Cahill v Tomkins[2015] QCAT 410

APPEARANCES:

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

REPRESENTATIVES:

REASONS FOR DECISION

1. [1]
   Damien Edward Cahill made a claim on 19 March 2012 in relation to his dealings with Prime Real Estate Australia Pty Ltd (Deregistered) and Cecil Thomas John Tomkins (‘the Agent’) against the Claim Fund which is established under the provisions of the Property Agents and Motor Dealers Act 2000 (Qld) (‘the Act’), and subsequently maintained under the provisions of the Agents Financial Administration Act 2014 (Qld) (‘AFAA’).
2. [2]
   The claim by Mr Cahill was for amounts as follows:^[2]

   1. (1)
      $9,960.00 in favour of him for the Deposit Bond fee paid 5 February 2008 plus interest to the date of repayment and the costs of the NSW proceedings and this matter on an indemnity basis;
   2. (2)
      $93,700.00 in favour of QBE Insurance (Australia) Limited for the amount paid out pursuant to the Bond on 14 December 2010 plus interest to the date of repayment and the costs of the NSW proceedings and this matter on an indemnity basis; and
   3. (3)
      In favour of Deposit Access Pty Ltd the costs of the NSW proceedings and this matter on an indemnity basis.
3. [3]
   There is a similar file involving a claim by Sandra Joanne Sutton and David John Sutton.^[3] Sandra Sutton is the mother of Mr Cahill. The circumstances and considerations in both claims are effectively identical. I will deliver separate Reasons and Decisions on each claim, which will be also effectively identical, only with necessary identification and detail modifications.

Course of the Proceedings

4. [4]
   I gave a decision^[4] on 21 March 2014 in a  previous application by Mr Cahill for an extension of time to file a claim against the Fund, and made the following Orders:

   1. (1)
      The time for the filing of a claim against the claim Fund by Damien Edward Cahill is extended to the date upon which he lodged his claim, being 19 March 2012, pursuant to section 511 of the Property Agents and Motor Dealers Act 2000.
   2. (2)
      I refer the claim to the Chief Executive for processing.
5. [5]
   The claim was referred to the Tribunal for determination under Chapter 14 of the Act on 4 August 2014 by the Chief Executive, Department of Justice and Attorney-General, (the ‘Chief Executive’).
6. [6]
   In an accompanying submission, the Chief Executive sought directions that Mr Cahill provide a properly articulated claim, making reference to the specific provisions of the Property Agents and Motor Dealers Act 2000 (Qld) (‘the Act’), and related Acts, which he relied on.
7. [7]
   I gave Directions on 8 August 2014 that Mr Cahill was to file such an “Outline of Claim” by 17 October 2014, and that the Chief Executive, could make further submissions by 19 December 2014.
8. [8]
   The Outline of Claim was received from the Suttons as directed, and further submissions were received from the Chief Executive as directed.
9. [9]
   I gave further Directions on 20 February 2015 that Mr Cahill was to deliver a response by 6 March 2015, with which he complied.
10. [10]
    I then gave further Directions on 27 March 2015 that the proceeding would be determined by a Member of the Tribunal on the basis of the documents filed without an oral hearing.
11. [11]
    This is the ‘on the papers’ decision in the proceeding.

