Department of Employment, Economic Development and Innovation v Baldwin [2012] QCAT 161

CITATION: Department of Employment, Economic Development & Innovation v Baldwin [2012] QCAT 161 PARTIES: Department of Employment, Economic Development & Innovation v Michael John Baldwin APPLICATION NUMBER: OCR061-11 MATTER TYPE: Occupational regulation matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Susan Gardiner, Member DELIVERED ON: 18 April 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. Michael John Baldwin is reprimanded. 2. Michael John Baldwin is disqualified permanently from being the holder of any form of licence or certificate of registration issued under the Property Agents and Motor Dealers Act 2000. 3. Michael John Baldwin is prohibited permanently from being an executive officer of a corporation that holds any form of licence issued under the Property Agents and Motor Dealers Act 2000. 4. Michael John Baldwin pay a fine of $8,000 (80 penalty units) within 30 days of the date of this order. 5. Michael John Baldwin pay the Chief Executive’s costs of this proceeding fixed at $510 within 30 days of the date of this order. CATCHWORDS: PROPERTY AGENTS – REOPENING OF PENALTY DECISION – where misuse of trust account – where five unauthorised withdrawals – where loss of $600,000 – appropriate penalty -- 1 of 7 -- 2 Property Agents and Motor Dealers Act 2000, ss 384, 496 Queensland Civil and Administrative Tribunal Act 2009, s 140 New South Wales Bar Association v Evatt (1968) 117 CLR 177 The Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development v Cornwell J [2005] CCT X007-05 The Chief Executive, Department of Tourism, Racing and Fair Trading v Gunther [2004] QCCTPAMD 68 The Chief Executive, Department of Tourism, Racing and Fair Trading v Gunther [2004] QCCTPAMD 18 Department of Employment, Economic Development and Innovation v Welburn [2010] QCAT 202 The Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development v Ruffo Pty Ltd & Judith Ruffo [2004] QCCTPAMD 18 Secretary of Surveyors Board v Hudson Dist Ct 30/8/91; Executive of Tourism, Sport and Racing v Ross Dummett X006-03 APPEARANCES and REPRESENTATION (if any): This matter was heard on the papers in the absence of the parties in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009. REASONS FOR DECISION [1] On 5 October 2011 an order was made in this Tribunal reprimanding Michael John Baldwin under the Property Agents and Motor Dealers Act 2000, disqualifying Mr Baldwin permanently from being the holder of any form of licence or certificate of registration and from being an executive officer of a corporation that holds any form of licence issued under the PAMD Act. Mr Baldwin was also fined $9,000 (90 penalty units) and ordered to pay the Chief Executive’s costs of this proceeding fixed at $510. [2] Mr Baldwin sought a reopening of this decision and on 29 March 2012, QCAT made a further order allowing a reopening of this matter on the issue of penalty alone to be considered by a member, not the original decision maker. [3] The agreed facts of this matter in relation to Mr Baldwin’s disqualifications are as follows: Property Investments & Management Pty Ltd, trading as Ray White -- 2 of 7 -- 3 Southport held a real estate corporation licence from 18 August 1997 to 22 July 2010. Mr Baldwin was a director of that company and held a real estate principal licence from 18 December 2002 to 22 July 2008 when he surrendered his licence, not thereafter seeking reinstatement. Between March 2008 and June 2008, Mr Baldwin signed cheques for five unauthorised withdrawals from the company trust account as follows: i. On 31 March 2008, $382,000 was drawn from Rental Trust Account 1 and deposited into the company’s general account. ii. On 9 April 2008, $110,000 was drawn from Sales Trust Account 2 and deposited into the company’s general account. iii. On 1 May 2008, $50,000 was drawn from Sales Trust Account 2 and deposited into Rental Trust Account 1. iv. On 30 May 2008, $60,000 was drawn from Sales Trust Account 2 and deposited into Rental Trust Account 1. v. On 10 June 2008, $110,000 was drawn from Rental Trust Account 1 and deposited into Sales Trust Account 2. The company was placed under external administration and the administrator identified a shortfall in the rental and sales trust accounts of $613,186. The funds were not recovered. The Department made payments from the statutory fund under the PAMD Act to consumers and this fund was not reimbursed by the company or Mr Baldwin. [4] Mr Baldwin was referred by the Chief Executive to QCAT for disciplinary proceedings under s 496 of the PMAD Act. The grounds for this referral were: a. Mr Baldwin was an executive officer of a corporation that has been found guilty of disciplinary charges.1 b. He is not a suitable person to hold a licence2. c. In carrying on business, Mr Baldwin has been incompetent or acted in an unprofessional way.3 Submissions on Penalty [5] Mr Baldwin makes the following submissions: He was involved in the real estate industry for 18 years successfully where he conducted himself professionally and ethically in every respect. The transactions occurred over a short period of time, were affected by the global financial crisis and Mr Baldwin was not engaging in behaviour calculated to deceive the public. Mr Baldwin was under 1 Property Agents and Motor Dealers Act 2000, s 496(1)(g)(v). 