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Holgar v Chief Executive, Department of Justice and Attorney-General

 

[2019] QCAT 370

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

 

CITATION:

Holgar v Chief Executive, Department of Justice and Attorney-General & Ors [2019] QCAT 370

PARTIES:

Teresa Halina Holgar

(applicant)

 

v

 

Chief Executive, Department of Justice and Attorney-General, office of fair trading

and

the real estate exchange (Brisbane) Pty LTD

and

Robert Ian Hyde

(respondents)

APPLICATION NO/S:

GAR 343–17

MATTER TYPE:

General administrative review matters

DELIVERED ON:

29 November 2019

HEARING DATE:

29 November 2018 and  30 November 2018

HEARD AT:

Brisbane

DECISION OF:

Member Paratz

ORDERS:

The decision of the Chief Executive, made on 19 October 2017, to reject the claim made by Teresa Halina Holgar upon the fund maintained under the Agents Financial Administration Act 2014 (Qld), is confirmed.

CATCHWORDS:

CONTRACTS –  PARTICULAR PARTIES – PRINCIPAL AND AGENT – DUTIES AND LIABILITIES OF AGENT TO PRINCIPAL – where a real estate agent released a deposit under a contract for sale of land to the buyer – whether the agent was aware of a dispute or should have considered a dispute may arise as to the deposit

ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – where a claim upon a statutory fund under the Agents Financial Administration Act 2014 (Qld) was made – whether the claim was made out

Agents Financial Administration Act 2014 (Qld), s 21,
s 25, s 26, s 27

APPEARANCES &

REPRESENTATION:

 

Applicant:

K Gover of Counsel, instructed by Lillas & Loel, Lawyers

Respondents:

Chief Executive Department of Justice and Attorney-General – A Tan, Senior Recoveries Officer

The Real Estate Exchange (Brisbane) Pty Ltd and Robert Ian Hyde – B Heath, solicitor of Carter Newell

REASONS FOR DECISION

  1. [1]
    Mr Hyde is a real estate agent (‘the agent’) with a real estate agency known as Hyde Real Estate (‘the agency’).
  2. [2]
    Ms Holgar (‘the owner ‘) first appointed the agent on 5 May 2016 to act on her behalf in relation to the sale of her property at 37 Aberfeldy Street, Kenmore, Queensland, and made a second appointment on 29 July 2016.
  3. [3]
    A signed contract of sale for the property was received on 31 July 2016 from Mr Horn (‘the buyer’). The buyer paid a deposit of $80,000 which was received by 8 August 2016.
  4. [4]
    A series of events then occurred in relation to the transaction, and the agent refunded the deposit in full to the buyer on 8 November 2016.
  5. [5]
    Ms Holgar says that the agent should not have refunded the deposit to the buyer, and has made a claim against the fund maintained by the Chief Executive in relation to the deposit. The claim was rejected by the Chief Executive on 19 October 2017 and the owner has brought an Application to Review that decision.
  6. [6]
    At the commencement of the hearing, Counsel for the owner advised that the claim being made was for the sum of $82,300.00, being $80,000.00 in respect of the deposit plus $2,300.00 for interest paid on bridging finance.
  7. [7]
    The matter was heard in an oral hearing over two days on 29 November 2018 and 30 November 2018.
  8. [8]
    There have been very substantial submissions in this matter from all parties. Together they represent two medium-sized ring binders. Prior to the hearing, the Chief Executive filed submissions on 17 January 2018. The owner filed submissions on 12 February 2018. The Chief Executive filed submissions in reply on 2 March 2018.
  9. [9]
    I gave directions for the filing of closing submissions at the conclusion of the hearing. The owner filed closing submissions on 17 December 2018. The Chief Executive filed submissions on 4 January 2019. The Agent and the Agency filed submissions on 7 January 2019. The Owner filed submissions in response to those submissions on 6 February 2019. The Chief Executive filed further submissions in response to the Owner’s submissions on 8 February 2019.

The Chief Executive’s Reasons for Decision

  1. [10]
    In its reasons for decision, dated 19 October 2017, the Chief Executive noted that the claim is brought under section 82 of the Agents Financial Administration Act 2014 (Qld) (‘the Act’) on the basis of an alleged carrying out of a prescribed event by the agent and the agency.
  2. [11]
    It is convenient to set out in full the background of the matter, as noted by the Chief Executive (referring to the parties by description):[1]
    1. (a)
      On 29 July 2016, the owner appointed the agent in writing to sell her property at 37 Aberfeldy Street, Kenmore Queensland.
    2. (b)
      On 31 July 2016 the owner received a signed contract of sale for the property from a Mr Brian Edward Horn as buyer. It was and dated and signed by the buyer only. By 8 August 2016, the buyer had paid the full deposit of $80,000 to the agent to hold.
    3. (c)
      On 8 September 2016 the owner wrote to the agent and requested that they refund the deposit to the buyer because there was no agreement to purchase the property.
    4. (d)
      The agent advised the owner that they had strong evidence to the contrary and offered to meet to discuss.
    5. (e)
      On 29 September 2016, the buyer attended at the Land Registry Office in Brisbane to effect settlement and the owner did not.
    6. (f)
      On 30 September 2016, the buyer wrote to the owner purporting to affirm the initial contract. The Chief Executive notes that there is no evidence in the material to indicate that a copy of this correspondence was ever sent to the agent.
    7. (g)
      On 5 October 2016, the buyer lodged a Caveat over the title to the property, claiming to have an interest in it pursuant to the initial contract. The Chief Executive notes that there is no evidence in the material to indicate that the agent was ever notified of this occurrence.
    8. (h)
      On 21 October 2016, the buyer wrote to the agent and:
      1. Noted that the owner had authorised the release of the deposit to the buyer in her letter of 8 September 2016; and
      2. Authorised the agent to release the deposit to him.
    9. (i)
      On 4 November 2016, the buyer wrote to the owner and:
      1. Noted the owner’s position that no contract existed between the parties;
      2. Advised that he would no longer pursue the matter; and
      3. Stated that the contract was at an end and advised that he would withdraw the caveat.
    10. (j)
      On 8 November 2016, the agent refunded the deposit in full to the buyer by way of a bank cheque drawn upon Westpac Banking Corporation.
    11. (k)
      Also on 8 November 2016, the owner wrote to the buyer and stated that she accepted the buyer’s election to affirm the contract and nominated settlement to occur on 22 November 2016 at 2:30 pm. The Chief Executive notes that there is no evidence in the material to suggest that this correspondence was ever sent to the agent.
    12. (l)
      Also on 8 November 2016, the owner wrote to the agent advising that she was preparing a settlement statement and asked if the agent still held a deposit.
    13. (m)
      On 10 November 2016, the owner wrote to the agent advising that a dispute may arise between the owner and the buyer in relation to the deposit.
    14. (n)
      On 22 November 2016, the buyer did not attend the reconvened settlement and the owner purported to terminate the initial contract.
  3. [12]
    The Chief Executive noted that it was satisfied that the agent was licensed as a Real Estate Agent Principal, and the agency was licensed as a Real Estate Agent Corporation, at the time of the event alleged to give rise to the claim, and that the agent and the agency were ‘relevant persons’ within section 80 of the Act at the time of the event.[2]
  4. [13]
    The Chief Executive referred to Part 2, Divisions 3 and 5 of the Act (sections 21, 22, 25 to 28) which regulate when an agent may pay an amount from a trust account, and noted that the essential issue is whether the agent is aware of a dispute about the deposit:[3]