Facts giving rise to the Claim

12. [12]
    Mr Tomkins was a Real Estate Agent. He was involved in transactions whereby Sandra Sutton and Mr Cahill signed contracts to purchase lots ‘off the plan’ in 2008 in a residential unit development on the Gold Coast known as ‘Elston’ at the corner of Hamilton Avenue and Surfers Paradise Boulevard. They allege that actions of Mr Tomkins, and loss suffered by them, give rise to their entitlement to claim on the Fund.
13. [13]
    Mr Cahill entered into contracts to buy two units on Level 3 - Lot 22 for $468,000 and Lot 23 for $469,000. The contracts were entered into on 25 January 2008. Arrangements were made for the 10% deposit of $46,800 and $46,900 to be provided by means of a Deposit Bond provided by QBE Insurance (Australia) Limited by its authorised agent Deposit Access Pty Ltd. The deposit bonds were issued on 28 February 2008.
14. [14]
    QBE Insurance (Australia) Limited (‘QBE’) paid the lot 22 Deposit Bond premium of $4,845, and the lot 23 Deposit Bond premium of $4,845, to Deposit Access Pty Ltd on 5 February 2008. 
15. [15]
    The Contracts were due to settle on 14 August 2009. Mr Cahill failed to complete the contract. On 24 August 2009, Ramsden Bow Lawyers, acting for the Vendor, made demand upon QBE Insurance for payment of the Deposit.
16. [16]
    On 14 December 2010 QBE paid the amount of $46,800 under the lot 22 bond, and $46,900 under the lot 23 bond, to the Vendor.
17. [17]
    QBE instituted proceedings against Mr Cahill in the Local Court of NSW. An amended Statement of Claim was filed on 22 July 2011. The claim was for a total of $101,233.38 being $95,879.76 for claim plus interest and fees and costs.
18. [18]
    Mr Cahill filed an amended defence to the action on 18 July 2011. It alleged that Mr Cahill was induced to request the bond on the basis of misrepresentations of Mr Tomkins made for himself and on behalf of the vendor and QBE, and that the conduct of QBE was deceptive and misleading and otherwise unconscionable and unfair.
19. [19]
    Mr Cahill was represented in those proceedings by Synergy Group Legal Pty Ltd. He alleged that the misrepresentations were to the effect that:-^[5]

    1. (a)
       the deposit bond was a requirement to facilitate the transaction;
    2. (b)
       the transaction was an option to purchase which Cecil Tomkins undertook to novate prior to completion;
    3. (c)
       the only monies which the Defendant had to pay was the fee accompanying the bond (which was duly paid by the Defendant);
    4. (d)
       Cecil Tomkins had done this many times successfully for the plaintiff and developers of real property under construction benefiting himself and other clients;
    5. (e)
       In this development, Cecil Tomkins was doing this with at least 3 other Buyers;
    6. (f)
       Cecil Tomkins was experienced and knowledgeable in such matters and the defendant did not need independent legal or financial advice; and
    7. (g)
       In any event, the legal liability of the defendant was limited to the deposit bond fee paid by the defendant.
20. [20]
    An application was apparently to be made to join Cecil Tomkins and Deposit Access Pty Limited to the proceedings on 1 November 2011, and a Cross-Claim against those parties by Mr Cahill was filed on 17 November 2011. It is unclear what happened to that application and cross-claim.
21. [21]
    Judgment was given for QBE against Mr Cahill on 29 February 2012 as per a Consent Order for the amount of $157,711.93.
22. [22]
    It appears that the units were resold by the Vendor at a higher price, so no claim was made against Mr Cahill by the Vendor in that respect.

Basis of the Claim

23. [23]
    The Solicitors for the Suttons and Mr Cahill have argued that their clients were caught in a ‘scheme’ that was orchestrated by Mr Tomkins. The proposition was put forward in a letter^[6] from them to the Chief Executive of 31 January 2012:-

The circumstances are set out in detail in the material indexed and attached. However, in summary, our clients (and others who corroborate their version of events) were induced to enter into contracts for building units under construction on false bases and have as consequence suffered significant damage and loss for which compensation from the Fund is sought.

In our submission, there can be no doubt that the Agent acted according to the following scheme. When interviewed on 17 November 2011 by a representative of our office about the process, he admitted that had we referred another client who proposed to purchase 1 apartment with a $50,000.00 cash deposit, he would have sold him 10 apartments using Deposit Bonds at $5,000.00 each.

The basic sales pitch was that a unit could be taken off the market and held for the duration of construction for the cost of a deposit bond… a little under $5,000.00 being 1% of the purchase price of approximately $500,000.00 for each property. Mr Cahill had $10,000.00 to spare at the time, so could not afford to buy two (2) Gold Coast apartments. Mr Tomkins advised him to buy two (2).

The idea presented by Mr Tomkins was that the Suttons and Mr Cahill would never complete the purchase of the Unit (had they done so, they would definitely have needed finance and the contract was not made conditional in any respect); and Mr Tomkins dissuaded our clients from taking independent legal or financial advice.

