Chief Executive Department of Justice and Attorney General v Leach [2012] QCAT 318

CITATION: Chief Executive Department of Justice and Attorney General v Leach [2012] QCAT 318 PARTIES: Chief Executive Department of Justice and Attorney General v Maree Ruth Leach APPLICATION NUMBER: OCR006-12 MATTER TYPE: Occupational regulation 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. Proper grounds exist for disciplinary proceedings against Maree Ruth Leach. 2. The Chief Executive Department of Justice and Attorney General shall file and serve submissions on penalty by 10 August 2012. 3. Maree Ruth Leach may file and serve submissions on penalty by 3 September 2012. 4. The tribunal will determine penalty based on the written submissions and without an oral hearing not before 3 September 2012. CATCHWORDS: REAL ESTATE AGENT – DISCIPLINARY PROCEEDINGS – where agent failed to provide audit reports for trust account – where agent failed to give written notice after opening a trust account – where agent acted as a real estate agent while unlicensed – whether agent failed to declare a beneficial interest – where agent failed to reconcile bank statements to the trust account cash book – where agent failed to provide documents in response to notice to -- 1 of 11 -- 2 produce – whether agent harassed tenant – whether agent lacked honesty, fairness and professionalism – whether agent failed to verify facts material to sale – whether agent failed to carry out repairs promptly – whether agent failed to give notice of referral to TICA Where Department provided abbreviated brief of evidence Queensland Civil and Administrative Tribunal Act 2009, ss 21(1), 21(2) Property Agents and Motor Dealers Act 2000, ss 13, 496 Acts Interpretation Act 1954, s 35E Property Agents and Motor Dealers (Real Estate Agency Practice Code of Conduct) 2001, ss 15, 23(1), 34 Briginshaw v Briginshaw (1938) 60 CLR 336 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] The Chief Executive Department of Justice and Attorney General has applied to start disciplinary proceedings against Ms Leach. The Chief Executive submits that proper grounds exist for disciplinary proceedings against Ms Leach in that: a) Pursuant to s 496(1)(b)(ii) of the Property Agents and Motor Dealers Act 2000, Ms Leach has contravened the Act. b) Pursuant to s 496(1)(g)(i) of the Act, Ms Leach is not a suitable person to hold a licence. c) She has, in carrying on business or performing an activity, been incompetent or acted in an unprofessional way. [2] The particulars of the conduct which is said to substantiate the Chief Executive’s claims are: a) Ten instances of failing to lodge a trust account audit report within the prescribed time limit. b) Providing a false or misleading document. c) Three instances of failing to give written notice after opening a trust account. d) Acting as a real estate agent when not licensed. -- 2 of 11 -- 3 e) Failing to reconcile bank statements with trust account cash book balance. f) Failing to comply with a notice to produce documents. g) Failing to act with honesty, fairness and professionalism. h) Two instances of harassment. i) Failing to verify material facts in relation to a purchase of property. j) Failing to carry out maintenance of repairs of rental property. k) Recording information on TICA without notice or justification. [3] Ms Leach held a real estate agent’s licence from 19 January 2005 to 12 January 2007. Her licence lapsed but was reissued on 27 July 2007 and remains current. Failing to lodge a trust account audit report [4] Ms Leach has three responses to the claim that she did not lodge trust account audit reports. The first is that she was not aware of the obligation to lodge trust account audit statements and the Office of Fair Trading never contact her to advise that the audits were outstanding. Secondly, Ms Leach claims that she engaged a Pat Fleming to prepare the audits reports and that Ms Fleming had sought and obtained extensions of time in which to file the reports. Thirdly, in relation to three reports, Ms Leach says that she engaged Mr Staib to prepare and lodge the reports and that this was done. [5] As a licensee, Ms Leach should be aware of her obligations under the Act. It is not the role of the Office of Fair Trading to remind licensees of their obligation. Ms Leach’s apparent ignorance of her obligations is no excuse. [6] The Chief Executive’s officer, Mr Tully, contacted Ms Fleming about the missing audit reports. She confirmed that she had been engaged to complete them. There is one letter from Ms Fleming dated 20 April 2007 referring to an audit of a trust account for the year ended 30 September 2006. There is no other material filed that supports Ms Leach’s contention that Ms Fleming was charged with filing the audit reports. In any event, the available evidence suggests that Ms Fleming was engaged only when Ms Leach became aware of the requirement and not at the time that each audit was due. Ms Leach’s explanation is deficient and unsatisfactory. The obligation to file reports lie with her; although she may delegate the preparation of the report to others, she cannot delegate the responsibility. [7] There is a letter from Mr Staib to the Office of Fair Trading dated 21 July 2011 asking for an extension of time in which to file audit reports. I also