Accordingly, the key question to determine is whether there was anything in the material before the (agent and agency) that should have put them on notice that a dispute did or may exist between the parties about the deposit before it was released on 8 November 2016.

  1. [14]
    The Chief Executive noted that it was satisfied on the balance of probabilities that the agent and the agency had no basis upon which to be aware of or consider that a dispute had or may arise in relation to the deposit because they had no material before them to doubt the previous written authorisations from both parties when they released the deposit.[4]
  2. [15]
    The Chief Executive concluded that the evidence in the material established that the owner did not notify the agent and the agency of the potential of a dispute until after the money was released, and the owner had not commenced any court proceedings in respect of the deposit. It accordingly concluded that it was satisfied on the balance of probabilities that the agent and the agency did not commit a claimable event mentioned in section 80(2)(1) of the Act because they released the deposit to the buyer in accordance with section 22(3) of the Act, and rejected the claim.[5]

Legislative Provisions

  1. [16]
    Section 21 of the Act provides as to when payment may be made from trust accounts:

21 When payments may be made from trust accounts

  1. (1)
    An amount paid to a trust account must be kept in the account until it is paid out under this act.

Maximum penalty – 200 penalty units or two years imprisonment.

  1. (2)
    An amount may be paid from a trust account only in a way permitted under this act.

Maximum penalty – 200 penalty units or two years imprisonment.

  1. [17]
    Section 22 of the Act provides as to when an agent may draw an amount from the agent’s trust account.
  2. [18]
    Part 2 Division 5 of the Act provides as to ‘Payments from trust accounts if a dispute arises or is likely to arise.’
  3. [19]
    Section 25 of the Act provides as to the application of Part 2, Division 5 of the Act:

25 Application of div 5

  1. This division applies if –
  1. an agent holds a transaction fund for a transaction under section 22; and
  2. before the transaction fund is paid out under section 22, the agent becomes aware of the dispute, or considers a dispute may arise, between the parties to the transaction about entitlement to the transaction fund or part of the fund (the amount in dispute).
  1. [20]
    Section 26 of the Act provides for the situation where the agent considers that a party to the transaction is entitled to the amount in dispute.
  2. [21]
    Section 27 applies to deal with an amount in dispute if it is not dealt with under section 26:

27 Dealing with amount in dispute if not dealt with under s 26

  1. This section applies if the amount in dispute is not dealt with under section 26.
  2. The agent must not pay out the amount in dispute unless the agent receives written notice –
  1. from all parties to the transaction stating the person who is entitled to the amount; or
  2. a proceeding has been started to decide who is entitled to the amount.

Maximum penalty – 200 penalty units or 2 years imprisonment.

The evidence of Ms Holgar

  1. [22]
    The owner gave oral evidence.
  2. [23]
    She referred to interest on a bank account with the Bank of Queensland, which she said was from where she paid monthly interest payment that was due on the bridging finance.[6]
  3. [24]
    Ms Holgar agreed that she had signed two appointments of the agent in Form 6. The first appointment had a list price of $799,000+, which she described as an indication:[7]

Member: Hang on. Just before we go off there. Just on that same page that you’re looking at, page 2, the next box, section 3, in Price, it’s got a list price there of $799,000. Is that the price that the property was to be offered for sale at?

Ms Holgar: Yes

Member: All right. Did those instructions change at any time?

Ms Holgar: Not to my knowledge, unless the tactic might have changed. I don’t recall, you know. We were aiming for a price in the mid 80’s [sic], eight hundreds, I should say. So…

Member: So do you understand why you signed a list price – it’s not shown as reserved, it is shown as a list price of $799,000. If you’re looking for a price in the mid-800s?

Ms Holgar: Sorry. We were hoping to achieve somewhere over that. It says 799,000 plus.

Member: Yes?

Ms Holgar: So that was an indication of where the agents could have taken it with potential buyers.

