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  • Unreported Judgment

Prestige & Rich Pty Ltd

 

[2020] QCATA 165

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Prestige & Rich Pty Ltd & Anor v Chief Executive, Department of Justice and Attorney General, Office of Fair Trading & Anor [2020] QCATA 165

PARTIES:

PRESTIGE & RICH PTY LTD

STEPHANIE ELIZABETH TO

(applicant/appellant)

v

chief EXECUTIVE, DEPARTMENT OF JUSTICE AND ATTORNEY GENERAL, OFFICE OF FAIR TRADING

jianjie li

(respondent)

APPLICATION NO/S:

APL014-19

ORIGINATING APPLICATION NO/S:

GAR122-18

MATTER TYPE:

Appeals

DELIVERED ON:

15 December 2020

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

ORDERS:

  1. Leave to appeal refused.
  2. Appeal dismissed.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – ADMISSION OF FURTHER EVIDENCE – EVIDENCE NOT AVAILABLE AT HEARING – WHEN NOT ADMISSIBLE - where appellants seek to rely upon a transcript of Magistrates Court  hearing – where no application to rely upon fresh evidence by appellants – where failure by appellants to address relevant principles for the admission of further evidence – where evidence could have been obtained by the exercise of reasonable diligence

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – Agents Financial Administration Act 2014 (Qld) – whether error in finding that appellants had no entitlement to an amount in dispute under Part 2 Division 5 of the AFA Act – where appellants were instructed to return the deposit monies held – where failure to pay an amount from a transaction amount to the person entitled is an offence - consideration of context of provisions of Division 5 and object of the Act

Acts Interpretation Act 1954 (Qld), s 14A(1), s 32CA(1)

Agents Financial Administration Act 2014 (Qld), s 6, s 15(2), s 16, s 21, s 22, s 25(1), s 26, s 27, s 28, s 82(1)(a), s 82(1)(b), sch 1

Property Occupations Regulation 2014 (Qld), reg 22(1)

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 28(3)(b), s 142(1), s 142(3)(b), s 146, s 147

Active Property Marketing Services v Joelco P/L [2007] QSC 167

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41

Burt v Claude Cousins & Co Ltd [1971] 2 QB 426

Cachia v Grech [2009] NSWCA 232

Ericson v Queensland Building Services Authority [2013] QCA 391

Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388

Hauff v Miller [2013] QCA 48

McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577

Prestige & Rich Pty Ltd v McGregor [2019] QDC 151

Prestige & Rich Pty Ltd v McGregor [2020] QCA 220

Prestige & Rich Pty Ltd & Anor v Chief Executive, Department of Justice and Attorney-General, Office of Fair Trading & Anor [2018] QCAT 436

QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41

TA Miller Ltd v Minister of Housing and Local Government [1968] 1 WLR 992

Walton v New Lakelands Pty Ltd [2013] QCATA 49

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

REASONS FOR DECISION

What is this appeal about?

  1. [1]
    Prestige & Rich Pty Ltd is a real estate agent. Ms To is a director of Prestige. Prestige and Ms To will be collectively referred to as the appellants unless it is otherwise appropriate to refer to them individually.
  2. [2]
    The Chief Executive made a decision that the appellants were liable for a payment from the claim fund established under the Agents Financial Administration Act 2014 (Qld) (the original decision). The appellants sought a review of that decision. The tribunal confirmed the decision of the Department (the decision below).[1]
  3. [3]
    The appellants have appealed the decision below.

The background

  1. [4]
    In 2016, Prestige agreed to act as the selling agent for the vendors of a property in Brisbane. A contract of sale was entered into between the vendors and a buyer, Mr Li. Mr Li paid a deposit of $24,500.00 to Prestige. The contact of sale was subject to Mr Li obtaining finance by 25 March 2016.
  2. [5]
    When Mr Li could not obtain finance, his solicitors terminated the contract on 24 March 2016. Prestige formed the view that there arose at that time a dispute, or a potential dispute, about the entitlement to the deposit monies. Prestige gave notice to the vendors and Mr Li on 31 March 2016 that it intended to release the deposit monies to the vendors on or after 1 June 2016.
  3. [6]
    Subsequently, on 13 April 2016, the solicitors for the vendors wrote to the solicitors for Mr Li, copying in Prestige, advising that the contract had been properly terminated and instructing Prestige to pay the deposit to Mr Li. Prestige did not do so.
  4. [7]
    On 13 May 2016 Mr Li commenced proceedings against Prestige in the Supreme Court of Queensland seeking a declaration that the contract had been properly terminated and an order that the deposit monies be paid to him. Mr Li’s application was dismissed on 3 June 2016 on the basis that the proceeding should have been brought in the Magistrates Court.
  5. [8]
    Prestige subsequently released $4,500.00 of the deposit monies to the vendors and paid to itself the balance of $20,000.00 in respect of a claimed commission on the failed sale.
  6. [9]
    Mr Li subsequently lodged a claim with the Chief Executive against the claim fund established under the AFA Act in respect of the unpaid deposit monies. A decision was made by the Chief Executive accepting the claim. The Chief Executive found that the appellants were liable for Mr Li’s financial loss in the amount of $24,500.00.[2]
  7. [10]
    The appellants filed an application to review the decision of the Chief Executive on 9 April 2018 and on 14 December 2018 the tribunal dismissed the application.