have copies of audit reports prepared by Mr Staib. That Ms Leach eventually complied does not alter the fact that she was noncompliant with the requirements to lodge trust account reports in a timely way. [8] I am satisfied that Ms Leach failed to file audit reports on each of ten occasions and that she has no reasonable excuse for her failure to do so. Providing a false document -- 3 of 11 -- 4 [9] Ms Fleming did file one audit report on Ms Leach’s behalf. The Chief Executive says that this document is false and misleading in that: a) The account the subject of the report was not opened until after the relevant audit period. b) Ms Leach was using another trust account at the time and she did not lodge a report in relation to that account. c) The bank statement balance and the audit report figures do not reconcile. d) The audit report refers to two uncleared transfers which do not appear on the bank statement. e) Accountants engaged by Ms Leach prior to Ms Fleming’s engagement were not, in fact, satisfied that the trust account had been adequately kept and were of the view that the requirements of the Act in relation to the application of trust money had not been observed at all times. [10] Ms Leach says that she now knows Ms Fleming made errors in the management of accounts. [11] The Chief Executive does not have any evidence to suggest that Ms Leach deliberately withheld the adverse audit report; that she deliberately engaged Ms Fleming to produce a false report or that she knew Ms Fleming had submitted a false report. Although it appears that a false report has been submitted, I am not persuaded that Ms Leach was actively involved in that event. Therefore, I am not persuaded that it is a matter for which she should be disciplined. Failing to give written notice after opening a trust account [12] Ms Leach says that, on each occasion, she thought the bank sent the notice directly to the Office of Fair Trading. [13] Ms Leach has provided a copy of a confirmation of opening of a trust account for ANZ a/c number 4864-00963 dated 22 November 2007. It has an Office of Fair Trading fax stamp of 22 November 2007 but that is evidence that the Office of Fair Trading sent the document (perhaps in blank as the letter of 19 November 2007 suggests). There is no evidence that the Office of Fair Trading ever received the document. The Chief Executive has filed a certificate from one of its officers confirming that no notice was ever received. [14] I prefer the evidence of the Chief Executive and find that Ms Leach did not give written notice that she had opened trust accounts as she was required to do under s 377(1) of the Act. Acting as a real estate agent when unlicensed [15] Ms Leach says that she was not advised that she was unlicensed pending the provision of audit reports. She points to a letter from the Office of Fair Trading dated 10 August 2010 which records that her licence was “pending” as justification for her view that she was not unlicensed. -- 4 of 11 -- 5 [16] A proper examination of that letter shows that Ms Leach had no reason to believe that she was licensed. The notice specifically notes that the grant of a licence will be taken to pending, that she was required to return he licence to the Office of Fair Trading and that the Office would issue a fresh licence when Ms Leach complied with the audit report requirements. The only conclusion that can be drawn from that letter is that Ms Leach was unlicensed. [17] More importantly, the Chief Executive’s complaint relates to the period 13 January 2007 to 26 July 2007 whereas the notice refers to a period in 2010. I am satisfied that Ms Leach was acting as a real estate agent while unlicensed in the period 13 January 2007 to 26 July 2007. Reconciliation of bank statements to trust account cash book balance [18] The Chief Executive has provided copies of Ms Leach’s bank statements and trust account cash book reconciliations. The records consist of two unindexed bundles of documents, one almost 5 cm thick and another 3 cm thick. The Chief Executive has not provided me with any assistance to navigate this information so I have chosen one reconciliation at random which confirms the Chief Executive’s assertion. [19] In response, Ms Leach states simply that the Office of Fair Trading have not previously contacted her about the reconciliations. As I have observed previously, the obligation to maintain records and comply with the Act lies with the licensee and it is not the role of the Office of Fair Trading to remind licensees of their obligations. Given Ms Leach’s lax attitude towards the provision of audit reports, and her reliance on others to fulfil her responsibilities, I accept the Chief Executive’s assertions that none of the bank statements have been reconciled to the trust account cash book balance. Failure to provide documents in response to a notice to produce [20] Mr Tully asserts that certain trust account bank statements are missing. Ms Leach does not deny that allegation but simply asserts that Mr Tully should have told her earlier that these documents had not been supplied. I accept Ms Leach’s admission. Honesty fairness and professionalism [21] There are four allegations that Ms Leach acted in a way that lacked honesty, fairness and professionalism: a) She acted as letting agent for Mark