Brown v Wilen Pty Ltd [2012] QCAT 324

CITATION: Brown & Anor v Wilen Pty Ltd & Ors [2012] QCAT 324 PARTIES: Angus Brown Elizabeth Fogarty v Wilen Pty Ltd Jeffrey Dean Allen Lee Terry Wilson APPLICATION NUMBER: OCL020-12 MATTER TYPE: Other civil dispute matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Peta Stilgoe, Senior Member DELIVERED ON: 23 July 2012 DELIVERED AT: Brisbane ORDERS MADE: [1] Pursuant to s 488 of the Property Agents and Motor Dealers Act 2000, the claim is allowed in the sum of $40,774.17. [2] Pursuant to s 489 of the Property Agents and Motor Dealers Act 2000, at the expiration of the appeal period, the Chief Executive must pay to Mr Brown and Ms Fogarty the sum of $40,774.17 from the Claim Fund, and, if there is an appeal, payment must not be made until after the appeal is finally decided. [3] Pursuant to s 488(3)(c) of the Property Agents and Motor Dealers Act 2000, Wilen Pty Ltd, Mr Jeffrey Dean Allen and Ms Lee Terry Wilson are named as the persons responsible for the financial loss of Mr Brown and Ms Fogarty. [4] Upon payment from the Claim Fund and pursuant to ss 490 and 530 of the Property Agents and -- 1 of 5 -- 2 Motor Dealers Act 2000, Wilen Pty Ltd, Mr Jeffrey Dean Allen and Ms Lee Terry Wilson are liable (and if more than one, jointly and severally) to reimburse the Claim Fund by paying the sum of $40,774.17 to the Chief Executive, Department of Justice and Attorney General. CATCHWORDS: REAL ESTATE AGENT – where failure to count for deposit – where deposit misappropriated – whether “silent” director a person responsible for the loss Corporations Act 2001 (Cth), s 198A Property Agents and Motor Dealers Act 2000, ss 385(4), 386, 470, 470(1)(e), 488, 490(2), 573 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 Brown and Ms Fogarty sold their unit at the Gold Coast through Wilen Pty Ltd trading as Wilson Allen Real Estate. Mr Allen and Ms Wilson were directors of that company. [2] The purchasers paid a deposit of $54,000 to the company’s trust account on 22 August 2011. The sale was settled on 30 September 2011 but Mr Brown and Ms Fogarty have not received the balance of the deposit from Wilen. [3] Mr Brown and Ms Fogarty made a claim on the statutory claim fund for $40,774.17. Wilen is now under external administration. A copy of the receiver’s claim report was sent to each of the respondents by letters dated 28 February 2012. [4] The tribunal is required to determine whether there should be a payment from the fund. Section 488 of the Property Agents and Motor Dealers Act 2000 sets out the process for deciding the claim. The Tribunal must be satisfied that: a) An event as mentioned in section 470(1) happened; and b) The claimant suffered financial loss because of the event. [5] 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 default1 and any amount ordered to be paid to the claimant as 1 Section 488(2). -- 2 of 5 -- 3 compensation to the claimant under sections 530A, 572D or 592A of PAMDA2. [6] Finally in allowing a claim the Tribunal must decide the amount of the claimant’s financial loss and name the person who is liable for the loss3. The event [7] The receiver’s report shows that there was no money available in the trust account to pay the balance deposit when the sale settled. There are two withdrawals from Wilen’s trust account that appear to account for the money. On 19 August 2011, there is a withdrawal of $10,000 labelled “comm. Yachting” and a withdrawal of $44,000 on 22 August 2011 labelled “yachting”. The receiver reports that these funds were paid to Wilen’s business cheque account. [8] The failure to pay trust money to an entitled party within 42 days of it being due and payable is an “event” under s 470(1)4. The failure to account to a client for all trust money received is an event within s 470(1)5. The wrongful conversion of trust money is an event within s 470(1)6. Stealing or misappropriation is an event7. [9] I am satisfied that Wilen did not pay Mr Brown and Ms Fogarty the trust money to which they were entitled within 42 days of it being due and payable. I am satisfied that Wilen did not account to Mr Brown and Ms Fogarty for the transactions that occurred in relation to the deposit. I am satisfied