Mr Tomkins told our clients he would resell the Unit prior to completion; and apparently, knowingly mislead our clients and others about the Foreign Investment Review Board (‘FIRB’) requirements in this regard.

He misadvised our clients that there would be no stamp duty or taxation ramifications and that they would be entitled to a significant return on their investment of the $5,000.00 approximately, for each property paid as the deposit Bond premium. This was the only amount requested and he said words to the effect that, if anything did go wrong ‘the Insurance Company takes care of the rest’, ie our clients believed from his words and actions that this was the limit of their liability in the unlikely event that things did not go just as he said.

Mr Tomkins clearly intended our clients to believe, and may have believed himself, that their liability was in any event limited to the cost of the Bond ($4,845.00 in the case of the Suttons, and $9,690.00 in the case of Cahill) but that was untrue. He did not explain any of the indemnity and charging provisions of the Deposit Bond and in addition to paying for something that they did not receive (and would not have entered into and paid for, had they known the truth) the parties have had to defend action taken in New South Wales by QBE for payments made to the Seller pursuant to the Bond ($47,340.00 in the case of Sutton and $93,000.00 in the case of Cahill) and they have incurred interest and costs themselves plus costs of QBE and Deposit Bonds Access Pty Ltd.

The Agent claimed that he was a representative of these two companies, but they dispute this and although he was able to produce 3 deposit Bonds, they were not all as represented. They were, however, sufficient for Mr Tomkins to obtain payment from the Developer of half of the commission upfront with balance on completion.

In our submission, the Agent has acted according to a scheme whereby the nature and effect of the agreements they were to lead into was deleterious to them and their position was prejudiced in order for the Agent to get his commission. Our clients have suffered loss and damage, and in our respectful submission, deserve compassion from the Fund accordingly.

24. [24]
    The facts of the matter are not in dispute, and there is no apparent challenge to the allegations of Mr Cahill as to what was said to him.
25. [25]
    No Statements of Evidence have been filed, but the various correspondence from Mr Cahill and his solicitors sets out his allegations as to what was said, and as to what occurred.
26. [26]
    The Real Estate Agent, Mr Tomkins, has not provided evidence, and he has not responded to Directions sent to him.
27. [27]
    The claim is therefore to be assessed on the material provided, and on a consideration of the relevant law.

Legal basis of the Claim

28. [28]
    Mr Cahill claims compensation from the Fund pursuant to sections 470 and 488 of the Act.^[7]
29. [29]
    Section 470 lists the events which give a person an entitlement to make a claim against the Fund, if the person suffers financial loss. Section 470(1)(a) lists the provisions of the Act which if contravened, are an event. Section 470(d) lists the provisions of the Land Sales Act 1984 (Qld), which if contravened, are an event.
30. [30]
    The Chief Executive has identified the events alleged by Mr Cahill as falling into three groups:^[8]

2. 1)
   Deposit Bond Event

Dealing with the initial deposits and the deposit bonds paid by Mr Cahill in a manner that contravened s 82(1)(b) of the Agents Financial Administration Act 2014 (‘AFAA’) and s 206 of the Property Occupations Act 2014 (‘POA’) (formerly PAMDA s 470(1)(e) and s 573) and s 23 and s 24 of the Land Sales Act 1984 (‘LSA’).

2. 2)
   Misrepresentation Event

Making false or misleading representations about the properties within the meaning of POA s 212 (formerly s 574 PAMDA).

2. 3)
   Marketeering Event

Engaging in a course of conduct that breached s 207, s 208 and/or s 209 (formerly s 573A, 573B and/or s 573C PAMDA).

31. [31]
    The submission of Mr Cahill categorises the claim as being made up of two components^[9]:

The conduct complained of by (the Agent) is one event we say, but has broadly speaking two (2) components as follows:

1. (a)
   The conduct of the (Agent) as particularised and overall was such that it wrongfully mislead (Mr Cahill) to purchase real property and the suffered loss as a consequence; and
2. (b)
   (the Agent) handled property (including monies and negotiable instruments, we submit) inappropriately, such that the loss was caused.