  1. [25]
    The second appointment, dated 29 July 2016, had a list price of $815,000. Ms Holgar agreed that she signed an appointment at that list price, as a potential buyer, Mr Horn, had offered that price, on the basis that the agent reduced his commission from $22,500 to $21,400.[8]
  2. [26]
    Ms Holgar said that she had undertaken training to become a real estate agent in 2016, and was employed at the time of the hearing as a design and marketing consultant for GJ Gardner homes, and had held that position since 2017. She agreed that she knew very well how real estate agents’ contracts worked.[9]
  3. [27]
    Ms Holgar agreed that she instructed her lawyer to write to the agent on 8 September giving him instructions to refund the deposit to the buyer, Mr Horn, and had not at any stage told her lawyer to withdraw the instruction to the agent.[10]
  4. [28]
    In cross examination, Ms Holgar agreed that she later sought to enforce the contract with Mr Horn, as she had signed a contract to purchase another property at Dusk Street that was subject to the sale of the Aberfeldy Street property, which she wanted to proceed with:[11]

Mr Heath: So you signed this contract, you were seeking confirmation within seven days, that you could sell Aberfeldy Street, and then – to your horror – on 4 November you received an email from Mr Horne saying is not going to pursue his rights to enforce the sale of that contract?

Ms Holgar: That’s right.

Mr Heath: And this came out of the blue didn’t it? And this was the problem for you, in settling Aberfeldy Street you couldn’t – it’s buying Dusk Street if you couldn’t settle Aberfeldy Street?

Ms Holgar: That’s right.

Mr Heath: And that’s why you sent – you got your lawyers to send the letter on 8 November? Sorry, you need to respond verbally?

Ms Holgar: Yes.

Mr Heath: Thank you. All right. So – and you didn’t tell Mr Hyde any of this either, did you?

  1. [29]
    Ms Holgar said that she made a third counter-offer to Mr Horn of $815,000 on a 90 day settlement, as the longest period they could have gotten was the most desirable, and 90 days was satisfactory to her.[12] Subsequently however she had decided to withdraw the property from sale, and had asked her husband to call the agent about that:[13]

Member: Just while Mr Tan’s looking for that. You were being asked before about the events that occurred on 30 July 2016, and at paragraph 29 you say that Mr Hyde told you the buyer is out at $815,000 but he will consult his wife later tonight. You said at paragraph 30 you felt uneasy about that call. You discussed the sale with your husband and came to a decision to withdraw that third counter offer. And then on paragraph 32, you say on about 1 August 2016, which would have been a day or two later, he received a phone call from Mr Hyde saying the buyers accepted your offer. Why wouldn’t you have been pleased when you got that phone call from Mr Hyde on 1 August? Because your counteroffer had been $815,000. Why did you decide that you were unhappy with your own offer?

Witness: Because on the Saturday the 30th was a conversation that I’d asked my husband to make – a call he had to make to Mr Hyde. Because we’d had a family discussion that afternoon, and we decided that we were – we were sick of the whole thing. And we wanted to pull the property of the market. And…

  1. [30]
    Ms Holgar was asked why she was then wanting to pursue the contract with Mr Horn on 8 November 2016, when she had been aware of the letter from the buyer’s solicitor dated 4 November saying that the matter was at the end. She said this was because she wanted to go ahead with her new purchase by that time:[14]

Ms Gover: On 8 November, you wrote – you instructed your solicitors to write to the solicitors for the buyer and say, ‘This is a settlement date. We’re going ahead’. And you also instructed your solicitors to enquire of Mr Hyde – or rather, Cayne Hyde, about the deposit. At that time, where the buyer had indicated, essentially, that he was going to walk away, what were you concerned about? What was the motivation to want to push the contract through?

Ms Holgar: I think – well, I think at that stage we – because I’m not sure it was a – a week or so prior, but at some stage prior to that, I had discussions with James Loel about the situation. He urged me to start looking in earnest for a property that he – he wan – because he believed that that was our solution, to – to go through with the settlement. And we did find one, and – that suited our needs, and we wanted to go ahead.

The Evidence of Mr Holgar

  1. [31]
    Mr Holgar said that he had been involved in settling maybe 100 real estate contracts himself, as he has a separate company with other projects in it, and accepted that he would probably be described as a sophisticated investor.[15]
  2. [32]
    He was asked as to whether he had instructed the agent to withdraw the third counter-offer, and said he told the agent the property was off the market:[16]

Mr Heath: On 30 July – so your wife asks you to call Mr Hyde. Okay. Now, you say in your affidavit that she asked you to tell him to withdraw it from the – withdraw the counter offer she had made on 29 July, and to take the property off the market. That’s what you say you’re told to do. Now, I’m going to suggest to this – and you understand, I need to put to you what my client’s version of events is, out of fairness, so that you know the case that we are bringing to meet you. Okay. So what I put you is this: is that Mr – you spoke to Mr Hyde. And Mr Hyde told you that the buyer was not happy that there had been an additional counteroffer, but he was talking to his wife and he would advise the position in due course. Did Mr Hyde say that you?

Mr Holgar: He did, in…

Mr Heath: Thank you?

Mr Holgar: … More or less those words, yes.

Mr Heath: Yes. And on that basis, you didn’t instruct Mr Hyde to withdraw the third counteroffer. Did you?

Mr Holgar: What I replied to Mr Hyde was words to the effect that he can come back if he wants to, but the property is off the market.

The evidence of Mr Hyde

  1. [33]
    Mr Hyde gave evidence and said that he had been working in Real Estate for 30 years, and just short of 10 years in Australia.
  2. [34]
    Mr Hyde said that he received a letter from McInnes Wilson Solicitors on behalf of the buyer on 21 October 2016 asking him to release the deposit, and that once he received the details of the account to pay it into, that he acted immediately to pay the funds.[17]
  3. [35]
    In his affidavit filed on 13 July 2018, Mr Hyde described why he did not pay out the deposit until 8 November 2016:[18]

48. The reason I did not release the deposit funds to the buyer until 8 November 2016, notwithstanding that I have received the buyers written direction to do so on 21 October 2016, is because I had spoken to the buyers [sic] agent shortly after 21 October 2016 and asked whether he had a domestic bank account into which he wished me to deposit the funds, rather than the international bank account provided in the buyer’s solicitors letter. I made this enquiry because I knew, from my conversations with the buyers [sic] agent, that the buyer intended to buy a property in Australia (even if the sale of the property fell through) and, therefore, he may have wished to avoid the costs involved in moving the deposit money between Singapore and Australia.