that Wilen misappropriated or converted the bulk of the deposit. I am, therefore, satisfied that there is an “event” within s 470(1). Financial loss [10] I am satisfied that Mr Brown and Ms Fogarty suffered a financial loss because of Wilen’s breach of the Act. [11] I am further satisfied that $40,774.17, being the deposit less commission payable is the appropriate assessment of Mr Brown and Ms Fogarty’s loss. Other matters [12] I am required to take into account any amount Mr Brown and Ms Fogarty may have received or recovered if not for their neglect or default. [13] There is no evidence to suggest that Mr Brown and Ms Fogarty would have been able to receive or recover any amount to reduce their loss if they had taken any different action. Who is liable for the loss? [14] Wilen, as the corporate licensee, is clearly liable for the loss. [15] Section 490(2) provides that a person is liable to reimburse the fund if the person is: 2 Section 488(3)(a). 3 Section 488(3)(b) and (c). 4 Section 385(4). 5 Section 386. 6 Section 573. 7 Section 470(1)(e). -- 3 of 5 -- 4 a) A responsible person; b) If the responsible person was a corporation, each person who was an executive officer of the corporation. [16] As directors of Wilen, Mr Allen and Ms Wilson were executive officers of the company. Because I have found that the company is a responsible person, it follows that they must also be responsible persons. [17] Ms Wilson has filed submissions denying responsibility for the loss on the grounds that: she had no involvement with the day-to-day running of the business; she was not consulted in any management decision; she did not have an office at Wilen; she is not computer literate; she did not deal with the accounts; she has no accounting experience or knowledge; she has never had a board meeting with Mr Allen; she has never received any financial information in relation to the company; she has no understanding of the statutory or other requirements that apply to Wilen; and it was Mr Allen, acting alone, who is responsible for the loss. [18] Ms Wilson has also detailed her current financial position, her family difficulties and her inability to reimburse the statutory fund if I make the order sought. [19] Being a director of a company carries obligations to manage the company8. The Corporations Act 2001 does not contemplate the role of a silent director who takes no part in the management of the company and thereby avoids obligations to the company and its creditors. [20] This is yet another salutary lesson to ensure that would-be directors of companies understand their obligations fully. It is also another unfortunate example of sexually transmitted debt. It is not enough for a woman to claim that she should not be liable for her failure as a director because she left that obligation to others, including, at some stage throughout the life of Wilen, her husband. [21] While I have some sympathy for Ms Wilson’s position, the fact remains that she was an executive officer of Wilen at the time of the loss and, therefore, a responsible person, and, therefore, a person liable to reimburse the fund. Orders [22] Pursuant to s 488 of the Property Agents and Motor Dealers Act 2000, the claim is allowed in the sum of $40,774.17. [23] Pursuant to s 489 of the Property Agents and Motor Dealers Act 2000, at the expiration of the appeal period, the Chief Executive must pay to Mr Brown and Ms Fogarty the sum of $40,774.17 from the Claim Fund, and, if there is an appeal, payment must not be made until after the appeal is finally decided. [24] Pursuant to s 488(3)(c) of the Property Agents and Motor Dealers Act 2000, Wilen Pty Ltd, Mr Jeffrey Dean Allen and Ms Lee Terry Wilson are named as the persons responsible for the financial loss of Mr Brown and Ms Fogarty. 8 Corporations Act 2001 (Cth), s 198A. -- 4 of 5 -- 5 [25] Upon payment from the Claim Fund and pursuant to sections 490 and 530 of the Property Agents and Motor Dealers Act 2000, Wilen Pty Ltd, Mr Jeffrey Dean Allen and Ms Lee Terry Wilson are liable (and if more than one, jointly and severally) to reimburse the Claim Fund by paying the sum of $40,774.17 to the Chief Executive, Department of Justice and Attorney General. -- 5 of 5 --