The Agents Financial Administration Act 2014 (Qld) (AFA Act)

  1. [11]
    The main object of the AFA Act is to protect consumers from financial loss in dealings with agents regulated under an Agents Act.[3] An Agents Act is defined.[4] The object is to be achieved mainly by: regulating the way agents establish, manage and audit trust accounts; and establishing a claim fund to compensate persons in particular circumstances for financial loss arising from dealings with agents; and promoting administrative efficiency for claims made against the claim fund.[5]
  2. [12]
    An amount received by an agent in respect of a transaction must be paid into the agent’s trust account.[6] An ‘amount’ includes a deposit for a transaction.[7] An amount paid to an agent’s trust account must be kept in the account until it is paid out under the Act.[8] An amount may be paid from a trust account only in a way permitted under the AFA Act.[9]

Dealing with transaction funds which are not in dispute

  1. [13]
    Part 2, Division 3 of the AFA Act deals with payments from a transaction fund in circumstances where there is no dispute about who is entitled to the monies. ‘Transaction fund’ means an amount held in an agent’s trust account for a transaction.[10]
  2. [14]
    An agent may draw an amount from the trust account to pay the agent’s transaction fee or transaction expenses for a transaction only if the amount is drawn against the transaction fund for the transaction and the agent is authorised to draw the amount.[11] A transaction fee includes a commission.[12]
  3. [15]
    An agent must, after a transaction is finalised, pay an amount from a transaction fund to the person entitled to it or someone else in accordance with the person’s written direction.[13]
  4. [16]
    If a dispute about a transaction arises, the transaction is not taken to be finalised until the agent is authorised to pay out the transaction fund under Division 5.[14]

Dealing with transaction funds, the entitlement to which is dispute

  1. [17]
    Part 2, Division 5 of the AFA Act deals with payments from a transaction fund in circumstances where the entitlement to the fund is in dispute. The provisions of Division 5 apply in circumstances where an agent becomes aware of a dispute or considers a dispute may arise between the parties to a transaction about an entitlement to a transaction fund.[15]
  2. [18]
    If an agent considers that a party to a transaction is entitled to an amount in dispute, the provisions of s 26 of the AFA Act apply. In circumstances where an amount in dispute is not dealt with under s 26, then s 27 and s 28 of the AFA Act apply.
    1. Section 26 AFA Act
  3. [19]
    If an agent considers that a party to a transaction is entitled to an amount in dispute, the agent must give written notice to the parties to the transaction that: the agent considers a stated party is entitled to the amount; the agent is authorised to pay the amount unless, within a stipulated period, (i) a proceeding in respect of the dispute is started and the agent is notified accordingly, or (ii) all parties to the transaction authorise the payment of the amount to a stated party.[16]
  4. [20]
    After giving the notice to the parties, the agent may pay the amount in dispute to the stated party in two circumstances: firstly, if the agent is unaware of the commencement of a proceeding claiming an entitlement to the amount within the stipulated period;[17] secondly, where the agent is, within the stipulated period, authorised to pay the amount.[18]
  5. [21]
    Section 26(5) of the AFA Act provides:
  1. (5)
    To remove any doubt, it is declared that this section—
  1. (a)
    provides a process for the payment of an amount in dispute; and
  1. (b)
    does not decide legal entitlement to the amount or prevent a person legally entitled to the amount recovering it from the person to whom it was paid.

ii. Section 27 and s 28 AFA Act

  1. [22]
    If an amount in dispute is not dealt with under s 26, an agent must not pay out the amount unless authorised in writing by all parties to the transaction to do so[19] in which event the amount must be paid to the person as directed by the parties[20] or if a proceeding has been started to decide who is entitled to the amount, the amount must be paid into court.[21]

Entitlement to claim against the fund

  1. [23]
    A person may claim against the fund if the person suffers financial loss as a result of, inter alia, a contravention of the provisions of the AFA Act relating to the management by an agent of trust account funds,[22] or the stealing, misappropriation or misapplication by an agent of trust funds.[23]

The decision below

  1. [24]
    The learned member found:
    1. (a)
      there was no persuasive evidence that Mr Li had failed to discharge his obligations in relation to obtaining finance;[24]
    2. (b)
      whether or not Mr Li had discharged his obligations in relation to obtaining finance was irrelevant as the vendors and Mr Li agreed that the contract should be terminated;[25]
    3. (c)
      once the vendors and Mr Li agreed that the contract had been terminated and that the deposit should be returned to Mr Li, the opinion of Prestige became irrelevant, if it ever was relevant;[26]
    4. (d)
      from the date the solicitors for the vendors instructed Prestige that the deposit should be paid to Mr Li, Prestige, as agent for the vendors, was bound to follow those instructions unless they were unlawful;[27]
    5. (e)
      it was not the role of Prestige to enforce the conditions of the contract of sale and Prestige had no right to engage in enforcing the contract of sale or any part of it;[28]
    6. (f)
      the AFA Act is intended to provide protection for parties to the transaction, not for an agent to seize a commission or fees;[29]
    7. (g)
      the actions of Prestige in paying themselves a commission from the deposit monies appeared founded on a notion of self interest rather than the duty owed by Prestige as the vendors’ agent;[30]
    8. (h)
      section 26 of the AFA Act does not provide a mechanism for the resolution of the issue of the legal entitlement to an amount in dispute;[31]
    9. (i)
      the agent holds deposit monies as trustee, subject to directions as are given by the parties to the transaction;[32]
    10. (j)
      section 27 of the AFA Act requires an agent to pay monies in dispute in accordance with a direction given by the parties;[33]
    11. (k)
      a prudent agent would seek legal advice where there was uncertainty in relation to the handling of trust funds. The tribunal inferred that Prestige had not sought such advice;[34]
    12. (l)
      the fact that Mr Li had not personally signed the contract of sale was irrelevant as this was not an issue of dispute between the parties to the contract;[35]
    13. (m)
      the conduct of Prestige demonstrated little regard for the vendors. Prestige failed to act in the best interests of the vendors.[36]

