Alford v Auctioneers and Agents Committee [2002] QDC 130

DISTRICT COURT OF QUEENSLAND CITATION: Alford v Auctioneers and Agents Committee [2002] QDC 130 PARTIES: LINDSEY CLAUDE ALFORD Applicant v AUCTIONEERS AND AGENTS COMMITTEE Respondent FILE NO/S: D2939 of 2001 DIVISION: PROCEEDING: Appeal ORIGINATING COURT: District Court Brisbane DELIVERED ON: 24 May 2002 DELIVERED AT: Brisbane HEARING DATE: 17 May 2002 JUDGE: McGill DCJ ORDER: Appeal allowed; decision of respondent of 14 May 2001 set aside; order in lieu that the real estate agent’s licence of the appellant be renewed subject to the condition that, while he remains an undischarged bankrupt, he not operate a trust account. CATCHWORDS: APPEAL AND NEW TRIAL – Appellate Jurisdiction – occupational tribunal – Auctioneers and Agents Committee – qualifications for licence – fit and proper person – Auctioneers and Agents Act 1971 s.45(1) PRINCIPAL AND AGENT – Statutory provisions relating to agents – licensing – fit and proper person – effect of bankruptcy – Auctioneers and Agents Act 1971 s.45(1) COUNSEL: The appellant appeared in person R Vize for the respondent SOLICITORS: Crown Solicitor for the respondent [1] This is an appeal pursuant to s.17(1)(a) of the Auctioneers and Agents Act 1971 (“the Act”) from a decision of the respondent made under Part 3 of the Act. On 27 April 2001 the appellant who was the holder of a real estate agents licence applied for a renewal of that licence in accordance with s.25 of the Act. On 14 May -- 1 of 6 -- 2 2001 the appellant’s application was considered by a meeting of the Real Estate Agents and Auctioneers subcommittee of the respondent, and was refused. The appellant was notified of that decision by a letter sent on 17 May 2001. 1 This appeal is brought from that decision to refuse the application. [2] I considered the nature of an appeal under s.17 of the Act recently, in Stephens v Auctioneers and Agents Committee (Appeal 5069/00, 16/5/02, unreported) when I followed the decision of Mylne DCJ in Amos v Auctioneers and Agents Committee (1980) 6 QL 290. The appeal is in effect a re-hearing de novo, that is to say it is necessary for the appeal to be decided on the basis that the evidence put before the District Court, although to some extent that can be achieved by putting in evidence material which was before the Committee (or in this case the Subcommittee). There was no hearing before either the Subcommittee or the Committee so there is no question of a transcript of oral evidence in the present case. The issue before me is the issue which was before the Committee, namely, should the appellant’s licence be renewed? The appellant is seeking the renewal of his licence and therefore has the onus. I am not concerned with whether there was any error on the part of the Committee or the Subcommittee, or for that matter whether there was any defect in the procedure by which they arrived at their decision. Relevant considerations [3] By s.45(1) renewal of a real estate agents licence should not be granted to an applicant who: (a) is not resident in Queensland or within 65km of the boundary of Queensland; or (b) is not 21 years of age; or (c) is not a person of good fame and character; or (d) does not have business premises complying with the prescribed requirements (if any); or (e) is not a fit and proper person to hold such a licence. [4] There was no dispute in the present case about any of the matters other than paragraph (e). It is a matter for the appellant to show that he is a fit and proper person to hold such a licence: Sobey v Commercial Agents Board (1979) 22 SASR 70 at 76. [5] The concept of fitness and propriety is a broad one. It has been said that the very purpose of the expression is to give the widest scope for judgment and indeed for rejection, and that fitness for something involves honesty, knowledge of what is required of a person in such a position, and the ability or capacity to do what is required, in terms of physical, mental and financial capacity: Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127 at 156-7 per Dixon CJ, McTiernan and Webb JJ. 1 Affidavit of J L Maher filed 9 October 2001 para 9, exhibit LJM7. -- 2 of 6 -- 3 [6] For the purposes of an appeal by way of re-hearing de novo, the issue is not whether on the material before the Tribunal and at that time the appellant was fit, but whether on the material now before me the appellant has shown that he is now fit to hold the licence: Builders Licensing Board v Spurway Constructions (Sydney) Pty Ltd (1976) 135 CLR 616; Re: Fredericks [1984] 1 Qd R 438; Conte v Auctioneers and Agents Committee (1996) 18 QL 57. [7] I heard the appeal on 17 May 2002. At the conclusion of the hearing I ordered that the appeal be allowed and that the appellant’s real estate agent’s licence be renewed for a period of 12 months from the date on which it otherwise expired, subject to a condition, and said that I would give my reasons for that decision later. These are those reasons. Background [8] The appellant is 55 years of age, a graduate of Sydney University, and has been self employed for most of the last 32 years, for almost all of which he has been involved in the business of real estate agent, property development, property consultant and property management. He has had long experience as a real estate agent, and there has never been any grounds for concern about his professional competence or propriety in the conduct of his real estate agency work. In more recent years however his business had moved more into property development rather than conventional real estate agency work, and