49. Shortly after my discussion with the buyers [sic] agent discussed above, the buyers [sic] agent instructed me to refrain from paying the deposit funds until the details of a domestic bank account was provided.

50. I was provided with the details for the buyers [sic] domestic bank account on 8 November 2016 at 11:24 am (approximately three hours before I made the deposit payment).

  1. [36]
    In cross examination, Mr Hyde said that he received a text message from the buyer’s agent with the bank details at 11.24 in the morning[19] and said:[20]

… And the minute I received that, I acted immediately to – to pay them the funds.

  1. [37]
    Mr Hyde was asked at what time he went to the Westpac bank and had the cheque issued to pay the deposit, but was unable to name a specific time:[21]

Ms Gover: So you get the text at 11.24 in the morning and you said – you said just then you acted immediately, so how immediately is immediately?

Mr Hyde: Immediately. So immediately would take me from my office to the – to Westpac probably under five minutes. Getting a cheque issued and – it then – it then was banked.

Gover: So they would get you to Westpac at 11.30 in the morning?

Mr Hyde: Oh just…

Ms Gover: Roughly. Do you recall getting the message and essentially packing your things and going straight to the bank?

Mr Hyde: I’ve said to you the recollection in that regard, I acted as – I acted immediately and if you want to draw reference to when the cheque was drawn, I’m not sure there’s anything on file in terms of the date stamping of what the time that cheque was drawn but we certainly can see there was banked within – within a – within two or three hours.

Ms Gover: Yeah. It was banked at 2.15 p.m. at ANZ?

Mr Hyde: Yeah. So – so, if, you know, if that’s as immediate as the process took.

  1. [38]
    Mr Hyde said that he paid the deposit out in response to instructions from solicitors for both parties:[22]

Ms Gover: After you got the email from the buyer’s solicitors asking you to release the deposit, you considered that the buyer was entitled to the deposit?

Mr Hyde: Well I had received two instructions in that regard. One from Mr Loel ah, and one from the buyer’s solicitor. They synchronised in instruction to release the deposit to the buyer so my interpretation of that would mean that I would then need to pay it to the buyer. Now semantics of all of that – are not for me to decide however, instruction 1 and instruction 2 are quite clear. Pay the money to the buyer. That’s what I did. I do not read anything else into that. Simply I was told by both parties to pay it to the buyer. No other person. There wasn’t any confusion related to that.

The Evidence of Mr Cayne Hyde

  1. [39]
    Mr Cayne Hyde gave evidence that he had been practising as a sales agent for roughly 12 years and worked with his father Mr Hyde.
  2. [40]
    Mr Cayne Hyde said that he was not aware that a dispute had occurred between the parties prior to the deposit being released:[23]

Ms Gover: And after you received the email on 8 November you obviously discussed it with your father?

Mr C Hyde: sorry – say again.

Ms Gover: After you received these emails you would’ve discussed them with your father?

Mr C Hyde: Sure, in brief, yeah.

Ms Gover: And you then became aware that he had released the deposit on 8th of November?

Mr C Hyde: Yes

Ms Gover: And that there was some dispute in relation to?

Mr C Hyde: There was an apparent dispute, yes.

Ms Gover: I suggest to you that the reason you didn’t reply to the email – the emails received by you from the buyers – the seller’s solicitor is because you knew that a dispute had occurred, you knew the deposit had been released and you were concerned that the Hydes might’ve acted inappropriately in some way in relation to that deposit?

Mr C Hyde: I just want to reiterate the fact that we have had no absolutely no communication from either solicitors side [sic] and therefore we would never have been aware of any dispute that may have arisen or could have arisen. That’s why the for – email was forwarded to Rob. In the interim the deal didn’t exist, according to her solicitors. That was our view on the whole thing.

  1. [41]
    Mr Cayne Hyde was asked about the timing of the settlement statement email. It was put to him that the email was received at 1:44 pm on 8 November 2016 - he did not disagree with that, and said that he forwarded onto his father at 4:09 pm.

The Chief Executive’s submissions

  1. [42]
    In its initial submissions, filed on 17 June 2018, the Chief Executive submitted that section 25 to 27 of the Act relevantly apply if the company becomes aware of a dispute, or it considers that a dispute may arise between the applicant and the buyer about who is entitled to the deposit before it is paid out, but that none of the matters that the owner points to in her application meet that threshold test.[24]
  2. [43]
    The Chief Executive noted that at some point between 30 September 2016 and 4 November 2016 the owner completely changed her position as to whether a binding contract existed with the buyer, and then asserted that a binding contract had come into existence and the buyer was obligated to purchase the property, but at no point did she communicate this to the agent before the deposit was released. It submitted that if the owner had done so, the agent would have been legally required to either hold the deposit in trust or pay it to a court as required by Part 2, Division 5 of the Act.[25]
  3. [44]
    In its further submissions of 2 March 2018, the Chief Executive agreed with the owner that the key question (threshold question) for the Tribunal to determine this matter is:[26]

‘Was there anything before the company/Mr Hyde that should have put them on notice that a dispute had or may arise over who was entitled to the deposit before it was released to the buyer?’