Appeals – the statutory framework

  1. [25]
    An appeal on a question of law is as of right[37] and is an appeal in the strict sense. An appeal on a question of fact or mixed law and fact may only be made with the leave of the Appeal Tribunal[38] and, if leave is granted, is conducted by way of rehearing.[39]
  2. [26]
    In determining an appeal on a question of law only, the Appeal Tribunal may confirm or amend the decision; set aside the decision and substitute its own decision; or set aside the decision and remit the matter to the tribunal for reconsideration with or without the hearing of additional evidence.[40]
  3. [27]
    The Appeal Tribunal should only substitute its own decision if the determination of the question of law resolves the appeal entirely in the appellant’s favour.[41] Otherwise the matter should be remitted for reconsideration.
  4. [28]
    If an appeal is one against a decision on a question of fact only or a question of mixed law and fact, and subject to leave to appeal being granted, the Appeal Tribunal may conduct the rehearing with or without additional evidence.[42] In deciding the appeal, the Appeal Tribunal may confirm or amend the decision, set aside the decision and substitute its own decision or set aside the decision and remit the matter to the tribunal for reconsideration.[43]
  5. [29]
    The relevant principles to be applied in determining whether to grant leave to appeal are well established: is there a reasonably arguable case of error in the primary decision;[44] is there a reasonable prospect that the applicant will obtain substantive relief;[45] is leave necessary to correct a substantial injustice to the applicant caused by some error;[46] is there a question of general importance upon which further argument, and a decision of the appellate court or Tribunal, would be to the public advantage.[47]

What are the grounds of appeal?

  1. [30]
    The appellants rely upon numerous grounds of appeal, some of which are clearly not appeal grounds. For example, some of the purported grounds do not assert error and merely re-agitate matters argued at first instance. Other purported grounds of appeal relate not to the decision below but to the original decision by the Chief Executive.
  2. [31]
    The Chief Executive’s reply submissions attempt to coherently articulate the grounds of appeal:
    1. (a)
      Mr Li had no standing to claim upon the fund as he had not executed the contract of sale;
    2. (b)
      Mr Li had no legal right to reclaim his deposit because he did not properly terminate the contract;
    3. (c)
      The claim should have been refused because Mr Li cannot take advantage of his own supposed wrongdoing;
    4. (d)
      The appellants’ handling of the deposit was legally correct because:
      1. It accords with the correct interpretation of s 26 of the AFA Act; and
      2. Mr Li’s Supreme Court application seeking his deposit was dismissed;
    5. (e)
      The decision below suffered from unrectified procedural fairness and contained other errors.[48]
  3. [32]
    The other errors relied upon by the appellants, as referred to in (e) above, include:
    1. (a)
      Wrongly identifying the buyer under the contract of sale;
    2. (b)
      Wrongly identifying the date of the contract of sale;
    3. (c)
      Wrongly identifying that there was a house located on the parcel of land the subject of the contract of sale.
  1. [33]
    The grounds of appeal involve questions of law, questions of fact and questions of mixed law and fact.

Further evidence

  1. [34]
    In their submissions, the appellants seek to rely upon further evidence not before the tribunal below in the form of a transcript of a hearing in the Holland Park Magistrates Court on 6 November 2018. It should be noted that there has been no application by the appellants for leave to rely upon the further evidence.
  2. [35]
    The relevant principles upon which leave to introduce further evidence should be given are well established:
    1. (a)
      By the exercise of reasonable diligence the evidence could not have been discovered in time to be used in the original hearing;
    2. (b)
      It is reasonably clear that if the evidence had been available at the hearing, and had been adduced, an opposite result would have been produced;
    3. (c)
      The evidence proposed to be adduced is reasonably credible.
  3. [36]
    In the absence of the Appeal Tribunal being satisfied as to all three matters, leave to introduce further evidence will be refused.[49]
  4. [37]
    In the absence of an application to rely upon the further evidence, the appellants have not addressed any of the relevant principles to which I have referred.
  5. [38]
    It is accepted that the evidence is reasonably credible being the official transcript of proceedings in the Magistrates Court.
  6. [39]
    The hearing in the Magistrates Court took place five weeks prior to the hearing below. In an affidavit sworn by Mr Hong the general manager of Prestige, and filed in the proceedings below prior to the hearing, the Magistrates Court hearing was specifically referred to.[50] It is clear that the appellants considered what transpired at the Magistrates Court hearing to be relevant in the proceedings below. The appellants’ representative at the hearing below, Mr Hong, referred to the Magistrates Court hearing however made no attempt to file or otherwise rely upon the transcript.[51] The transcript of the Magistrates Court hearing could, with reasonable diligence, have been obtained by the appellants. No explanation is offered by the appellants as to why it was not. A failure to obtain the transcript speaks of a lack of diligence on the part of the appellants. 
  7. [40]
    Having failed to obtain a copy of the transcript to use in the proceedings below, the appellants cannot now remedy this omission. In light of this finding, it is not necessary to consider further whether the evidence would have affected the outcome of the proceedings below.
  8. [41]
    Leave to rely upon the further evidence is refused.

Consideration

  1. [42]
    The grounds of appeal are conveniently dealt with under the following groupings:
    1. (a)
      Grounds of appeal relating to findings about the contract;
    2. (b)
      Grounds of appeal relating to findings about the application of the AFA Act;
    3. (c)
      Grounds of appeal relating to procedural and miscellaneous matters.

