Chief Executive, Department of Justice and Attorney General v Mikealy Pty Ltd and Anor [2012] QCAT 428

CITATION: Chief Executive, Department of Justice and Attorney General v Mikealy Pty Ltd and Anor [2012] QCAT 428 PARTIES: Chief Executive, Department of Justice and Attorney General v Mikealy Pty Ltd Keith Frederick Chadban APPLICATION NUMBER: OCR171-12 MATTER TYPE: Occupational regulation matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Peta Stilgoe, Senior Member DELIVERED ON: 10 September 2012 DELIVERED AT: Brisbane ORDERS MADE: [1] Mikealy Pty Ltd and Keith Frederick Chadban are reprimanded. [2] Mikealy Pty Ltd and Keith Frederick Chadban are disqualified from holding a licence or registration certification under the Property Agents and Motor Dealers Act 2000 for a period of 10 years. [3] Keith Frederick Chadban is disqualified from being an Executive Officer of a corporation that holds a licence or registration certificate under the Property Agents and Motor Dealers Act 2000 for a period of 10 years. [4] Mikealy Pty Ltd shall pay to the Chief Executive Department of Justice and Attorney General a fine of $8,250 by 1 December 2012. [5] Keith Frederick Chadban shall pay to the Chief Executive Department of Justice and Attorney General a fine of $5,500 by 1 December 2012. -- 1 of 4 -- 2 CATCHWORDS: REAL ESTATE AGENT – where monies transferred from trust to business account – where trust account not kept as required – where trust account ledgers overdrawn - where no consumer suffered loss – where money transferred to keep business going Property Agents and Motor Dealers Act 2000, ss 10, 496 DTFTWID v Cornwell [2005] QCCTPAMD 14 Chief Executive DEEDI v Schellaars [2010] QCAT 477 APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009. REASONS FOR DECISION [1] Mr Chadban was the holder of a property agent’s licence until 29 October 2011. He was the working director of Mikealy Pty Ltd, which was also a licensee and traded under the name of Harcourts Buderim. [2] The Chief Executive has referred both Mr Chadban and Mikealy to the tribunal for disciplinary proceedings under s 496 of the Property Agents and Motor Dealers Act 2000. The Chief Executive asserts that both Mikealy and Mr Chadban have breached the Act and in carrying on business has been incompetent and acted in an unprofessional way. If the tribunal finds that there are grounds for disciplinary action against the company, then Mr Chadban, as executive officer of the company, must take responsibility for its actions. [3] The Chief Executive says that Mr Chadban withdrew money from the trust account on a number of occasions between March and June 2010 and deposited the money to the general account. An examination of the trust account records shows 30 withdrawals from trust between 1 March 2010 and 30 June 2010. On 17 June, Mr Chadban deposited $150,000 to the general account and, one day later, deposited $144,818.72 to the trust account. The inescapable inference is that the deposit of $150,000 should have been made to trust. [4] A report from David Bromet & Associates, auditor of the trust account, states that the account had not been kept in accordance with the requirements of PAMDA, that the trust account did not reconcile properly each month and that trust creditors’ ledgers had been overdrawn. [5] I am satisfied that Mr Chadban has breached numerous provisions of PAMDA. Because the breaches involve trust money, I am satisfied that the breaches are serious and that there are grounds for disciplinary action against Mr Chadban and the company. -- 2 of 4 -- 3 Penalty [6] One of the objects of PAMDA is to protect consumers against particular undesirable practices associated with the promotion of residential property.1 The objects of the Act are achieved mainly through: a) Ensuring only suitable persons are licensed.2 b) Ensuring that those who carry on business maintain close personal supervision of the way the business is carried on.3 c) Providing protection for consumers in their dealings with licensees.4 [7] The Chief Executive seeks the following penalty: a) A reprimand. b) That both the company and Mr Chadban be disqualified from holding any form of licence, or being an executive officer of a corporation that holds any form of licence, for a period of ten years. c) A fine of $7,500 for the company and $5,000 for Mr Chadban. [8] The Chief Executive has referred me to Chief Executive DTFTWID v Cornwell5 and Chief Executive DEEDI v Schellaars6. [9] Mr Cornwell withdrew a total of $36,612.30 from trust in five separate transactions. No member of the public suffered any loss and Mr Cornwell cooperated fully with the Chief Executive. The tribunal disqualified him from holding a licence for a period of 10 years and imposed a fine of $3,000. [10] Ms Schellaars withdrew $42,239.50 from trust in 23 separate transactions. She was disqualified from holding a licence for five years. The tribunal took into account that no consumers had suffered any loss, she had made full admissions and none of the money had been used in the operation of her business. [11] Mr Chadban admits that he used the funds to pay wages. He says that he did not use the money for his own purposes but simply to keep the business going. He says that he was running the business from a hospital bed and had not paid himself a wage for 3½ years. Mr Chadban says he is now bankrupt and “very disabled”. Mr Chadban has not provided any evidence to support these assertions. [12] I also note that Mr Chadban has not cooperated with the Chief Executive, despite being given a number of opportunities to do so. [13] As the Chief Executive has pointed out, an increasing number of licensees are presenting to the tribunal because they have used trust money to fund the operation of the business. Trust accounts exist because it is money placed “on trust” with the licensee and is not available to the licensee. That is a fundamental principle underlying the protection of consumers and the 1 Section 10(2) PAMDA. 2 Section 10(3)(a)(i) PAMDA. 3 Section 10(3)(a)(ii) PAMDA. 4 Section 10(3)(b)(i) PAMDA. 5 [2005] CCT X007 - 05. 6 [2010] QCAT 477. -- 3 of 4 -- 4 regulation of the industry. There is no excuse for any licensee to use trust money for business expenses. If Mr Chadban had been experiencing difficulty in maintaining his business, and he was running it from a hospital bed, he should have sought help. I agree with the Chief Executive’s submission that a substantial period of disqualification is warranted. Mr Chadban’s conduct is more serious that that of Mr Cornwell. He should be disqualified for ten years. He should also be prohibited from acting as an executive officer of any licensee for the same period. [14] In Schellaars, I imposed a fine of $5,000. The imposition of a fine should be referenced to the penalty unit that applied at the time of the decision. In 2010, a penalty unit was $100. Today, a penalty unit is $110. Mr Chadban should pay a fine of 50 penalty units, or $5,500. [15] Corporate respondents are commonly fined a higher amount, usually 50%. Although Mr Chadban says that he “filed for bankruptcy” of Mikealy Pty Ltd, an ASIC search on 5 September 2012 shows that the company is still trading. I order Mikealy Pty Ltd pay a fine of $8,250. Orders [1] Mikealy Pty Ltd and Keith Frederick Chadban are reprimanded. [2] Mikealy Pty Ltd and Keith Frederick Chadban are disqualified from holding a licence or registration certification under the Property Agents and Motor Dealers Act 2000 for a period of 10 years. [3] Keith Frederick Chadban is disqualified from being an Executive Officer of a corporation that holds a licence or registration certificate under the Property Agents and Motor Dealers Act 2000 for a period of 10 years. [4] Mikealy Pty Ltd shall pay to the Chief Executive Department of Justice and Attorney General a fine of $8,250 by 1 December 2012. [5] Keith Frederick Chadban shall pay to the Chief Executive Department of Justice and Attorney General a fine of $5,500 by 1 December 2012. -- 4 of 4 --