32. [32]
    The PAMDA Act was replaced by several other Acts. There are broad transitional provisions that have the effect of making PAMDA still applicable where a claim has been lodged before the replacement 2014 Acts came into force.
33. [33]
    I will consider each of the alleged events in turn.

The Deposit Bond Event

34. [34]
    Section 470(1)(e) of PAMDA {s 82(1)(b) AFAA} provides :

1. (e)
   a stealing, misappropriation or misapplication by a relevant person of property entrusted to the person as agent for someone else in the person’s capacity as a relevant person.

35. [35]
    Section 573 of PAMDA {s 206 POA} provides:

    1. (1)
       This section applies if a licensee, in the performance of the activities of a licensee, receives an amount belonging to someone else.
    2. (2)
       A licensee who –
    3. (3)
       (a) dishonestly converts the amount to the licensee’s own or someone else’s use; or

1. (b)
   dishonestly renders an account of the amount knowing it to be false in a material particular;

commits a crime.

36. [36]
    Section 23(1) and s 23(2) LSA (Reprint 5D effective 15 February 2012) provide:

23  Contractual requirement re holding of money

1. (1)
   Where an instrument, that is intended to bind a person (absolutely or conditionally) to purchase a proposed lot, provides for the payment of money in respect of the purchase, all moneys the payment whereof the purchaser is bound to make in terms of the instrument, whether by way of deposit or otherwise, without becoming entitled in terms of the instrument, whether by way of deposit or otherwise, without becoming entitled in terms of the instrument to receive a registrable instrument of transfer in exchange therefor shall be paid directly to the public trustee constituted under the Public Trustee Act 1978 unless the parties to the instrument agree that such moneys shall be paid directly to –
2. (2)
   (a) a law practice at its office in Queensland; or

   3. (b)
       A real estate agent duly licensed under the Property Agents and Motor dealers Act 2000; or

   3. (c)
       A real estate agency in which a real estate agent carries on business;

specified in the instrument.

37. [37]
    Section 24 of the LSA (Reprint 5D effective 15 February 2012) provides:

24(1) An entity that receives money as a trustee in accordance with section 23(1) shall retain the money in the entity’s trust account until the purchaser or vendor becomes entitled, in accordance with this part, or otherwise according to law, to a reFund or payment of the money whereupon the trustee shall dispose of the money in accordance with the law governing the operation of the entity’s trust account.

38. [38]
    The Solicitors for Mr Cahill allege that Mr Tomkins took an initial deposit of 1% of the purchase price from Mr Cahill, and directed that to QBE Insurance Ltd for provision of the Deposit Bond.^[10] They allege that the initial deposit was applied in breach^[11] of s 470(e) PAMDA; s 573 PAMDA; and/or s 23 LSA. Further that the Agent received and held the Deposit Bond until after the intended completion and termination by the Applicant.^[12] Further, that the Agent then released the Deposit Bond to the seller^[13] adverse to the interests of Mr Cahill in breach of s 470(e) PAMDA, and converting funds for the benefit of the seller, in breach of s 470(e) PAMDA,s 573 PAMDA, s 23 LSA and s 24 LSA.
39. [39]
    The submissions of the solicitors for Mr Cahill provide the following basis for the allegations of  mis-handling of the deposit Bond:^[14]

12. It is a theft, misappropriation or misapplication in proper analysis because the Funds; and the Deposit Bond “instrument” (which in our submission, requires application of the same provisions of things held in trust; no less so than Title Deeds, “or Bearer” cheques and other negotiable instruments). The Bond was capable of being discounted as instrument payable on demand for monies worth…a bill of exchange in historical parlance. The Agent used that document and the monies paid by the Applicant to obtain an advance payment of commission to which he was not entitled; and at the Applicant’s expense.

13. It was a fraud; and there is no doubt that the Respondent did this intentionally and multiple times. Unfortunately the Applicants were unable to mitigate the loss.