It submitted that the answer to this question determined the issue:[27]

If the answer is ‘yes’, then the company/Mr Hyde breached sections 21 or 22 of AFAA by releasing the deposit to the buyer instead of treating it as disputed trust monies in accordance with Part 2, division 5 of AFAA. In that case, the review and the claim ought be allowed. If the answer is ‘no’, then the company/Mr Hyde did not commit a claimable event and the review ought be dismissed.

  1. [45]
    In its closing submissions filed on 4 January 2019, the Chief Executive refers to the ‘settlement statement email’ sent by the owner to the agent, and submits that it does not put the agent and the agency on notice that a dispute about the deposit might arise, because it indicated that the owner was preparing to complete the contract and was concerned that the deposit was still held in trust:[28]

18. The Chief Executive submits that the words ‘please let us know if you are holding the full deposit..’ does not indicate any concern for the deposit. On its face, it indicates that the applicant’s solicitors do not believe/suspect that the respondents hold the full deposit, but if they are wrong, they want the respondents to correct them. Its apparent purpose is actually to assist the applicant’s solicitors [sic] calculations, not to express concern about the deposit.

19. The Act and other legislation intends and requires that the respondents follow the applicant’s lawful instructions, not to read her mind or instruct themselves. The settlement statement email was sent after both the buyer and the applicant gave the respondents matching written authorities to pay the deposit to the buyer. At this point, the applicant made no effort to change her instructions or inform the respondents of her radically different intentions, which is out of character.

  1. [46]
    In relation to the owner’s claim for interest on the bridging finance, the Chief Executive notes that the loan agreement to borrow $500,000 from Australian Mortgage Funding and Management Pty Ltd Unit Trust or Nominee, to finance the purchase of the Dusk Street property, was entered into by Micrah Pty Ltd. It submits that the owner did not have any personal interest obligations, and cannot therefore make a claim in respect of the alleged loss which would have been suffered by Micrah Pty Ltd:[29]

53. Even if the applicant paid interest from her own funds, she was never liable to do so in the first place because the loan did not obligate her to do so and it was not alleged, nor was any evidence led, to establish that AMFM ever called on her guarantee.

54. Nevertheless, the applicant says that she is entitled to the bridging finance interest from the fund because she is a director of Micrah Pty Ltd and paid its interest obligations from her own funds. The Chief Executive submits that neither of these factors, even if established, would make the bridging finance interest a financial loss that the fund can address.

55. Micrah Pty Ltd is a separate and distinct legal entity from its directors and its debts do not become the liabilities of its directors without binding authority. No such authority is cited. Accordingly, Micrah Pty Ltd’s liability to pay the bridging finance interest is not the applicant’s liability. The applicant, for reasons best known to herself, chose to meet Micrah Pty Ltd’s repayment obligations voluntarily and not because she was liable to do so. Accordingly, the bridging finance interest was not caused by the claimable event.

  1. [47]
    In relation to costs, the Chief Executive supported the owner’s request for further directions to be made as to costs.[30]

The submissions of the owner

  1. [48]
    The owner initially filed submissions on 12 February 2018. The owner identified the ‘claimable event’ as the ‘unauthorised release of the deposit to the buyer on 8 November 2016’.[31]
  2. [49]
    The owner submitted that she accepted that the Act did not impose a positive obligation on agents to investigate whether a dispute exists, but that the agent had not acted in an appropriate manner:[32]

30. The respondents [sic] approach was imprudent at best. The third respondents [sic] attitude in this matter is clearly demonstrated by the unauthorised email dated 12 August 2016 and his failure to respond to the applicants [sic] emails of eight, 10 and 18 September 2016. His attitude illustrates the atmosphere in which the deposit was released, and a lack of regard for the applicants [sic] instructions as principal.

31. It is accepted that the Act does not impose a positive obligation on agents to investigate whether a dispute exists. However, an expectation that an agent would confirm dated instructions in the circumstances is not onerous. The respondents acted on the basis of unsubstantiated assumptions as to the state of affairs between the applicant and the buyer (for example, that termination had occurred and that the right to terminate was not challenged by the applicant).

32. Such a loose-handed approach to dealing with trust money does not promote the protection of consumers and ought not be condoned by the interpretation of the Act.

  1. [50]
    In her closing submissions the owner asked the Tribunal to infer that the agent was wilfully blind about the potential for a dispute in relation to the deposit, or at least to conclude that the objective circumstances were such that he should have been aware a dispute may arise:[33]

28. In addition to the matters set out above, at 1:44 pm on 8 November 2016 (i.e. prior to the release of the deposit) the solicitor for the applicant sent an email to Cayne Hyde stating:

‘I am drafting a settlement statement in respect of this transaction.

Please let us know if you are holding the full deposit in the amount of $80,000.’

29. On its face, that email indicated that the applicant was preparing to complete the contract and was concerned that the deposit was still held in trust. This directly contradicted the position expressed by the buyer’s solicitors in the letter dated 21 October 2016 and should have made the respondents aware that a dispute may arise in relation to the deposit.

  1. [51]
    The owner submitted that the property was ultimately sold to a third party for an increased value of $850,000, but that this would not affect the entitlement of the owner to also recover the deposit, and that she was not required to pursue a claim against the buyer directly:[34]

48. Exhibit 2, tended on behalf of the Chief Executive, demonstrates that the Aberfeldy Street property was ultimately sold to a third party for $850,000. The ultimate sale price of the Aberfeldy Street property is not relevant to the quantum of the claim or the issues to be determined by the tribunal. The applicant was entitled to the deposit and, but for the claimable event, would have had the benefit of both the deposit and the increased purchase price attained under the subsequent sale contract. Nonetheless, it is noted that the applicants [sic] total loss arising out of this transaction exceeds the loss claimed against the fund.