he has been involved in various business activities of that kind. Some of these were more successful than others; as a result he has at different times found himself in some financial problems, and in the early 1980’s entered into a composition with his creditors under the Bankruptcy Act. More recently he was made bankrupt as a result of a failure of some schemes to develop commercial properties,2 and was at the time of his application and remains an undischarged bankrupt. Bankruptcy [9] The respondent does not take the attitude that bankruptcy necessarily disqualifies a person from holding a real estate agents licence, a position which would in any event not be appropriate in the absence of some such express disqualification in the Act. The object of having such a policy is to assist with consistency and fairness in the approach of the Committee in specific cases, although each individual case must be dealt with on its merits. Matters likely to be of particular importance are the reason for the bankruptcy, whether it arose out of the activities of the licensee as a licensee, and whether there has been a breach of the bankruptcy law by the licensee. There are also some practical considerations about the effect of bankruptcy, to which I shall return. [10] The appellant’s explanation for his bankruptcy is that he became involved through his redevelopment projects with a particular company which was represented by those operating it as a substantial company, although in fact it was without assets. There were three projects of the appellant involved. One was the refurbishment 2 This was done through a company, but the appellant had given a personal guarantee for the major indebtedness of the company. The separate identity of the company is of no significance, so I shall disregard it. -- 3 of 6 -- 4 of some retail premises in South Brisbane. These premises were purchased and refurbished by the appellant, and were then leased to this company, but the rent was not paid by it and ultimately the leases had to be terminated. There were then attempts to find another tenant, and an alternative prospective tenant was located but that tenant, effectively at the last minute, declined to proceed. That was the last straw and as a result the appellant went bankrupt. [11] There was also a redevelopment in Warwick, where a strip of six new fast food outlets were constructed and opened. Three of these were leased to this same company, but the lease was terminated shortly after the development began to trade, and apparently the businesses were abandoned by the company. For some time the appellant tried to keep the businesses going himself, while he sold them, but they were not operated profitably and that ultimately made the situation worse. In addition there was another proposed development at a different provincial city where this company’s interest in taking space encouraged the appellant to proceed with the development. [12] Not only did the failure of this company deprive the appellant of the benefit of the tenancies concerned, the appellant also lent some money to this company with the loan secured by second mortgage on some property owned by it, and that money was also lost by him. Because the same tenant was involved in all three of the projects, the effect on the appellant of its failure was greater than the effect the failure of a tenant normally would have. [13] I had before me the evidence of a forensic accountant who had examined a number of the documents associated with the transactions, and was able to confirm that on the basis of the material provided by the appellant his bankruptcy was the result of the actions of this tenant. The documents were put in evidence before me. He also expressed the opinion that, had the tenant not failed but paid the rent as promised under the leases the development would have been successful and the appellant would not have become bankrupt. [14] There is no doubt that there was some criminal fraud on the part of some of those behind the company, since two of the individuals ultimately pleaded guilty to criminal charges involving either fraud of passing of unsatisfied cheques to the appellant’s company. The third person behind the company was also charged, but there were some other charges as well and ultimately he agreed to plead guilty to some charges in return for other charges, including those involving the appellant, being dropped. [15] In these circumstances I am satisfied that the appellant has shown that the immediate cause of his bankruptcy was that he became involved as a landlord with a company which was without substance and which tied up certain rental premises for a time without ultimately producing any financial reward. Even if the periods during which the company was actually in occupation of the premises under leases without paying rent were fairly short, the practical effect would have been much greater, because there would have been a significant period prior to the commencement date of each lease during which the appellant was relying on the lease to that company coming into effect in and refraining from otherwise marketing the premises. Indeed it may be that one or two of the developments would not have proceeded at all had it not been for the involvement of this -- 4 of 6 -- 5 company. Where such developments are constructed with borrowed money, if there is any significant delay in realising a return by way of rent the consequences can be severe, since the appellant was relying on the return from rental of the properties to pay the cost of financing them. [16] Once the properties came to be