40. [40]
    The Chief Executive says that Mr Cahill (at paragraphs 10 to 16 of their Outline of Claim) alleges^[15] that the Agent committed the Deposit Bond Event by:

    2. a)
       Taking Mr Cahill’s payment of $4,845.00 for Lot 22 Elston Grandsurf Resort, and of $4,845.00 for Lot 23 Elston Grandsurf Resort, being the fees charged by QBE to provide the Deposit Bonds (Initial Deposits) and then directing QBE to issue the Deposit Bonds; and

    2. b)
       Receiving and holding the Deposit Bonds until after the contract of sale for the Property was at an end, and then releasing it to the Vendor.
41. [41]
    The Chief Executive submits that even if Mr Cahill can establish that the Agent has dealt with the initial deposit and the deposit bond as alleged, that it would not constitute a breach of either s 23 or s 24 of the LSA:^[16]

    2. a)
       The Chief Executive submits that the deposit bond was not a purchase instrument as defined by s 23(1) LSA because it did not bind Mr Cahill to purchase the property.^[17]

    2. b)
       It submits that the deposit bond is not captured by s 23(2) LSA because it did not provide for Mr Cahill to pay money without becoming entitled to receive a registrable transfer in accordance with the contract for sale.^[18]

    2. c)
       It submits that s 24 LSA does not apply because the contract for the sale of the property nominated the Vendor’s solicitors as the entity to hold any deposit payable, and not the agent; no moneys were actually paid to the Agent  under the Deposit Bond; and moneys were paid to the Vendor’s solicitors under the Deposit Bond after Mr Cahill’s entitlement to receive the registrable instrument of transfer for the property under the contract was extinguished.
42. [42]
    The Chief Executive submits that s 82(1)(b) AFAA and s 206 POA as to dishonestly converting, stealing or misapplying property, do not apply as :

    2. a)
       The Agent remitted the Initial Deposit to the appropriate entity for the appropriate purpose.

    2. b)
       Holding the Deposit Bond and then releasing it to the Vendor after the contract of sale was at an end cannot constitute an event within the meaning of s 470 PAMDA because Mr Cahill was not, in fact, entitled to the deposit after the contract was at an end and, it follows, had no entitlement to call upon the Deposit Bonds.^[19]
43. [43]
    I accept the submissions of the Chief Executive in these respects.
44. [44]
    The Agent dealt with the Initial Deposits in a manner as anticipated, they were forwarded to QBE, and Deposit Bonds were issued by QBE accordingly. There is no mishandling of the Initial Deposits moneys in terms of the LSA or the AFAA.
45. [45]
    QBE in turn provided Deposit Bonds, and then paid it to the Vendor when called upon. Those events were not controlled by the Agent. Mr Cahill subsequently consented to a judgment being entered against him in favour of QBE, which indicates that he conceded a liability by him to QBE. That sequence of events does not show any mishandling of the Deposit Bond by the Agent.
46. [46]
    The Solicitors for Mr Cahill submit that the agent used the Deposit Bond instrument to obtain a benefit for himself by way of an advance payment of commission ‘to which he was not entitled,’^[20].
47. [47]
    It has not been shown however that the Agent was not entitled to the Commission – that is a question between the Vendor and the Agent. It would appear that the Vendor agreed to pay commission before a sale settled – presumably that was an inducement to agents to obtain sales, and not to have to wait until the settlement date, which may be several years in time ahead in an ‘off the plan’ sale such as this. The Agent may well have been entitled to payment of the commission once a Contract was entered into, and a Deposit was provided by way of a Bond.
48. [48]
    The mere payment of commission to the Agent has not been shown to be a breach of any of the relevant Acts, and does not of itself give rise to claim against the Fund.
49. [49]
    No basis is therefore shown for a claim against the Fund in respect of the Deposit Event.

The Misrepresentation Event

50. [50]
    The misrepresentations are described in the outline of Claim:^[21]

4. The Agent made representations (‘the Representations’) about the property, to the effect that:

3. (a)
    the property for sale was unique and should be purchased by the Applicants for reasons including the following;

3. (b)
    the acquisition of the property could be achieved with a payment of only 1% of the purchase price;

3. (c)
    the Agent would look after the applicant’s interests as paramount in relation to the purchase;

3. (d)
    the Applicants would not be obliged to do or contribute anything further towards the completion of the purchase of the property (because the Agent would take care of everything for them); and

3. (e)
    the liability of the Applicants in any event was limited to the Applicants’ upfront payment of 1% of the purchase price.