49. Similarly, it is relevant that the applicant chose to make a claim against the fund rather than pursue a civil remedy against the buyer for breach of contract. Nonetheless, it is noted that an action commenced against the buyer would be more costly and likely protracted. In the circumstances of this matter, the Act [sic] provided a more efficient means of recovering part of the applicants [sic] loss. Nothing in the act requires claimants to pursue other potential avenues of relief before making a claim against the fund.

  1. [52]
    The Owner’s Closing Submissions in Response, filed on 6 February 2019, describe the owner’s attitude towards the contract as explicable:[35]

49. Much of the respondent’s submissions focus on the applicant’s conduct of the contractual dispute. The applicant’s attitude towards the contract is explicable when one recalls that she believed the third counteroffer had been withdrawn, had received extraordinary correspondence from the agent, and was given conflicting legal advice about the existence of a contract.

The Agent and Agency’s submissions

  1. [53]
    The agent and the agency submit that the payment of the deposit from the trust account was made regularly in reliance on written instructions.[36]

8. It is the second and third respondents [sic] contention that the payment made from the trust account on 8 November 2016 to the buyers [sic] account was made regularly, in accordance with section (27)(2) of the AFAA, which provides that:

The agent must not pay out the amount in dispute unless the agent receives written notice:

  1. (a)
    from all parties to the transactions stating the person who is entitled to the amount; or
  2. (b)
    a proceeding has been started to decide who is entitled to the amount

Maximum penalty – 200 penalty units or 20 years imprisonment.

9. In this regard, the second and third respondents rely on the written directions received from the applicant’s solicitors on 8 September 2016, and from the buyer’s solicitors on 21 October 2016, to pay the $80,000 deposit to the buyer.

  1. [54]
    The agent and the agency endorse and adopt the ‘threshold question’ referred to in the submissions of the parties.[37]
  2. [55]
    The agent and the agency submit that the owner’s evidence was unsatisfactory and evasive:[38]

The applicants [sic] unsatisfactory evidence with respect to whether, or not, she had made an offer capable of acceptance on 29 July 2016, is consistent with the evasive and unsatisfactory manner in which she gave much of her evidence and, moreover, her conduct throughout the course of the negotiations with Horn, in which the applicants [sic] position changed repeatedly.

  1. [56]
    The agent and the agency summarised the actions of the owner in the process as follows:[39]

37. Even after all that had transpired between the applicant and Horn’s solicitors, characterised by the applicant grudgingly conceding that she had made an offer capable of acceptance on 29 July 2016, then accepting that a binding contract was entered into between the parties as at 1 August 2016, then disputing that a binding contract had been entered into it all, then refusing to attend the nominated settlement date of 29 September 2016, and then, after Horn decided to withdraw the Caveat and discontinue his dispute with the applicant, seeking to affirm the contract, the applicant, then, remarkably, made demand upon Horn for the return of the deposit and indicated an intention to pursue proceedings against him.

38. However, the applicant decided not to do so and, rather, conceded that she chose to pursue proceedings against the second and third respondents because it was less costly to do so.

  1. [57]
    The agent and the agency submit that the owner’s lack of communication with them should be seen in the context of her actions in making an undisclosed complaint about them:[40]

39. The applicant’s decision to cease communication with the second and third respondents – which the applicants Council characterised repeatedly throughout the course of the hearing as a period of ‘radio silence’ and which the third respondent categorised, correctly, as ‘absolute silence’, she made a complaint to the Office of Fair Trading concerning the second and third respondents in August 2016, without alerting the second and third respondents to that complaint.

  1. [58]
    The agent and the agency referred to the proposition that there was an obligation on the agent to launch an investigation with respect to the disposition of the deposit, and queried how that could have been expected in light of the owner’s fluctuating positions:[41]

66. Even if, which is denied, there was such an obligation, what any such investigation would have revealed as to the applicants [sic] intentions would have changed, depending upon the day upon which the enquiry was made. The evidence supports the proposition that the applicant, a sophisticated person with knowledge of real estate agency practice, sought to exploit, with the benefit of legal advice, the proposition that the date for settlement of the contract had not been initialled, in advancing an unsustainable argument that she had not entered into a contract. The applicant held that position for some time, and then resiled from it, but only after the applicant had decided, without notice or reference to the second or third respondents, to enter into a contract for the purchase of another property, the purchase of which was contingent upon the sale of the Aberfeldy Street property. The applicant’s plans in that regard were, however, thwarted by Horn’s decision to abandon the purchase of the Aberfeldy Street property, whereupon the applicant reversed her previous position.

67. How, in such confusing circumstances, an agent could have been expected to have known what the applicants [sic] intentions were is unknown, even the applicant did not know from day-to-day what her position would be.