2 Property Agents and Motor Dealers Act 2000, s 496(1)(g)(ii). 3 Property Agents and Motor Dealers Act 2000, s 496(1)(g)(iii). -- 3 of 7 -- 4 pressure and stress at the time. Mr Baldwin deeply regrets his actions and points out he has lost his ability to earn during the subsequent court case of three years, the company receivership and finally his personal bankruptcy. He feels he still has a lot of expertise, skill and knowledge to give to the real estate industry. Mr Baldwin says he was fully co-operative with the receivers and managers of the company during the investigation and the criminal proceedings. He also admitted all offences at the compulsory conference in this matter – an early stage in the proceedings. Mr Baldwin surrendered his licence. Mr Baldwin accepts he must be prohibited from holding a licensee status but argues there is no reason why he should not hold a sales license which gives him no access to operating a trust account or owing a real estate business. Mr Baldwin submits a fine should not apply as he has already received a substantial penalty with the jail time he is currently serving for this offence. He also submits that he has no ability to financially pay any fine. [6] The Chief Executive submits: the primary object of disciplinary proceedings is protective of both the standards of the profession and members of the public from professional misconduct4. It is accepted that Mr Baldwin has been in the real estate industry for 18 years and that he has not previously been the subject of disciplinary or prosecution actions by the Office of Fair Trading. However the Chief Executive does point to some previous low level consumer complaints, mostly resolved administratively. Despite no previous disciplinary or prosecution actions, the seriousness of the offence and the significant breach of trust easily outweighs any discount the Tribunal could apply in imposing a penalty. Mr Baldwin’s submission that he “was fully co-operative with the receivers and managers of the company during the investigation and the criminal proceedings” is unclear and unsupported by evidence from Mr Baldwin. For Mr Baldwin to suggest that he is a suitable person for accreditation as a salesperson by the Government to the community and the industry is totally unreasonable and borders on fanciful. Mr Baldwin’s conduct was most serious and should attract a significant penalty including permanent exclusion and a heavy fine. What is relevant is that the legislation provides that where a person is convicted of a “serious offence” or is bankrupt, they are deemed unsuitable to hold a license or certificate of registration. 4 Secretary of Surveyors Board v Hudson Dist Ct 30/8/91 per Morley DCJ; Chief Executive of Tourism, Sport and Racing v Ross Dummett X006-03 delivered 24 June 2003 at 23. -- 4 of 7 -- 5 Concerning the level of fine imposed, the Chief Executive submits that Mr Baldwin has provided no evidence of his bankruptcy or details of any employment/ income prospects in the future. Disciplinary consequences are often more onerous that other consequences that may result from the same conduct5. Mr Baldwin withdrew significant amounts of trust monies and then arguably put a scheme into effect (an arranged loan) allowing him to repay the trust account and “cover his tracks” with a clear intention to not let his clients or the regulator become aware of his actions, despite his duty to inform. The Chief Executive seeks the costs of the first decision in this matter in the sum of $510 and further on this reopened determination (a fresh determination despite the tenor of the submissions by the Chief Executive6) in the sum of $320. Discussion [7] Without authority, Mr Baldwin transferred total funds of $712,000 in five transactions, resulting in a shortfall of $613,186.30 over 5 transactions. The misuse of trust account funds was not isolated. A payment to consumers was made from the statutory fund and never recovered by that fund. [8] The Chief Executive seeks the tribunal to: a. reprimand Mr Baldwin; b. disqualify him permanently from holding a licence; c. impose a fine of 200 penalty units ($20,000); and order him to pay costs totalling $830. [9] I am satisfied that the conduct of Mr Baldwin is so serious that he should be reprimanded and permanently disqualified from holding a licence or registration certificate under the PAMD Act, whether personally or as an officer of a corporation. [10] The fact that Mr Baldwin had been in the industry for such a long time means that he should have been well aware of his obligations in relation to trust funds and although Mr Baldwin was under immense pressure, I do not accept that the impact of the global financial crisis should be a reason to explain his actions at that time. However I do not have any evidence to suggest that Mr Baldwin’s conduct was a “scheme” calculated to deliberately deceive or defraud any the public7, as submitted by the Chief Executive. Rather it appears to have been a vain attempt by Mr Baldwin to support a failing business. [11] The loss to the public funds is substantial and will not be recovered. Mr Baldwin’s actions have also potentially caused a lack of public confidence in the industry and the professional standing of other parties in the industry. 