51. [51]
    The Solicitors for Mr Cahill submit that this conduct of the Agent was deceptive and misleading, and designed to mislead Mr Cahill into purchasing the property.
52. [52]
    The Chief Executive submits that these claims are inadequately particularised, and that it cannot properly respond to this part of Mr Cahill’s claim.^[22] Further it says that even were Mr Cahill able to adequately particularise the alleged representations, that the claim ought nonetheless to fail for the reasons related to considerations of ‘financial loss’.
53. [53]
    S 212 POA provides:

    1. (1)
       A licensee or real estate salesperson must not represent to someone else anything that is false or misleading relating to the letting, exchange or sale of property.
54. [54]
    The Chief Executive argued that the representations would not pass the common law test of representations:^[23]

The other provision that your clients rely on is s 574 being false representations about property. Your clients allege in the letter dated 29 June 2009 that the licensee made false representations regarding the valuation of the property on completion, the ready availability of finance and the ability to resell the property prior to completion on the basis that the selling agent would arrange…a deposit bond that your clients would not in fact have to contribute any money towards settlement. With respect none of these assertions appear to be false and some do not even fall into the category of past or present facts being capable of being falsely represented at the time the representations were made. I note that future promises are not facts capable of being misrepresented and do not ordinarily pass the common law test of representations.

55. [55]
    The basic representations as to the ‘sale’ of the properties was correct – the description of the lots, the selling price, and the required deposits, are not in contention.
56. [56]
    The properties were able to be secured by a payment equal to 1% of the purchase price, as the Contract called for a deposit of 10%, which could be provided by a Deposit Bond (which in turn was obtainable for a fee of 1% of the purchase price). That is what occurred.
57. [57]
    The difficulties arose when the time came for Mr Cahill to settle the purchase, and the Vendor required, and forfeited, the full 10% deposit. The circumstances as to why Mr Cahill was unable to on-sell the unit before the settlement date, and avoid this consequence, are unclear – the Vendor was apparently able to sell the unit without loss, and it is unexplained as to why Mr Cahill could not, or did not, do so similarly.
58. [58]
    The misrepresentations that Mr Cahill complains of are the representations that led him to agree to enter into the arrangements. 
59. [59]
    The claim for misrepresentation arises under the Act, which has an element of Consumer Protection. The Act provides that the main object of it is to provide a system that achieves an appropriate balance between the need to regulate for the protection of consumers and the need to promote freedom of enterprise in the market place.^[24] It further provides that another significant object is to provide a way of protecting consumers against particular undesirable practices associated with the promotion of residential property.^[25]
60. [60]
    Misrepresentation under the Act is subject to the provisions of the Act, and principles as to misrepresentation in Contract will not necessarily provide a test, but similar considerations will be relevant, to the extent they are not modified by specific provisions of the Act.
61. [61]
    A misrepresentation in Contract has been described in a leading text^[26] as ‘a representation that is not true, or, more broadly, that leads the representee into error.’
62. [62]
    Representations that may be relied upon in Contract are distinguished from ‘puffs’. The authors note that:^[27]

Flamboyant or alluring statements about the quality of the subject-matter of the contract which would not be understood to be literally true are not actionable. It would be unfortunate (and destructive of many a salesperson’s livelihood) if legal consequences were to attach to such statements as that a car was a ‘prestige auto’ or that a book was one which the reader ‘could not put down’. Even so, what appears to be mere sales talk has sometimes given rise to a remedy. Under the misleading conduct legislation the courts may be less forgiving of what might be regarded as mere sales talk. It is necessary therefore to distinguish between an actionable misrepresentation and hyperbole. The essence of misrepresentation is that it led the representee into error. This must be tested objectively – would a reasonable person in the position of the representee have been led into error by the statement?