Grounds of appeal relating to findings about the contract

  1. [43]
    The appellants assert that Mr Li did not have standing to claim upon the fund as he had not executed the contract of sale. In support of this contention, the appellants say that the learned member erred in wrongly identifying the purchaser under the contract and in making a finding that Mr Li had signed the contract.
  2. [44]
    The learned member referred to the buyer as JianJie Li.[52] A footnote in the reasons refers to Mr Li also being known as Qiang Li. It appears uncontentious that Qiang Li was in fact Mr Li’s son. The appellants say that Qiang Li signed the contract, not Mr Li. Although not the subject of a specific finding it is apparent that the learned member was satisfied Mr Li had signed the contract. The learned member found that there was no persuasive evidence that Mr Li had not signed the contract.[53] However even had the learned member erred in failing to find that Mr Li had not signed the contract, and for the reasons that follow, such error would not affect the outcome of the appeal.
  3. [45]
    Apart from reliance upon the fresh evidence contained in the transcript of the Magistrates Court hearing, in relation to which leave has been refused, the appellants point to no error by the learned member in finding that he was not persuaded Mr Li had not signed the contract. This is sufficient to dispose of this ground of appeal. I observe that if the contract was not validly formed then presumably it was void ab initio and the deposit money would in any event be returnable to Mr Li.
  4. [46]
    The appellants say that Mr Li had no entitlement to the deposit because he did not properly terminate the contract. Implicit in this submission is the contention that, absent an entitlement to the deposit, Mr Li had suffered no loss in relation to which he could claim upon the fund.
  5. [47]
    This submission immediately runs into a number of obstacles.
  6. [48]
    The evidence before the learned member was that the vendors’ solicitors wrote to the appellants advising that the contract had been lawfully terminated and that the deposit monies should be returned to Mr Li.[54] The learned member found that from the date of that letter the appellants, as agents of the vendors, were duty bound to follow the vendors’ instructions in relation to the return of the deposit unless those instructions were unlawful.[55]
  7. [49]
    The appellants, in this appeal and below, rely upon the decision in Hauff v Miller.[56] Hauff involved a dispute about whether a purchaser had taken all reasonable steps to obtain finance approval before terminating a contract on the basis of an inability to obtain finance. As the learned member correctly observed, Hauff did not involve a consideration of the AFA Act, or its predecessor the Property Agents and Motor Dealers Act 2000 (Qld), and has no relevance for present purposes. 
  8. [50]
    Whether the parties performed their obligations under the contract of sale was a matter exclusively for the parties. The role of the appellants was, as stakeholder, to deal with the deposit monies held in trust in accordance with the requirements of the AFA Act.  The vendors accepted that Mr Li had lawfully terminated the contract. That was, insofar as the appellants were concerned, and insofar as there remained any issues relevant to the termination of the contract of sale, the end of the matter, including the residual issue of whether Mr Li had in fact signed the contract.
  9. [51]
    The submission by the appellants that, once the provisions of Division 5 have been triggered, only a court can decide whether a contract has been lawfully terminated cannot be accepted. No authority is advanced by the appellants, nor any provision of the AFA Act referred to, to support such a contention. To accept the appellants’ submission would be, for the reasons following, contrary to the plain words used in Division 5 and contrary to the stated object of the AF Act.
  10. [52]
    The appellants say that Mr Li’s claim against the fund should have been refused on the basis that Mr Li should not be permitted to take advantage of his own wrongdoing. Central to this submission is the assertion by the vendors that Mr Li did not validly terminate the contract on the basis that he had not taken reasonable steps to obtain finance approval. However, the learned member found:

…. There was no persuasive evidence presented at the hearing that the Buyer in this case had failed to discharge his obligations in regard to financing but, in any event, whether he had or had not done so became irrelevant once the Buyer and Seller agreed that the contract should be terminated.[57]

  1. [53]
    The appellants’ complaint is principally directed at the letter from the financier to Mr Li declining Mr Li’s finance application.[58] The appellants say that the evidence is hearsay and the provenance of the letter questionable. It should be noted here that the tribunal is not bound by the rules of evidence.[59] Provided hearsay evidence has some rational probative value a tribunal may take it into account.[60] The only challenge to the veracity of the financier’s letter was that mounted by the appellants.
  2. [54]
    The evidence before the learned member was that the vendors accepted that Mr Li was unable to obtain finance which is evidenced by their agreement that the contract had been validly terminated and their direction to the appellants to return the deposit monies to Mr Li.
  3. [55]
    In any event, the learned member did not ultimately rely upon the letter from the financier in reaching his final decision. As the learned member correctly found, once the vendors and Mr Li agreed that the contract had been lawfully terminated, the letter from the financier became irrelevant for the purposes of the appellants’ obligations regarding the return of the deposit to Mr Li.  
  4. [56]
    There is no demonstrated error by the learned member.