Nichols without first having an appointment to act. b) When asked for the appointment to act, Ms Leach provided a copy of a document that purported to be valid appointment when the signature was not that of Mr Nichols. c) When negotiating with Mr Nichols for the purchase of a property, Ms Leach misrepresented what property was included in the sale. d) Ms Leach sent Mr Nichols an abusive and unprofessional email. -- 5 of 11 -- 6 [22] In relation to acting for Mr Nichols without an appointment to act, Ms Leach says that this has already been dealt with and she was fined. I take that as an admission of the fact that she did act without a valid appointment. The fact that Ms Leach has been fined in relation to that act does not mean that it cannot form part of a brief for disciplinary proceedings. [23] Ms Leach denies that she falsified Mr Nichols’ signature on an appointment to act. She says that this allegation has been investigated by the Queensland Police Service and no charges were laid. That the Queensland Police Service did not lay charges in relation to Mr Nichol’s complaint does not, of itself, mean very much. [24] I have been provided with a copy of an appointment to act that the Chief Executive obtained from Ms Leach. Mr Nichols says he did not sign it. [25] The signature on the document does not resemble Mr Nichols’ signature on his statement. On the balance of probabilities, even at the higher end of the Briginshaw test1 that is required in the consideration of disciplinary proceedings, I am satisfied that the document has been falsified and, therefore, that Ms Leach did provide a false document to the Office of Fair Trading. [26] Mr Nichols signed a contract for the purchase of a former garage at Allora through Ms Leach. The property had been for sale for a long time with another agent. When listed with the previous agent, the list price included the workshop equipment. The owner, Mr McLean says that he told Ms Leach the property included the workshop equipment and she told him that Mr Nichols was going to rent the shed for storage and did not want the equipment. [27] Ms Leach denies that Mr McLean told her the equipment was included. She says that Mr McLean was coerced into making the statement which, Ms Leach says, was witnessed by Mr McLean’s wife. [28] Mr McLean has no reason to provide a false document to the Chief Executive. His version of events is consistent with the proposition that Mr Nichols wanted to lease the shed to earn income and that proposition, in turn, is supported by Mr Nichols’ statement and the handwritten figures in MBN-1. Ms Leach’s only comment about that document is to question its relevance. [29] I am satisfied that Ms Leach did know that the workshop equipment was, initially, included in the sale price and that she did not disclose that information to Mr Nichols. Whether or not Mr Nichols was disadvantaged by that omission is not a matter that I am required to consider here. [30] I have a copy of an email from Ms Leach to Mr Nichols dated 8 July 2009. I find that Ms Leach has used inappropriate and abusive language in that email. Ms Leach says it was a private email but the electronic signature is: Maree Leach Team Maree Property Services Sales & Investment Specialist 1 Briginshaw v Briginshaw (1938) 60 CLR 336 -- 6 of 11 -- 7 [31] The email was written in the name of Ms Leach as licensee and refers to work she carried out for Mr Nichols as licensee. I am satisfied that the email is abusive and was unprofessional. [32] I am satisfied that the Chief Executive has demonstrated that Ms Leach acted in a way that lacked honesty, fairness and professionalism. Harassment – Mr Nichols [33] As I have already noted, Ms Leach acted for Mr Nichols in the purchase of investment property. At the same time, Mr Nichols moved into a property owned by Ms Leach and rented his home to a third party, with Ms Leach acting as the letting agent. [34] I have already observed that Ms Leach sent Mr Nichols an abusive email. Mr Nichols says that Ms Leach verbally abused him on or about 26 February 2010. On 5 September 2009, Ms Leach cut off power, water and gas to the property Mr Nichols rented from her. [35] Ms Leach says that: Mr Nichols was not paying rent or utilities; that Mr Nichols reported her to the Residential Tenancy Authority which dealt with the dispute; and this is a personal, not a professional issue. [36] Section 15 of the Property Agents and Motor Dealers (Real Estate Agency Practice Code of Conduct) Regulation 2001, on which the Chief Executive relies, states that: A real estate agent must not engage in high pressure tactics, harassment or unconscionable conduct in the conduct of a real estate agency practice. [37] While I am satisfied that Ms Leach’s conduct towards Mr Nichols was harassment, I am not satisfied that it was harassment in the conduct of a real estate agency practice. Ms Leach’s action in cutting off Mr Nichols’ services occurred in the context of lessor and tenant, not agent and tenant. It is apparent from Mr Nichols’ statement that the verbal abuse occurred within the context on an ongoing neighbourhood dispute and not as part of the conduct of Ms Leach’s real estate agency. [38] As I have already observed, by attaching the email signature of her business, Ms Leach did give her abusive email the character of