63. [63]
    The representations by the agent that the sale was unique, and that he would ‘look after Mr Cahill’s interests as paramount’ may be seen as sales talk or ‘puffs’.
64. [64]
    There is nothing to indicate that there was anything unique about this property, or that a reasonable person would believe that there was.
65. [65]
    The Agent was the agent for the Vendor. His primary duty was to obtain a sale at the best possible price for the Vendor. If considered in any depth, it is apparent that the Agent would have the interests of the Vendor as paramount, as he would be required to act in his client’s interests, not in Mr Cahill’s interests. A reasonable person would be unlikely to accept such a statement as truthful on its face, and rely upon such a proposition.
66. [66]
    Mr Cahill’s reliance is also clouded by representations that he made, or which were made on his behalf, in obtaining the Deposit Bond. The application to ‘Deposit Access’ (issued by QBE Insurance (Australia) Limited) was signed by Mr Cahill on 5 February 2008. On 6 February 2008 a letter was sent by his accountant,^[28] apparently in support of the application. The Deposit Bond itself was issued on 28 February 2008.
67. [67]
    The letter from his accountant said:

Re: Damian Edward Cahill

I advise that I act as accountant for the above client and confirm that they have been self employed for a period of ten years.

The individual/business is liquid and able to meet its current commitments. Based on my client’s current financial position, it would appear that the proposed commitment for Lots 22 and 23, Elston Grandsurf Resort, Surfers Paradise, 4217, of $469,000 for each unit, will not create undue hardship.

However, I am unable to guarantee the future performance of my client and their financial capacity at the time of the property settlement.

68. [68]
    The sending of the letter from his accountant, and the reference to their business background suggests that:

    2. a)
       Mr Cahill did seek advice from his accountant before the Deposit Bond was issued, and that he did not rely solely on the representations of the agent, and

    2. b)
       Mr Cahill was a business person of ten years standing, involved in a regulated industry as travel agents, so may be presumed to have a level of financial sophistication, and be able to assess the reasonableness of the representations made to him.
69. [69]
    It is therefore not established that:

    2. a)
       The statements of the agent as to the basics of the sale were misrepresentations

    2. b)
       Mr Cahill relied on the statements of the agent

    2. c)
       A reasonable person would have been led into error by the statements of the Agent.

70. [70]
    Mr Cahill has not established that the representations that induced him to enter into the Contract were misrepresentations that were false, and on which he reasonably relied.
71. [71]
    I am not satisfied that the misrepresentation ground is made out such as to afford recourse to the Act under S 212 POA, and consequently to a claim against the Fund.

The Marketeering Event

72. [72]
    Section 207 POA {s 573A PAMDA} provides:

207 Misleading conduct

A marketeer must not, in connection with the sale, or for promoting the sale, or for providing a service in connection with the sale, of residential property in Queensland, engage in conduct that is misleading or is likely to mislead.

73. [73]
    Section 208 POA {s 573B PAMDA} provides:

208 Unconscionable conduct

1. (1)
   A marketeer must not, in connection with the sale, or for promoting the sale, or for providing a service in connection with the sale, of residential property in Queensland, engage in conduct that is, in all the circumstances, unconscionable.

74. [74]
    Section 209 POA {s 573C PAMDA} provides as to false representations and other misleading conduct relating to residential property by a marketeer.
75. [75]
    The ability to claim against the Fund for a marketeering contravention is subject to the provisions of AFAA.  Section 80 AFAA  defines ‘marketeering contravention’ as:

Marketeering contravention means a contravention of any of the following by a relevant person –

1. (a)
   The Property Occupations Act 2014, section 207, 208 or 209
2. (b)
   Section 573A, 573B or 573C of the repealed Act.

76. [76]
    Section 82(2) AFAA provides:

(2) A person may make a claim against the Fund for financial loss relating to a non-investment residential property purchased by the person because of, or arising out of, a marketeering contravention only to the extent the loss is capital loss.

77. [77]
    The expression ‘non-investment residential property’ is defined by section 81 AFAA:

A person purchases a non-investment residential property only if –

1. (a)
   The property is a residential property; and either of the following has been assessed for the purchase –
2. (b)
   (i) a concession under the Duties Act 2001, chapter 2, part 9, for transfer duty;

(ii) a concession, under the repealed Stamp Act 1894, section 55A, for stamp duty.