Grounds of appeal relating to the application of the AFA Act

  1. [57]
    Section 21 and s 22 of the AFA Act deal with when payments may be made from an agent’s trust account.
  2. [58]
    An amount held in an agent’s trust account must be retained until it is paid out under the Act. An amount held in a trust account may be paid out in specified circumstances:
    1. (a)
      To pay a transaction expense when the expense becomes payable;[61] 
    2. (b)
      After a transaction is finalised, to pay an amount to the person entitled to the amount or otherwise in accordance with the person’s written direction (less any transaction fee and expense) and, after such payment, to draw the agent’s transaction fee from the transaction fund.[62]
  3. [59]
    A property agent must act in accordance with a client’s instructions unless it is contrary to the Property Occupations Regulation 2014 (Qld), or it is otherwise unlawful to do so.[63]
  4. [60]
    A transaction fee is the fees, charges and commission payable for the performance of an agent’s activities for a transaction.[64] The entitlement of an agent to a transaction fee will be determined by the terms of the agreement between the agent and the principal.
  5. [61]
    The agreement between Prestige and the vendors governed the circumstances in which the vendors were contractually obligated to pay a commission to Prestige. This contractual arrangement was quite separate to, and distinct from, Prestige’s obligations under the AFA Act in respect of dealing with trust account monies. This issue will be addressed later in these reasons.
  6. [62]
    The process for the payment by an agent of an amount held in a transaction fund in respect of a transaction where there is, or the agent considers there may be, a dispute about the amount is set out in Part 2, Division 5 of the AFA Act.
  7. [63]
    The provisions of Division 5 have application if:
    1. (a)
      The agent holds a transaction fund; and
    2. (b)
      There is a dispute between the parties to the transaction; or
    3. (c)
      The agent considers a dispute may arise between the parties to the transaction; and
    4. (d)
      The agent becomes aware of (b) or (c) before the transaction fund is paid out.
  8. [64]
    In the event of a dispute or a possible dispute about a transaction fund, s 26 of the AFA Act provides that the agent may give a notice to all of the parties to the transaction that the agent considers a stated party is entitled to the disputed amount and that the agent is entitled to pay the amount to the stated party in particular circumstances. The giving of the notice sets in train a statutory process which, if complied with by the agent, authorises the payment of the disputed amount and absolves the agent of any civil or administrative liability in relation to the payment.
  9. [65]
    Section 27 and s 28 set out how an agent must deal with an amount in dispute if the amount is not dealt with under s 26.
  10. [66]
    Section 27 applies if the amount in dispute is not ‘dealt with’ under s 26. Section 27(2) goes on to set out the circumstances in which an amount in dispute may be paid by an agent. Section 28 sets out when and to whom the amount must be paid.
  11. [67]
    The words ‘dealt with’ in s 27(1) clearly refer to the payment of a disputed amount in one of the circumstances set out in s 26(3). Accordingly, if a disputed amount has not been paid by an agent to a stated person in accordance with the process set out in s 26, the agent must comply with s 27 and s 28.
  12. [68]
    Returning then to s 26, after giving notice of intention to pay the disputed amount to a stated person, the agent may pay the amount to the person upon either of the conditions set out in s 26(3)(a) or (b) being satisfied. The use of the word may in s 26(2) and s 26(3) confers upon the agent a discretion in relation to the way in which an agent treats an amount in a transaction fund in circumstances where there is a dispute or a potential dispute about the amount.[65]
  13. [69]
    This construction is supported by s 26(6) which provides that an agent is not required to give notice to the parties to the transaction in accordance with s 26(2) and may retain the monies until authorised by the parties to pay the amount or a court decides entitlement to the disputed or potentially disputed amount.
  14. [70]
    Finally, s 26(5) makes clear that s 26 provides only for a process for the payment of an amount in dispute and does not decide legal entitlement to the amount.
  15. [71]
    The appellants’ contention that s 26(2) of the AFA Act, once engaged by an agent giving written notice, commits the agent to a path from which the agent may not stray, is rejected. Such a construction is not consistent with the words of the section, the context of s 26 within the Act as a whole or the object of the Act. In interpreting a provision of an Act the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation.[66] The main object of the AFA Act is to protect consumers from financial loss in dealing with agents.[67] Although the term ‘consumer’ is not defined in the AFA Act, giving the word its plain meaning, a vendor or a purchaser under a land sale contract is a consumer.
  16. [72]
    As is apparent from the foregoing discussion, the provisions of Division 5 are engaged in the event of a dispute or a potential dispute about an amount in a transaction fund. Section 25 refers to an agent who becomes aware of a dispute, or considers a dispute may arise, in relation to the entitlement to a transaction. In both circumstances the amount is an ‘amount in dispute’. Accordingly, an ‘amount in dispute’ may relate to a dispute that has actually arisen, or to a dispute that may arise at some future point in time.
  17. [73]
    If an agent gives notice pursuant to s 26(2) then the agent may pay the amount in dispute to the person stated in the notice subject to the requirements set out at s 26(3).
  18. [74]
    If, before the agent pays the amount in dispute in accordance with s 26(3), the agent receives a notice in accordance with s 27(2)(a) of the AFA Act, then s 28(2)(a) requires the agent to pay the amount in dispute in accordance with the notice. A failure to do so is an offence. This is the consequence of the operation of s 27(1) of the AFA Act which provides that s 27 applies if an amount in dispute is not ‘dealt with’ under s 26. As has been noted, the words ‘dealt with’ used in s 27(1) refer to the exercise of the discretion by an agent to pay an amount in dispute pursuant to s 26(3). 
  19. [75]
    This construction of the provisions of Division 5 is the same as reached in Prestige & Rich Pty Ltd v McGregor.[68] That matter involved an appeal from a decision by a Magistrate to convict the present first appellant of an offence under s 28(2)(b) of the AFA Act. Rackemann DCJ held that:
    1. (a)
      Section 26 is not an offence provision. It provides a process for an agent to make payment of the amount in dispute to the party the agent considers is entitled to it;
    2. (b)
      An agent holding an amount in dispute has a discretion whether to commence the process under s 26 by service of a notice under s 26(2);
    3. (c)
      An agent has a discretion, having given a notice, whether to pay the amount once the agent is entitled to do so;
    4. (d)
      Section 26 does not entitle the agent to adjudicate on the rights of the parties to the transaction;
    5. (e)
      The agent was not bound by the notice given to pay the amount in dispute to the vendor. At most the notice may have enlivened a discretion to do so;
    6. (f)
      The veracity of the purchaser’s claim to have terminated the contract pursuant to the finance clause and to be entitled to a refund of the deposit was not to the point in determining how the money ought to have been paid.
  1. [76]
    Rackemann DCJ considered the effect of s 27 and s 28 of the AFA Act. His Honour stated:
    1. (a)
      s 27(2)(b)(i) requires the parties to be told that the agent is authorised to pay the stated party on or after the stated date unless a proceeding of the kind referred to is started and the agent is advised accordingly;
    2. (b)
      s 27(3)(a) provides that the agent may pay the amount in dispute to the stated person if, after the stated date, the agent is unaware of a proceeding of the kind described;
    3. (c)
      the agent will be relevantly ‘unaware’ for the purposes of s 27(3)(a) unless a proceeding is both started and the agent is advised of that, as is contemplated in s 27(2)(b)(i).
  2. [77]
    Of particular relevance in this appeal is the analysis by Rackemann DCJ of the interaction between s 26, s 27 and s 28. His Honour found:
    1. (a)
      s 27 applies unless the amount in dispute is dealt with under s 26;
    2. (b)
      giving a notice under s 26(2) does not mean that the transaction fund or part therefore constituting the amount in dispute is ‘dealt with’;
    3. (c)
      the amount in dispute is not ‘dealt with’ under s 26 until the discretion to pay the amount pursuant to s 26(3) is exercised;
    4. (d)
      s 27 does not apply if payment has been made pursuant to s 26(3);
    5. (e)
      notice under s 27(2)(a) must be from all parties to the transaction but it is not necessary that the notice be constituted by a single document;
    6. (f)
      once notice is received under s 27(2)(a) prior to the amount in dispute being ‘dealt with’ under s 26:
      1. the obligation under s 28(2)(a) applies; and
      2. s 26 has no more work to do.
  3. [78]
    On the facts, Rackemann DCJ found that the notice given by the first appellant pursuant to s 26(2) did not avoid the application of s 27(2)(a) on the basis that the mere giving of the notice did not constitute the amount in dispute being ‘dealt with’ for the purposes of s 27(1). His Honour found that notice pursuant to s 27(2)(a) had been given by the parties to the first appellant. The obligation to make payment under s 28(2)(a) therefore arose and the first appellant committed an offence by failing to immediately make payment to Mr Li.
  4. [79]
    The first appellant in these proceedings sought leave to appeal the decision of Rackemann DCJ. The Court of Appeal dismissed the application for leave to appeal finding that the first appellant had failed to identify error in the decision of the District Court.[69] It should be noted that the decision at first instance in Prestige & Rich Pty Ltd v McGregor, and the subsequent appeal were decided after the decision below.
  5. [80]
    I turn now to the facts of the matter before the tribunal below.
  6. [81]
    Upon payment of the deposit by Mr Li, Prestige became the deposit holder.[70] Prestige was obliged to hold the deposit until a party to the contract became entitled to it. The contract of sale between the vendors and Mr Li[71] provided that if the contract was terminated without default by Mr Li, Mr Li was entitled to receive the deposit.[72]
  7. [82]
    In Active Property Marketing Services v Joelco P/L White J stated:

