Chief Executive, Department of Justice and Attorney General v SND (Aust) Pty Ltd (under external administration) and Anor [2012] QCAT 429

CITATION: Chief Executive, Department of Justice and Attorney General v SND (Aust) Pty Ltd (under external administration) and Anor [2012] QCAT 429 PARTIES: Chief Executive, Department of Justice and Attorney General v SND (Aust) Pty Ltd (under external administration) t/as SV Partners Shaun Nicholas Darcy APPLICATION NUMBER: OCR202-12 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. SND (Aust) Pty Ltd and Shaun Nicholas Darcy are reprimanded. 2. Shaun Nicholas Darcy shall pay to the Chief Executive Department of Justice and Attorney General a fine of $20,000 by 1 December 2012. CATCHWORDS: REAL ESTATE AGENT – where agent pre- drew commission – where agent had consent to pre-draw commission Property Agents and Motor Dealers Act 2000, ss 10, 365, 385, 496 Chief Executive DTFTWID v Cornwell [2005] QCCTPAMD 49 Chief Executive DJAG v Brisbane City Student Accommodation Pty Ltd OCR220- 11 APPEARANCES and REPRESENTATION (if any): -- 1 of 5 -- 2 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] SND (Aust) Pty Ltd traded as Raine & Horne Palm Beach/Currumbin. Mr Darcy was the sole director of the company. Both the company and Mr Darcy were licensed real estate agents. [2] Mr and Mrs Best signed a contract for the purchase of a property through SND. The contract required a deposit of $29,250. They paid that deposit by two instalments. [3] SND went into liquidation in November 2008. [4] In October 2009, Mr and Mrs Best withdrew their offer to purchase the property. SND did not return the deposit to them. SND’s banking records show that the trust account had a zero balance. [5] The Chief Executive has referred SND and Mr Darcy to the tribunal for disciplinary proceedings under s 496 of the Property Agents and Motor Dealers Act 2000 asserting that they are not suitable persons to hold a licence and/or that they have been carrying on business in an unprofessional way. The particulars of that assertion are that they have disbursed trust account funds without authority and failed to lodge audit reports as required. [6] The contract Mr and Mrs Best signed had a settlement date of about 12 months. Mr Darcy says he received advice that the commission could be released before settlement if both seller and purchaser consented. Mr Darcy says he received that advice from both parties’ solicitors and a senior trainer of the REIQ. Mr Darcy has not provided statements from any of these parties. He has not provided a copy of any advice in writing. [7] Mr Darcy says that he obtained the necessary letters of consent. He is not able to supply copies to the tribunal but he has provided statutory declarations from Angus Walker and Tina Palushi confirming that they did obtain their clients’ written consent to the early payment of commission. [8] Mr Best provided a statement to the Chief Executive. He says nothing about a request for the early release of the deposit although he does say that he believed the money was still in trust. [9] Even though another agency handled the sale on behalf of the estate, Mr Darcy was the relevant sales person at that agency. He says that, because he had already received commission, he instructed sales staff that no commission was payable on the sale and that he alone would handle the transaction. He has provided statutory declarations from sales staff confirming that Mr Darcy did give those instructions. [10] Mr Darcy says that Mr Best rang him on several occasions wanting to avoid the contract of sale because of family issues. Mr Darcy says he told Mr Best that the contract was unconditional and Mr Best advised him that his solicitor had told him the same thing. -- 2 of 5 -- 3 [11] There is a letter from Mr Best’s lawyers, Michael Cooper, dated 14 January 2010 stating that Mr and Mrs Best withdrew their offer to purchase because: The requirements of s. 365 of the Property Agents and Motor Dealers Act had not been complied with. [12] Section 365 of PAMDA deals with the relationship with the Electronic Transactions (Queensland) Act 2001. It does not give a purchaser any reason to avoid a contract. I might have given Mr Best’s lawyers the benefit of the doubt, and assumed that the reference was a typographical error, except for a letter from the seller’s lawyers, Ingwersen & Lansdown, dated 28 October 2009 in which they stated: We wish to advise we have accepted the Buyer’s repudiation of the Contract and are currently seeking our client’s instructions in relation to the remedies available to