78. [78]
    The concessions that are referred to relate to:^[29]

Purpose of pt 9

The purpose of this part is to provide for concessions for transfer duty for a dutiable transaction that is –

1. (a)
   The transfer, or agreement for the transfer, of a home or first home or of vacant land on which a first home is to be constructed

79. [79]
    Section 84(2) AFAA provides that the persons who cannot make a claim against the fund includes:

(g) a person who suffers financial loss because of, or arising out of, a marketeering contravention relating to the purchase by the person of a residential property, other than a non-investment residential property.

80. [80]
    The effect of the above provisions is that a claim cannot be made for a marketeering contravention where the purchase is for an investment residential purpose.
81. [81]
    There is nothing in the material put forward by Mr Cahill that suggests that he was intending to live in the units as a home, or first home. The purchase seems clearly to have been for investment purposes.
82. [82]
    In these circumstances, no claim can arise by Mr Cahill against the Fund for a marketeering contravention in respect of the marketeering event.

Conclusion

83. [83]
    The Solicitors for Mr Cahill strongly argue that the Agent has acted in a deliberate and unconscionable way to benefit himself, and that Mr Cahill was an innocent party who acted upon what the Agent told him, and has suffered significant financial loss as a result.
84. [84]
    They submit that the object of the legislation is clearly made out in Section 6 AAFA to provide compensation in such cases,^[30] and that the Agent should be ‘brought to account.’^[31]
85. [85]
    Mr Cahill entered into the purchase with the intention of achieving a profit. He accepted what the agent told him. There is a common cited expression as to consumer protection that ‘if something looks too good to be true, it probably is.’
86. [86]
    Here, the agent was telling Mr Cahill that he could essentially make substantial money for almost nothing. All he had to do was sign up to purchase a unit, but he did not have to outlay any substantial money at any point (only an initial application fee of $4,845.00 for each unit), and the units would be resold at a presumably substantial profit, which he would get to keep, and there was no risk, except perhaps for the initial application fees of $4,845.00 each.
87. [87]
    Common sense would surely alert a reasonably prudent person that if making money out of this unit development was so simple, and had no drawbacks, that everybody would be doing it, and there would be a queue of people on the Gold Coast eager to seize this opportunity.
88. [88]
    At the end of the day, Mr Cahill has to accept some responsibility for the situation he placed himself in - he committed to a very large financial commitment without seeking legal or financial advice. In his evident enthusiasm to take part in this property scheme, he did not exercise basic prudence.
89. [89]
    Sympathy nevertheless has to be had with the predicament Mr Cahill has found himself in. He was taken advantage of, by an evidently glib and persuasive agent, and has ended up with a significant financial loss.
90. [90]
    If the agent acted deceitfully or improperly, then he exposes himself to charges for breaches of the relevant Acts, and possible criminal charges.
91. [91]
    In that situation, the buyers may have recourse against the Agent in a civil claim for fraud or misrepresentation, or perhaps a claim for restitution in, or as a result of, criminal proceedings.
92. [92]
    In this matter, it appears that the Agent has proved elusive, and there is a suggestion that he has no Funds. No criminal charges, or breaches of an Act, have been referred to in these proceedings. The possibility of Mr Cahill recovering anything from the Agent in either civil or criminal proceedings, therefore appears unlikely. It is understandable why Mr Cahill would look for recourse to the Fund in those circumstances.
93. [93]
    The Fund is established to reimburse the public from breaches of the Act by agents who act deceitfully or wrongly in terms of the Act. The Fund however is not established to reimburse the public from a ‘bad deal’, or to stand in the place of normal prudence and care.
94. [94]
    In this matter, Mr Cahill has not been able to point to a specific provision of the Act that gives rise to a valid claim against the Fund by him.
95. [95]
    Many of the submissions made on behalf of Mr Cahill refer to principles of fairness. However, there is no overriding provision in the Act of ‘compassion’ or ‘hardship’ or ‘fairness’, that gives the Chief Executive the ability to make a discretionary payment from the Fund, or make what amounts to an ‘ex-gratia’ payment from the Fund.
96. [96]
    The consequence is that, despite the unfortunate situation that Mr Cahill has found himself in, his claim does not fall within the provisions of the Act as to the Fund. Consequently, the claim must be rejected.
97. [97]
    I order that the claim against the Fund made on 19 March 2012 by Mr Cahill is rejected.