Discussion

  1. [59]
    The steps taken by both the owner and the proposed buyer in this matter are convoluted. It took place within the context of protracted negotiations involving the agent, the owner and the buyer, which commenced on 5 May 2016 (when the agent and the agency was first appointed by the owner) and continued with numerous twists and turns through to November 2016.
  2. [60]
    At first impression, the actions of each of the owner and the buyer, at one point affirming a position, then subsequently adopting a completely opposite position, seem to be inexplicable. However, I am satisfied that a logical course of events can be discerned, which occurred because each of the owner and the buyer were seeking to maximise and safeguard their personal position at each point as the events unfolded. What can be seen occurring is a fluid dynamic between the two parties, as each considered, and reacted to, the actions of the other.
  3. [61]
    The owner’s position was driven firstly by her desire to enter into a contract. I consider that she then began to repent of her bargain. Her change of mind is expressed by her as being the result of a family discussion.
  4. [62]
    The owner then decided that she would withdraw from the negotiations, and asked her husband to advise the agent that the property was ‘off the market.’
  5. [63]
    The owner did not attend the scheduled settlement of the Aberfeldy Street property on 29 September 2016.
  6. [64]
    The buyer then sought to enforce the contract, to the extent that a Caveat was lodged on 6 October 2016 over the property. If the buyer had wanted to continue to assert his position, he would have then had to support the Caveat by appropriate legal proceedings.
  7. [65]
    It is apparent that the buyer reconsidered his position, in light of the opposition by the owner to there being an enforceable contract; and then decided not to support the Caveat by legal action and not to press his claim, and to give the matter away, and to proceed with the purchase of an alternate property.
  8. [66]
    The buyer, by his solicitors, advised the agent on 21 October 2016 that he did not intend to pursue his rights under the contract and sought that the deposit be refunded.
  9. [67]
    That would, in the normal course of events, have concluded the matter. However, whilst the buyer was having second thoughts and making alternate arrangements, the owner also was making new arrangements.
  10. [68]
    The owner entered into a contract on 24 October 2016 to buy the Dusk Street property, which was conditional upon the sale of the property at Aberfeldy Street, and had to be confirmed around 3 November 2016 to go unconditional.[42]
  11. [69]
    The owner then decided that she would seek to enforce the contract for the sale of the property at Aberfeldy Street, which she had previously argued was not valid.
  12. [70]
    It is apparent that these strategic manoeuvres were engaged in by the buyer and the owner independently, and involved their lawyers. The person who was left out of these manoeuvrings was the agent.
  13. [71]
    The owner gave evidence as to her reaction to learning on 4 November 2016 that the buyer was no longer seeking to enforce the Contract, and her giving instructions to her solicitors to enforce the contract which led to their email of 8 November 2016, and said that she did not inform the agent of any of those matters:[43]

Mr Heath: So you’ve signed this contract, you were seeking confirmation within seven days, that you could sell Aberfeldy Street, and then – to your horror – on 4th November you received an email from Mr Horn saying he is not going to pursue his rights to enforce the sale of that contract?

Ms Holgar: That’s right.

Mr Heath: And this came out of the blue, didn’t it? And this was the problem for you, in settling Aberfeldy Street you couldn’t – it’s buying Dusk Street if you couldn’t settle Aberfeldy Street?

Ms Holgar: That’s right.

Mr Heath: And that’s why you sent – you got your lawyers to send the letter on 8 November? Sorry, you need to respond verbally?

Ms Holgar: Yes.

Mr Heath: Thank you. All right. So – and you didn’t tell Mr Hyde any of this either did you?

Ms Holgar: No.

Mr Heath: No. Thank you. All right. Paragraph 70 of your affidavit, you have your lawyers write to Mr Hyde on 8 November saying the draft in the settlement statement and asking if you’re holding the full deposit in the amount of $80,000. Now this seems to be – would you agree with me – this seems to be the first communication that your lawyers have had with Mr Hyde since 8 September isn’t it?

Ms Holgar: Yes.

Mr Heath: Okay. And even then, in that letter, you don’t tell them you’re in dispute with the buyer, do you?

Witness: No.

Mr Heath: You don’t do that till two days later, do you?

Witness: No.

  1. [72]
    The owner submits in her closing submissions that she was not required to withdraw her earlier instructions to refund the deposit, and to keep the real estate agent informed:[44]

27. Paragraph 19 of the Chief Executive’s submissions again criticises the applicant for not withdrawing the 8 September 2016 instructions – this submission is addressed above. It also criticises the applicant for not advising the respondents of ‘her radically changed different intentions’. In effect, that submission attempts to impose on the applicant an obligation to provide notice of the dispute. As discussed in paragraphs 14 to 17 of the applicant’s submissions, that obligation was excluded from the current legislative scheme. Further, there is no reason why a seller would keep the real estate agent abreast of legal issues and negotiations in relation to a contract after it has been signed, particularly where these matters were being dealt with by the parties [sic] solicitors.

  1. [73]
    If the owner was acting consistently with those submissions, then this reinforces the credibility of the agent’s contention that he was not advised that the owner had a dispute as to the deposit, and was not aware of any legal interplay between the parties which would have alerted him to a dispute as to the deposit.
  2. [74]
    The events of 8 November 2016 are central to this matter. On the same day:
    1. (a)
      the agent acted to draw a cheque from the trust account of the agency and deposit it to the account of the buyer; and
    2. (b)
      the owner’s solicitor sent an email to the agent enquiring if the deposit had been released, referring to a settlement statement being prepared.
  3. [75]
    The agent’s evidence is that he was advised of the appropriate account to pay the deposit into at 11:24 am on 8 November 2016, and acted immediately to do so. It is not known at what time the cheque was drawn, but it was noted as being paid into the ANZ bank at 2:15 pm on 8 November 2016.
  4. [76]
    The settlement statement email was sent to Mr Cayne Hyde at 1:44 pm on 8 November 2016. It is unclear when Mr Cayne Hyde read that email, but it was not forwarded to his father until 4:09 pm.
  5. [77]
    It is curious that these events both occurred on the same day, but no explanation has been put forward as to any link between the events occurring.
  6. [78]
    There is no evidence that the agent was aware of the settlement statement email at the time the cheque was paid into the ANZ bank.
  7. [79]
    I accept the evidence of the agent that he was responding only to the advice by the buyer’s agent as to the details of the account into which to refund the deposit, and am satisfied that he was not aware of the settlement statement email at the time he effected the transactions at the banks.
  8. [80]
    I am also satisfied that the settlement statement email was not read by the agency (through Mr Cayne Hyde), and that the agency did not know of the email, at the time the agent deposited the deposit monies into the account of the buyer.
  9. [81]
    I consider that actual knowledge would have been required by the agent and the agency of the settlement statement email at the relevant time of payment of the deposit into the buyer’s account, for there to be any relevance of it to the payment – I do not consider that they can be deemed to have had knowledge simply on the basis of the time at which the email was received.
  10. [82]
    The ‘threshold question,’ as previously referred to, is as follows:

‘Was there anything before the company/Mr Hyde that should have put them on notice that a dispute had or may arise over who was entitled to the deposit before it was released to the buyer?’