them. We have been advised by Shaun Darcy of your office that the agent’s commission has been released from the deposit. Kindly advise total amount currently held in trust and provide a copy of the agreement authorizing the earlier release of the commission. [13] Mr and Mrs Best contracted to buy the property at $585,000. It eventually sold at $510,000. Obviously, Mr and Mrs Best were facing a significant claim and were trying to recoup money from whatever source they thought would be available. The documentary evidence supports Mr Darcy’s version of events, not Mr Best’s version. [14] Although Mr Darcy has not been able to provide a copy of the authority to draw early commission, he does have statements from two independent witnesses confirming that they did see the authorities. I prefer this evidence to that of Mr Best’s rather bland statement that “he thought the money was still in trust.” I find that Mr Darcy did have authority to an early release of the commission. [15] The Chief Executive says that the written authorities are irrelevant because Mr Darcy was simply not able to draw his commission early. [16] Section 385 of PAMDA sets out when a licensee may draw money from trust. Although the section does contemplate a written direction from the person entitled to the trust money1, the ability to draw commission is still conditional upon the transaction being finalised. Mr Darcy cannot argue that the transaction was finalised when he drew commission. [17] I am therefore satisfied that disciplinary proceedings are appropriate. Penalty [18] One of the objects of PAMDA is to protect consumers against particular undesirable practices associated with the promotion of residential property.2 The objects of the Act are achieved mainly through: a) Ensuring only suitable persons are licensed.3 1 Section 385(2)(b) PAMDA. 2 Section 10(2) PAMDA. 3 Section 10(3)(a)(i) PAMDA. -- 3 of 5 -- 4 b) Ensuring that those who carry on business maintain close personal supervision of the way the business is carried on.4 c) Providing protection for consumers in their dealings with licensees.5 [19] The Chief Executive seeks the following penalty: a) A reprimand. b) That the company be disqualified from holding any form of licence for a period of 10 years. c) That Mr Darcy 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 10 years. d) That Mr Darcy pay a fine of $5,000. [20] The Chief Executive has referred me to Chief Executive DTFTWID v Cornwell6 as a comparable decision. Mr Cornwell withdrew a total of $36,612.30 from trust in five separate transactions. The funds were used for business and personal expenses. [21] This case is materially different from Mr Cornwell’s position. Mr Darcy did have the authority of both parties to release the commission early. He was not entitled to ask for that consent but it does make his conduct understandable and less serious. [22] The agents involved in the sale received their commission and only Mr Darcy’s personal commission went into the general account. It was not the case that the funds were drawn for the sole purpose of propping up a failing business. [23] It is also not clear that Mr Best has suffered any loss. If, as Ingwersen & Lansdowne’s letter suggests, Mr and Mrs Best repudiated the contract, then SND was entitled to its commission (although at a later date) and Mr and Mrs Best would not be entitled to a refund of the deposit. [24] I am not persuaded that a period of disqualification is warranted in this case. However, to act as a deterrent to both Mr Darcy and other licensees, and to emphasise the very limited circumstances in a licensee may draw trust money to pay commission, I consider a substantial fine is warranted. [25] Chief Executive DJAG v Brisbane City Student Accommodation Pty Ltd7 involved a number of instances of overcharging commission. In each case, the overcharging was a small amount and inadvertent. The Chief Executive agreed that a period of disqualification was not appropriate. The parties agreed that the tribunal should impose a fine of $40,000. [26] I have recently observed that the fines imposed on corporations are usually double that imposed on individuals. Therefore, Mr Darcy should be fined $20,000, which, until recently, would have been a fine of 200 penalty units. Orders 4 Section 10(3)(a)(ii) PAMDA. 5 Section 10(3)(b)(i) PAMDA. 6 [2005] QCCTPAMD 49. 7 OCR220-11. -- 4 of 5 -- 5 [1] SND (Aust) Pty Ltd and Shaun Nicholas Darcy are reprimanded. [2] Shaun Nicholas Darcy shall pay to the Chief Executive Department of Justice and Attorney General a fine of $20,000 by 1 December 2012. -- 5 of 5 --