The plaintiff asserts a lien over the deposit moneys. Of course, an agent’s entitlement to a lien depends on its entitlement to commission. Even if there can be a lien over moneys in trust account (which was doubted in Nickelby Pty Ltd v Holden – but assumed to be possible in Tibmor Pty Ltd v Nashlyn Pty Ltd), an agent can only hold a lien over property belonging to its principal. If the seller is not entitled to the deposit, the agent is not entitled to a lien. Here the seller disclaims any entitlement to the deposit.[73]

  1. [83]
    The appellants, in dealing with the deposit monies, applied the significant part thereof to themselves in payment of the claimed commission and released the balance to the vendors. In so doing, the appellants clearly regarded the deposit monies as belonging to the vendors. However these actions were entirely inconsistent with the instructions from the vendors who disclaimed any entitlement to the deposit and directed the appellants to pay the deposit to Mr Li.
  2. [84]
    Any entitlement Prestige had to a commission depended upon the terms of its appointment.[74] This was exclusively a matter between Prestige and the vendors and had no bearing upon the obligations imposed upon Prestige by the AFA Act in dealing with the deposit monies.
  3. [85]
    An agent may only pay its commission from monies belonging to its principal.[75] If a deposit belongs to a party other than the agent’s principal, the agent must look to its principal and any contractual arrangements with the principal, in respect of recovery of commission and expenses.
  4. [86]
    The learned member observed that an agent, as trustee, holds money subject to such directions as are given by the parties to the transaction. In Burt v Claude Cousins & Co Ltd,[76] Lord Denning MR stated:

If an estate agent or a solicitor, being duly authorised in that behalf, receives a deposit "as stakeholder" he is under a duty to hold it in medio pending the outcome of a future event. He does not hold it as agent for the vendor, nor as agent for the purchaser. He holds it as trustee for both to await the event: see Skinner v Trustee of the Property of Reed (a Bankrupt) [1967] Ch. 1194, 1200, per Cross J. Until the event is known, it is his duty to keep it in his own hands…