5 New South Wales Bar Association v Evatt (1968) 117 CLR 177 at 183. 6 Queensland Civil and Administrative Tribunal Act 2009, s 140. 7 See for example The Chief Executive, Department of Tourism, Racing and Fair Trading v Gunther [2004] QCCTPAMD 18. -- 5 of 7 -- 6 Disciplinary proceedings are intended to protect both public and other professional parties and the gravity of these charges can be seen in the substantial nature of the potential penalties imposed, 200 penalty units for an individual, 1,000 penalty units for a corporation and potential disqualification from holding a licence either permanently or for a stated period. [12] To support of the imposition of a fine of $10,000, the Chief Executive has referred to two comparable decisions. The first is the decision of Cornwall8. In that matter between 14 October 2004 and 27 October 2004, Mr Cornwall removed on five occasions trust account monies totalling $30,612.39 from the trust account and paid those monies into the working account of the business. In mitigation, Mr Cornwall pleaded guilty at an early stage to the proceedings and paid the monies back within two months of the monies being withdrawn from the trust account co-operating fully with the then Office of Fair Trading and showing remorse. The taking of these funds did not cause any loss to the PAMDA claim fund. In that matter Mr Cornwall was disqualified for ten years, fined $3,000 (40 penalty points) and ordered to pay legal costs. [13] The second decision is the decision of Ruffo9. In that matter, the licensee also made 5 unlawful withdrawals from the trust account to pay business expenses totalling $24,500. In this matter there were no losses to beneficiaries. The company was fined $2,250 (30 penalty points) and the director $1,500 (20 penalty points). Both were disqualified from holding licences for 10 years but this was suspended for 10 years. [14] The overwhelming difference in Mr Baldwin’s position and the cases cited is the large amount of funds that have been misappropriated. On each of these five occasions Mr Baldwin must have known the illegality of his actions but he continued nevertheless to remove large amounts of money. [15] Two further cases were cited by Senior Member Stilgoe in the earlier decision (now reopened) to which I will have regard. One I have already alluded to, the decision of Gunther10. This decision imposed a penalty of 100 penalty units. Mr Gunther schemed to sell houses at up to 74% more than their value to susceptible, commercially naïve and unsophisticated first home buyers. Mr Gunther drew the contracts to hide the true position from the banks, advancing funds to the purchasers and stood to make a profit of almost $160,00011. The Tribunal imposed a substantial penalty because of the deliberately manipulative scheme. There is no apparent scheme in Mr Baldwin’s actions but the amount unrecovered is substantial. [16] The second is the decision in Welburn12, an earlier matter in which this Tribunal imposed a penalty of 70 penalty units and which involved more 8 The Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development v Cornwell J [2005] QCCTPAMD 49; [2005] CCT X007-05. 9 The Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development v Ruffo Pty Ltd & Judith Ruffo [2004] QCCTPAMD 18. 10 [2004] QCCTPAMD 18. 11 [2004] QCCTPAMD 68. 12 The Chief Executive, Department of Employment, Economic Development and Innovation v Welburn [2010] QCAT 202. -- 6 of 7 -- 7 trust account breaches but of lower amounts over a longer period. The circumstances in Welburn disclosed a pattern of behaviour over a longer period. Mr Baldwin’s withdrawals occurred within one three month period. [17] Balancing all of these matters, I am satisfied that the appropriate penalty is higher in the range than the earlier decisions because of the substantial amount of money involved but not as high as 100 penalty points because of the lack of a planned scheme. In the circumstances, I am satisfied that the penalty should be 80 penalty units or $8,000. [18] It is appropriate that Ms Baldwin pays the Chief Executive’s costs fixed in the amount of $510. I am not satisfied that in all the circumstances, he should also bear the Chief Executive’s costs of the reopening. Orders [19] The orders should be: [1] Michael John Baldwin is reprimanded. [2] Michael John Baldwin is disqualified permanently from being the holder of any form of licence or certificate of registration issued under the Property Agents and Motor Dealers Act 2000. [3] Michael John Baldwin is prohibited permanently from being an executive officer of a corporation that holds any form of licence issued under the Property Agents and Motor Dealers Act 2000. [4] Michael John Baldwin pay a fine of $8,000 (80 penalty units) within 30 days of the date of this order. [5] Michael John Baldwin pay the Chief Executive’s costs of this proceeding fixed at $510 within 30 days of the date of this order. -- 7 of 7 --