sold by a mortgagee in possession, they were sold at prices which were much less than valuation which had been given previously, as not uncommonly occurs in such circumstances. Accordingly it is unsurprising that there would be in such a situation a substantial deficit. [17] There is nothing to indicate that the appellant was involved with these people other than as a victim of their criminal and fraudulent activity. It was suggested in cross-examination that the appellant may not have been prudent in relying as much as he did on this particular company. He said however and I accept that he had made some attempt to confirm the financial standing of the company, and I suspect that in such a situation it would be naturally tempting to welcome such a tenant in a range of developments, particularly if it appeared that there were prospects of a lengthy and fruitful relationship with it. In a situation like this it is sometimes easy to criticise with the benefit of hindsight. I do not think that there was any lack of prudence which could amount to unfitness. [18] Accordingly the circumstances of the bankruptcy do not indicate that it arose because of any wrongful or improper conduct on his part, or because of any financial irresponsibility on his part. This is not a situation where the bankruptcy reflects adversely on the character or competence of the appellant. [19] The appellant put forward, by way of affidavit evidence or in letters, various tributes to his character and ability. Inevitably in these proceedings there has been some focus on the financial misfortunes of the appellant, but there have been many other developments or other projects with which he has been associated over the years which have been successful. Depression [20] One other matter that emerged was that at the time when the appellant was having these difficulties, he was also battling with depression. He was referred in July 1998 to a psychiatrist, who expressed the opinion in evidence that at that time the appellant was suffering very severe depression, although he was not hospitalised. He urged the appellant to give up stressful activities, but that did not occur until the bankruptcy. The appellant has been treated with a range of therapies, including medication, which is continuing. [21] At one time the doctor concerned had written various reports to the effect that the appellant was prevented by his depression from being able to follow his usual occupation. At that time that would have been a reference to the occupation of property developer rather than real estate agent, but there is some relationship between the two and this could well be a factor appropriately taken into account in determining whether a person was fit to hold a real estate agent’s licence. [22] Whatever the difficulties in the past however, the treating psychiatrist, who is still to some extent treating the appellant, was called and expressed the firm opinion -- 5 of 6 -- 6 that the appellant is now very close to being cured, and that there would be no problem in his now carrying out the functions of a real estate agent. I should add that the very careful and thorough way in which the appellant prepared and conducted the appeal before me certainly gave no hint that any problems with depression were continuing to impact adversely on his efficiency; on the contrary it was one of the most impressive performances by a litigant in person I have ever seen, and a tribute to his intelligence and ability. There is in my opinion now no unfitness because of any psychiatric illness. [23] No other issues emerged in the course of the hearing of the appeal, or arose from the evidence before me. Subject to one practical matter therefore I am satisfied that the appellant has shown that he is a fit and proper person to hold a real estate agent’s licence. The practical consideration is that I am concerned about the practicalities of the appellant’s holding and operating a trust account at a time when he is an undischarged bankrupt. I raised this issue with the parties, and Counsel for the respondent helpfully referred to an earlier appeal under the Act where an order was made that a licence be conditional upon that appellant’s not operating a trust account while he was an undischarged bankrupt. The appellant did not oppose the imposition of a condition in those terms on the renewed licence. The appellant has lately been engaged in study rather than work in any field associated with real estate, although that was apparently in part as a result of the refusal of the respondent to renew his licence. He told me however that there would be no practical obstacle to his working as a real estate agent without the necessity to operate a trust account while he remains an undischarged bankrupt. He told me that his wife is a licensed real estate agent. [24] There is power in s.26(10) to impose terms and conditions on a renewal of a licence, and on appeal the effect of s.17(3) is that the Court stands in the shoes of the respondent, and can do whatever the respondent could have done in the circumstances including the imposition of conditions. Accordingly I can renew the licence subject to that condition. [25] For these reasons therefore the appeal was allowed and I ordered that the appellant’s licence be renewed subject to the condition that while he remains an undischarged bankrupt he not operate a trust account. I ordered the respondent pay the costs to be assessed; although the appellant conducted his appeal himself, he had incurred some costs by way of outlays and witnesses expenses, and these are recoverable. -- 6 of 6 --