  1. [87]
    Prestige was appointed in writing as agent on 4 February 2016.[77] The vendors agreed to pay to Prestige a commission if:
    1. (a)
      The contract of sale was completed; or
    2. (b)
      The vendors defaulted under the contract of sale and the contract was terminated as a result of such default; or
    3. (c)
      The contract of sale was not completed and the whole of the deposit paid was liable to be forfeited; or
    4. (d)
      The contract of sale was terminated by mutual agreement between the vendors and the purchaser.
  2. [88]
    Prestige may have been entitled to seek recovery of a commission from the vendors. However, the determination of this issue was irrelevant in the proceedings below and is irrelevant in this appeal.
  3. [89]
    Prestige was required to deal with the deposit monies in accordance with the provisions of the AFA Act.
  4. [90]
    The evidence before the learned member was:
    1. (a)
      Mr Li’s solicitors advised the vendors’ solicitors in writing on 24 March 2016 that Mr Li’s finance application had been declined, gave notice terminating the contract and requested that vendors’ solicitors authorise the agent to refund the deposit to Mr Li;[78]
    2. (b)
      On 25 March 2016 the vendors instructed the appellants to obtain written confirmation from the financier that finance had not been approved;[79]
    3. (c)
      On 29 March 2016 the appellants wrote to Mr Li’s solicitors requesting ‘a copy of all documentations relevant to its finance application for the purported purchase of (the property)’;[80]
    4. (d)
      On 31 March 2016, the vendors emailed Mr Li’s solicitors requesting a copy of a letter from the financier confirming finance had not been approved by 5pm that day;[81]
    5. (e)
      On 31 March 2016 at 2.46pm, the solicitors for Mr Li forwarded to the vendors and the appellants a letter from the financier, One Stop Loan, dated 17 March 2013 confirming that Mr Li’s finance application had not been approved and requesting the refund of the deposit to Mr Li;[82]
    6. (f)
      On 31 March 2016 at 4.14pm, the vendors emailed Mr Li’s solicitors querying the date of the letter from the financier;
    7. (g)
      On 31 March 2016,[83] the appellants gave notice to the parties in accordance with s 26(2) of the AFA Act and advising of their intention to pay the deposit to the vendors;[84]
    8. (h)
      On 13 April 2016, the solicitors for the vendors wrote to the solicitors for Mr Li, copying in the appellants, confirming that the contract had been lawfully terminated by Mr Li and instructing the appellants to release the deposit to Mr Li;
    9. (i)
      On 3 June 2016 the appellants paid $4,500.00 to the vendors and $20,000.00 to themselves as commission.
  5. [91]
    Accordingly, on and from 13 April 2016:
    1. (a)
      the appellants knew that there was no dispute about the amount held in the transaction fund; and
    2. (b)
      the appellants knew that both parties had authorised the return of the deposit to Mr Li.
  6. [92]
    As was stated in Prestige & Rich Pty Ltd v McGregor[85] a written notice for the purposes of s 28(2) of the AFA Act is not required to be constituted by a single document. The letter from Mr Li’s solicitors dated 24 March 2016, the email from Mr Li’s solicitors dated 31 March 2016 and the letter from the vendors’ solicitor dated 13 April 2016 together constituted notice for the purposes of s 27(2)(a) of the Act.
  7. [93]
    Where there is a dispute about a transaction fund, the transaction is not taken to be finalised until an agent is authorised to pay out the transaction fund under Division 5.[86] After a transaction is finalised, an agent is authorised to pay an amount from a transaction fund to a person entitled to the amount, or to someone else at the person’s direction, that is equal to the difference between the balance in the fund and the agent’s transaction fee and transaction expenses.[87] Upon the finalisation of a transaction, a failure to pay an amount from a transaction fund to the person entitled to the amount is an offence.[88]
  8. [94]
    When the notice was given to the first appellant in accordance with s 27(2)(a) of the Act the following occurred:
    1. (a)
      The transaction was finalised in accordance with s 22(4) of the Act;
    2. (b)
      The first appellant was required to pay the deposit to Mr Li in accordance with s 28(2)(a) of the Act;
    3. (c)
      The first appellant was required to pay the deposit to Mr Li in accordance with s 22(5)(a) of the Act.
  9. [95]
    In contravention of s 21, s 22 and s 28(2)(a) of the AFA Act, the appellants failed to release the deposit monies held in the transaction fund to Mr Li.
  10. [96]
    It is appropriate to mention briefly the appellants’ submission that they were, by s 26(3), permitted to pay the amount in dispute in accordance with the s 26(2) notice on the basis that they were, after the stated date, unaware of the start of a proceeding claiming an entitlement to the amount. The Chief Executive says that the Supreme Court proceedings commenced by Mr Li were proceedings for the purposes of s 26(3)(a) and that the appellants were clearly aware of these proceedings. Strictly speaking it is not necessary to determine this issue however for the sake of completeness the submission by the appellants will be addressed. A ‘proceeding claiming an entitlement to the amount’ as referred to in s 26(3)(a) is, in my view, a reference to a proceeding between the parties to a transaction noting that Division 5 is concerned with disputes between the parties to a transaction. On this basis, the Supreme Court proceedings commenced by Mr Li were not proceedings for the purposes of s 26(3)(a).
  11. [97]
    The learned member found that the decision under review was a valid exercise of the power conferred under the AFA Act.[89] Although the learned member’s reasons are somewhat economical, in agreeing with the Chief Executive’s position it seems apparent that the learned member was satisfied that:
    1. (a)
      The appellants contravened s 21(2) and s 22(5) of the AFA Act;
    2. (b)
      The appellants misappropriated or misapplied the deposit monies resulting in Mr Li suffering financial loss.
  12. [98]
    Although there was no specific finding by the learned member as to the failure by the first appellant to comply with the requirements of s 28(2)(a) this has no bearing on the outcome of the appeal. For the reasons set out, there was no error by the learned member in concluding that the appellants had contravened the AFA Act, that as a result of such contravention Mr Li suffered financial loss and that the appellants were liable for Mr Li’s loss.