business correspondence. [39] “Harassment” involves continued or repeated annoyance. A single email cannot constitute harassment. I am not satisfied that the Chief Executive has established this ground for disciplinary action. Harassment – Mr Cutbush [40] Mr Cutbush rented a dwelling owned by Ms Leach, although he did not know that at the time. Ms Leach is noted as the lessor’s agent on the lease, and her email correspondence with Mr Cutbush is written as agent, not owner. In her material in response to the Chief Executive, Ms Leach appears to confirm that she intended to, and did, act as agent, rather than owner: Cutbush did not need to know that I was one of the owners of this property… -- 7 of 11 -- 8 [41] I am satisfied therefore that Ms Leach’s conduct in relation to Mr Cutbush is in the course of her conduct of the real estate agency. [42] The conduct of which Mr Cutbush complains includes: a) Attempting to evict him and his family when he complained about the neighbours’ dogs. b) Refusing to carry out regular inspections or maintenance. c) Placing Mr Cutbush on TICA without cause. d) Failing to comply with the requirements of the Residential Tenancies and Rooming Accommodation Act 2008. e) Failing to provide quiet enjoyment of the property. f) Sending abusive emails. g) Verbal abuse by Ms Leach and her employee Mr Guevorts. h) Falsely reporting breaches of public service codes to Mr Cutbush’s employer. [43] Ms Leach says that: a) These matters have been dealt with by either the Residential Tenancies Authority or this tribunal. b) She has every right to report “the illegal use of government computers”. c) The tone of her emails is not a breach of the Code of Conduct. d) She did not verbally abuse Mr Cutbush as alleged. e) Mr Cutbush is lawfully listed on TICA. f) Mr Cutbush has, similarly, been harassing Ms Leach. [44] The fact that some of these matters have been dealt with by another forum, or even this tribunal, does not mean that they cannot form the basis of an application for disciplinary action. The Chief Executive has presented these facts as part of a series of events that, it says, constitutes harassment. [45] The tone of Ms Leach’s emails is not of a professional standard that the public is entitled to expect from a licensed real estate agent. Ms Leach does not deny that she attempted to have Mr Cutbush evicted on what appear to be questionable grounds. While it is legitimate to complain about breaches of public service guidelines, it is not legitimate to make very serious allegations without evidence. Ms Leach’s email to Minister Nolan dated 19 March 2010, in the context of the dispute and given her contemporaneous complaints to Mr Cutbush’s supervisor, was unnecessary and provocative. [46] There is evidence, including the decisions of this tribunal, of harassment of Ms Leach by Mr Cutbush. Mr Cutbush’s behaviour is not the issue and his conduct does not justify Ms Leach, as a licensee, adopting the same standard of behaviour. -- 8 of 11 -- 9 [47] I am satisfied that, taken as a whole, Ms Leach’s conduct towards Mr Cutbush was designed to be, and was, a continued and repeated annoyance to Mr Cutbush. It was harassment within the meaning of the Code of Conduct. Finding out or verifying material facts [48] The Chief Executive repeats its assertion that Ms Leach failed to take reasonable steps to find out what equipment what included in the sale of the Allora property to Mr Nichols. [49] I have already found that Ms Leach did not disclose to Mr Nichols that certain equipment could have been included in the sale price. [50] Section 23(1) of the Code of Conduct states: A real estate agent appointed to sell, purchase, exchange or lease property must take reasonable steps to find out or verify the facts material to the sale, purchase, exchange or lease that a prudent real estate agent would have found out or verified to avoid error, omission, exaggeration or misrepresentation. [51] The evidence does not indicate that Ms Leach failed to find out or verify facts material to the sale. Rather, the evidence shows that Ms Leach knew the relevant facts but failed to disclose them to Mr Nichols. I have already dealt with the failure to disclose. I do not consider that this ground of disciplinary action is substantiated. Maintenance or repairs of rental property [52] Section 34 of the Code of Conduct requires a licensee to promptly respond, and attend, to requests for maintenance or repairs to property. [53] Mr Cutbush says that maintenance issues were not dealt with promptly. Ms Leach says that this issue has been dealt with by the tribunal. [54] Once again, it is necessary to point out that the fact that some of these matters have been dealt with by this tribunal does not mean that they cannot form the basis of an application for disciplinary action. [55] The documentary evidence attached to Mr Cutbush’s statement is either incomplete or, if complete, insufficient. There is an email from Mr Cutbush in which he complains about the stair tread, asserting that he complained “weeks ago” and that Ms Leach has refused to repair it, yet there is no copy of the original complaint or Ms Leach’s apparent refusal to deal with it. [56] There are emails about the neighbour’s dogs and the adequacy of the fence between the properties but, as Ms Leach points