  1. [83]
    I am satisfied that, at the time the agent released the deposit, neither party had communicated to the agent or the agency that a dispute existed as to the deposit.
  2. [84]
    I am satisfied that at the time he released the deposit, the agent was of the understanding, based upon written advice, that both parties then considered the contract to be at an end, that neither wanted it to proceed, and that he released the deposit back to the buyer accordingly at the first opportunity he had, upon being advised of the account of the buyer to release the deposit into.
  3. [85]
    I am not satisfied that the agent or the agency should have been put on notice that a dispute may arise over who was entitled to the deposit before it was released to the buyer. This matter had been marked by offer and counteroffer, and contention as to the validity of the contract. The parties had legal representation throughout the process. The history of the matter was one of change and manoeuvring throughout.
  4. [86]
    The agent could not be expected to have formed the view that a dispute may arise as to entitlement to the deposit, given that I have found that the agent was acting under instructions from both parties which had not been withdrawn, and given the dynamic history of the negotiations, and the apparent conclusion of the matter by the change of attitude of the buyer who was no longer seeking to pursue the Contract.
  5. [87]
    The owner’s evidence was clear that she did not advise the agent of her change of attitude as to the validity of the contract, and did not advise him that she wished to enforce it, prior to the release of the deposit.
  6. [88]
    I am not satisfied that any circumstances have been identified as being in place on the morning of 8 November 2016 which should have put the agent on notice that a dispute may arise as to the deposit.
  7. [89]
    I consider that the agent, as at 11:24 am on 8 November 2016, and continuing through to 2:15 pm on 8 November 2016, rather than being expected to have had a reasonable belief that a dispute had or may arise, would more reasonably be expected to have had a belief that any dispute was over and would not arise, as the buyer no longer sought to enforce the contract, and the agent’s only knowledge at the time was that the owner also did not want to proceed with the contract.
  8. [90]
    I therefore find that the threshold question is determined in the negative.
  9. [91]
    I am not satisfied that the agent or the agency committed any breach of their duties under the Act, and accordingly, no claim can arise against the fund under the Act.
  1. [92]
    For the sake of completeness, I will address the claim for interest made by the owner in relation to bridging finance. I accept the submissions of the Chief Executive and the agent and the agency that the owner has not established any personal liability by her to pay interest at all, as the loan was taken out by Micrah Pty Ltd, which is not a claimant upon the fund. I would therefore not have allowed the claim for interest, even if I had allowed the claim upon the fund in respect of the deposit.
  2. [93]
    The Owner and the Chief Executive both referred to further directions being made as to costs. The parties may make a claim for costs subsequent to the making of these orders, even if the proceeding has ended, pursuant to section 106 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
  1. [94]
    The award of costs is subject to the provisions of Section 100 of that Act, which provides that each party usually bears its own costs, and Section 102, which provides that the Tribunal may make an order in relation to costs if the Tribunal considers the interests of justice require it to make the order.
  1. [95]
    If any application for costs is made, directions can then be made as to the filing of submissions in that regard.
  1. [96]
    I confirm the decision of the Chief Executive, made on 19 October 2017, to reject the claim made by the owner upon the fund maintained under the Agents Financial Administration Act 2014 (Qld).

Footnotes

[1]Reasons for Decision of the Chief Executive, 19 October 2017.

[2]Ibid [29], [30].

[3]Ibid [37].

[4]Ibid [41].

[5]Ibid [45], [46].

[6]Transcript 1-30, line 36.

[7]Ibid 1-35, line 32.

[8]Ibid 1-38, line 5.

[9]Ibid 1-47, line 45.

[10]Ibid 1-55, line 23.

[11]Ibid 1-61, line 11.

[12]Ibid 1-76, line 30.

[13]Ibid 1-78, line 3.

[14]Ibid 1-83, line 36.

[15]  Ibid 1-99, line 1.

[16]  Ibid 1-89, line 47.

[17]  Ibid 2-12, line 26.

[18]  Affidavit of Robert Ian Hyde, filed 13 July 2018, [48]-[50].

[19]  Transcript 2-11, line 39.

[20]  Ibid 2-12, line 28.

[21]  Ibid 2-12, line 44.

[22]  Ibid 2-31, line 20.

[23]  Ibid 2-66, line 5.

[24]  Chief Executive's submissions, filed 17 June 2018, [24].

[25]  Ibid [31].

[26]  Chief Executive's submissions, filed 2 March 2018, [12].

[27]  Ibid [13].

[28]  Chief Executive's submissions, filed [date] January 2019, [17], [18].

[29]  Ibid [53]-[55].

[30]  Ibid [62].

[31]  Submissions of the owner, filed 12 February 2018, [17].

[32]  Ibid [30]-[32].

[33]  Ibid [27]-[29].

[34]  Ibid [48], [49].

[35]  Applicant’s Closing Submissions in Response, filed 6 February 2019, [49].

[36]  Second and Third Respondents’ Closing Submissions, [7], [8].

[37]  Ibid [11].

[38]  Ibid [22].

[39]  Ibid [37], [38].

[40]  Ibid [39].

[41]  Ibid [66].

[42]  Transcript 1-60, lines 16-43.

[43]  Transcript 1-61, line 11.

[44]  Applicant's Closing Submissions in Response, filed 6 February 2019, [27].

Close

Editorial Notes

  • Published Case Name:

    Holgar v Chief Executive, Department of Justice and Attorney-General & Ors

  • Shortened Case Name:

    Holgar v Chief Executive, Department of Justice and Attorney-General

  • MNC:

    [2019] QCAT 370

  • Court:

    QCAT

  • Judge(s):

    Member Paratz

  • Date:

    29 Nov 2019

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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