Other grounds

  1. [99]
    The other grounds of appeal relied upon by the appellants relate to:
    1. (a)
      Breach of the fair hearing rule by the Chief Executive in failing to obtain an inspector’s report;
    2. (b)
      Findings of fact about the date of the contract, and the whereabouts of the deposit monies.
  2. [100]
    The learned member dealt with the issue of the inspector’s report, noting that:

… no inspector had been appointed and no report prepared. Section 94(1) makes such an appointment discretionary on DJAG who was entitled not to make such an appointment, and elected not to do so in this case. Therefore there was no report that could be given to the Applicants.[90]

  1. [101]
    The appellants’ submissions regarding the absence of an inspector’s report are without substance.
  2. [102]
    The learned member found that the balance of the deposit of $4,500.00 remained in the trust account of the vendors’ solicitor.[91] The appellants refer to the transcript of the hearing in the Magistrates Court in relation to what happened to this amount. I have refused the appellants’ leave to rely upon the transcript. In any event, what ultimately happened to the $4,500.00 is not material to the determination of this appeal. The money was never returned to Mr Li.
  3. [103]
    The appellants contend that a decision made by an agent to issue a notice pursuant to s 26(2) is an administrative decision and, once made, the agent is functus and cannot revisit the decision. An administrative decision is one made by a government official or a public officer or by a person acting under a delegated power. A decision by an agent to issue a notice pursuant to s 26(2) is not an administrative decision. As I have observed, the provisions of Division 5 are specifically stated to set out a process for the payment of an amount in dispute. The appellants’ contention to the contrary cannot be accepted.
  4. [104]
    Finally, the appellants refer to the findings by the learned member that the contract of sale involved a house (the land was in fact vacant) and that the date of the contract was 11 March 2016 (and not 21 March 2016). These errors have no bearing upon the decision below or the outcome of the appeal.

Conclusion and orders

  1. [105]
    The appellants have not made out any of the grounds of appeal. There was no error by the learned member in dismissing the review application. Insofar as leave to appeal is sought, leave is refused. The appeal is otherwise dismissed.

Footnotes

[1]Prestige & Rich Pty Ltd & Anor v Chief Executive, Department of Justice and Attorney-General, Office of Fair Trading & Anor [2018] QCAT 436.

[2]Decision dated 15 March 2018.

[3]AFA Act, s 6(1).

[4]Ibid, sch 1.

[5]Ibid, s 6(2).

[6]AFA Act, s 16.

[7]Ibid, s 15(2).

[8]Ibid, s 21(1).

[9]Ibid, s 21(2).

[10]Ibid.

[11]Ibid, s 22(1).

[12]Ibid, s 22(6).

[13]Ibid, s 22(5).

[14]Ibid, s 22(4).

[15]Ibid, s 25(1).

[16]AFA Act, s 26.

[17]Ibid, s 26(3)(a).

[18]Ibid, s 26(3)(b).

[19]Ibid, s 27(2)(a).

[20]Ibid, s 28(2)(a).

[21]Ibid, s 28(2)(b).

[22]Ibid, s 82(1)(a).

[23]Ibid, s 82(1)(b).

[24]Reasons, [19].

[25]Ibid.

[26]Reasons, [19].

[27]Ibid, [20].

[28]Ibid, [23].

[29]Ibid, [24].

[30]Ibid.

[31]Ibid, [25].

[32]Ibid, [27].

[33]Ibid, [29].

[34]Ibid, [30].

[35]Ibid, [33].

[36]Ibid, [34].

[37]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), s 142(1).

[38]Ibid, s 142(3)(b).

[39]Ibid, s 147(2).

[40]Ibid, s 146.

[41]Ericson v Queensland Building Services Authority [2013] QCA 391.

[42]QCAT Act, ss 147(1), (2).

[43]Ibid, s 147(3).

[44]QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.

[45]Cachia v Grech [2009] NSWCA 232, [13].

[46]QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.

[47]Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388, 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577, 578, 580.

[48]Chief Executive’s submissions filed 27 May 2019, [4].

[49]Walton v New Lakelands Pty Ltd [2013] QCATA 49.

[50]Affidavit of Richard Hong affirmed 1 December 2018 – appeal book filed 3 May 2019, p 106.

[51]T1-17, lines 15-26.

[52]Reasons, [3].

[53]Ibid, [33].

[54]Appeal book filed 3 May 2019, p 76.

[55]Reasons, [20].

[56][2013] QCA 48.

[57]Reasons, [19].

[58]Appeal book filed 3 May 2019, p 72.

[59]QCAT Act, s 28(3)(b).

[60]TA Miller Ltd v Minister of Housing and Local Government [1968] 1 WLR 992.

[61]AFA Act, s 22(1), s 21(2).

[62]Ibid, s 22(3).

[63]Property Occupations Regulation 2014 (Qld), reg 22(1).

[64]AFA Act, s 22(6).

[65]Acts Interpretation Act 1954 (Qld), s 32CA(1).

[66]Ibid, s 14A(1).

[67]AFA Act, s 6(1).

[68][2019] QDC 151.

[69]Prestige & Rich Pty Ltd v McGregor [2020] QCA 220.

[70]Appeal book filed 3 May 2019, p 50.

[71]Appeal book filed 3 May 2019, p 48.

[72]Ibid, p 55.

[73][2007] QSC 167, [23].

[74]Ibid.

[75]Ibid.

[76][1971] 2 QB 426, 435-436. The remarks of Lord Denning are obiter.

[77]Appeal book filed 3 May 2019, p 35.

[78]Appeal book filed 3 May 2019, p 67.

[79]Ibid, p 68.

[80]Ibid, p 69.

[81]Ibid, p 70.

[82]Ibid, p 72.

[83]The letter has a hand-written notation ‘5.30pm’, which is presumably a reference to the time the letter was sent.

[84]Appeal book filed 3 May 2019, p 75.

[85][2019] QDC 151.

[86]AFA Act, s 22(4).

[87]Ibid, s 22(3).

[88]Ibid, s 22(5).

[89]Reasons, [35].

[90]Ibid, [32].

[91]Ibid, [10].

Close

Editorial Notes

  • Published Case Name:

    Prestige & Rich Pty Ltd & Anor v Chief Executive, Department of Justice and Attorney General, Office of Fair Trading & Anor

  • Shortened Case Name:

    Prestige & Rich Pty Ltd

  • MNC:

    [2020] QCATA 165

  • Court:

    QCATA

  • Judge(s):

    Senior Member Brown

  • Date:

    15 Dec 2020

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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