser. [19] The Purchaser lodged a proof of debt in the liquidation and has been paid the sum of $64,301.70 being a dividend of $0.33843 in the dollar. Licence and Corporate and Business Name Details [20] Mr Tuxford held a Real Estate Agent Principal‘s Licence from 29 October 2004 and valid until 29 October 2010. [21] 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. [22] 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. [23] 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. [24] Sky 5 Pty Ltd did not hold a real estate corporation licence and did not maintain a trust account under the Act. [25] Mr Hutchinson was appointed a director of Sky 1 Pty Ltd on 19 November 2004 and remained a director at all relevant times. Mr Hutchinson was one of two equal shareholders of Sky 1 Pty Ltd at all relevant times. [26] Sky 1 Pty Ltd did not hold a real estate corporation licence and did not maintain a trust account under the Act. [27] Liquidators were appointed to Sky 1 Pty Ltd effective 26 February 2008. [28] 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. -- 4 of 8 -- 5 [29] 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. [30] Land Equity gained registration of the relevant lots in April 2009. Claim [31] 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. Law [32] 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. [33] The events are actions by a relevant person. [34] 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. [35] 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. [36] If the Tribunal allows the claim wholly or partly it must decide the amount of the loss and name the person liable. [37] 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. [38] Section 492(2) of the Act provides that a claimant may not recover from the fund for a single claim an amount more than $200,000. -- 5 of 8 -- 6 [39] Section 492(5) of the Act provides that interest is not payable from the fund in relation to a claim allowed against the fund. [40] No amount can be payable for interest claimed by the Purchaser and his claim does not therefore exceed $200,000. Discussion and Decision [41] 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? [42] 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. [43] 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 and that the deposit moneys were paid to such a person. [44] There is no evidence that Mr Tuxford or Mr Hutchinson maintained a trust account as required by the Act at the relevant time. [45] 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. [46] There is insufficient evidence to find that: a) Mr Hutchinson was acting as a relevant person in relation to the sale of these lots at Waverley Views Estate. b) Sky 5 Pty Ltd was a relevant person under the Act. c) Sky 1 Pty Ltd was a relevant person under the Act or either a licensee or an employee of a licensee appointed by the owner of land. Did the Event Cause Financial Loss? [47] If the deposits had been deposited to an appropriate trust account the moneys would have been available to be repaid to the Purchaser when the Contracts did not complete and the Purchaser would not have incurred legal costs. -- 6 of 8 -- 7 [48] 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 $125,698.30 in respect of the deposit moneys paid and $6,157.81 for legal costs, a total of $131,856.11. Section 488(3) Matters [49] 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. [50] On the balance of probabilities Mr Hutchinson as agent for Sky 5 Pty Ltd instructed the Purchaser or directed Mr Tuxford to instruct the Purchaser to deposit moneys to the bank account of Sky 1 Pty Ltd on each occasion. [51] 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. [52] Sky 5 Pty Ltd failed or neglected to ensure that the contracts executed by it provided in accordance with section 11 of the Land Sales Act 1984 for an appropriate deposit holder. [53] Sky 5 Pty Ltd failed or neglected to ensure that the amounts to be received by it were deposited to an appropriate trust account. [54] 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 [55] Mr Tuxford contravened the Act and is therefore responsible for the financial loss. [56] There is insufficient evidence to find that Mr Hutchinson contravened the Act. Orders [1] 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 the applicant, Angus McDonald the sum of $131,856.11. [2] 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. [3] 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 -- 7 of 8 -- 8 section 470(1) and who is liable for the financial loss of the applicant, Angus McDonald. [4] Upon payment of the sum of $131,856.11 from the Claim Fund to Angus McDonald, the respondent Mr Tuxford is liable to reimburse the Claim Fund by paying the sum of $131,856.11 to the Chief Executive of Employment, Economic Development and Innovation. -- 8 of 8 --