out, the obligation to ensure adequate fencing lies with the dog owner. [57] I am not satisfied that the evidence establishes a failure to attend to repairs promptly. The Chief Executive has not established this ground for disciplinary action. Recording of information [58] Both Messrs Nichols and Cutbush state that they were registered in the TICA database without notice. -- 9 of 11 -- 10 [59] Ms Leach says that she sent a letter to Mr Nichols’ last known address advising him of the listing with TICA. She has provided a copy of her letter to Mr Nichols dated 5 March 2010 advising him of the listing. Tenants often complain that they do not receive mail when a tenancy has been terminated and they have not provided a last known address, so the mere non-receipt of notice is not sufficient to establish that no notice was given. I am not persuaded that the Chief Executive has established this ground for disciplinary action. General Comments [60] Ms Leach has made a number of complaints about the conduct of the Chief Executive’s investigation and these proceedings. [61] The investigation was initiated by complaints from Cynthia Mayne and Mark Nichols with a further complaint from Mr Cutbush. [62] It should have been apparent from a very early stage in the investigation that all of the complainants, at some stage, lived with, or in properties owned by, Ms Leach. A simple search of this tribunal’s published decisions would have revealed considerable animosity between Mr Cutbush and Ms Leach and that Mr Nichols was a participant in that animosity. There is also some evidence that Mr Nichols resided with Ms Mayne. Given that background, the evidence of all parties should be viewed with some suspicion unless supported by documentary evidence. As I have observed, in instances where documentary evidence should have been available, none has been provided. [63] Ms Leach complains of a “witch hunt” by the Chief Executive, invasion of privacy and bias on the part of Mr Tully, the investigator. That comment shows Ms Leach does not understand the nature of an investigation. The Chief Executive is entitled to access ASIC records; it is entitled to ask third parties for copies of relevant documents and to make inquiries of Ms Leach herself. The Chief Executive’s actions in this regard cannot be criticised. [64] However, the bulk of the Chief Executive’s material was not provided to either the tribunal or Ms Leach until after she had filed her material in response to the application. The Chief Executive justified this action on the basis that a part brief was provided because respondents often do not contest the application, so it considered the cost of a full brief unnecessary unless and until Ms Leach challenged the application. This procedure is in accordance with the Office of Fair Trading Compliance Investigations Manual Version 1. [65] To act in this way is a breach of the Chief Executive’s obligations as a model litigant. If this proceeding had been an application for a review of a decision of the Chief Executive, the Queensland Civil and Administrative Tribunal Act 2009 would have required it to use its best endeavours to help the tribunal2 and provide a copy of any document or thing in its possession or control that may be relevant to the tribunal’s decision3. Disciplinary proceedings are very serious. It cannot be Parliament’s intention that 2 Section 21(1). 3 Section 21(2)(b) -- 10 of 11 -- 11 fundamental obligations of a decision-maker in review proceedings can be ignored in more serious disciplinary proceedings simply on the grounds of cost and efficiency. If Ms Leach had not contested the charge, the restricted brief would not have been sufficient for me to make a decision on the papers. [66] It should have been apparent to the Chief Executive that Ms Leach was always going to challenge the application. By providing a part brief, the Chief Executive has increased Ms Leach’s distrust of the process. That the Chief Executive did not comply with the tribunal’s timetable exacerbates the atmosphere of distrust, even though Ms Leach did not suffer any disadvantage as a result. [67] There is a further difficulty in that the statements provided as part of the full brief were not signed. Signed copies were provided at a later date, although some amendments had been made to them. Ms Leach objected to the tribunal’s reliance on unsigned statements and the late filing of the signed statements. In coming to my decision, I have accepted that the statements were signed, albeit late, but I have referred to the unsigned versions to which Ms Leach has responded in making my decision. Penalty [68] Proper grounds do exist for disciplinary proceedings against Ms Leach as I consider that she has acted in an incompetent and unprofessional way. As neither party has addressed me on the question of an appropriate penalty, I will allow time for submissions. Orders [69] Proper grounds exist for disciplinary proceedings against Ms Leach. [70] The Chief Executive Department of Justice and Attorney General shall file and serve submissions on penalty by 10 August 2012. [71] Maree Ruth Leach may file and serve submissions on penalty by 3 September 2012. [72] The tribunal will determine penalty based on the written submissions and without an oral hearing not before 3 September 2012. -- 11 of 11 --