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Scholefield v The Trustee for the Kafritsas Family Trust[2016] QCAT 382

Scholefield v The Trustee for the Kafritsas Family Trust[2016] QCAT 382

CITATION:

Scholefield V The Trustee for the Kafritsas Family Trust & Ors [2016] QCAT 382

PARTIES:

Sarah Scholefield

(Applicant)

v

  1. (1)
    The Trustee for the Kafritsas Family Trust
  2. (2)
    Beachcomber Management Pty Ltd
  3. (3)
    Hi Surf Resorts Pty Ltd (in liquidation)
  4. (4)
    Greg Kafritsas
  5. (5)
    Christos Kafritsas

(Respondents)

APPLICATION NUMBER:

GAR021-15

MATTER TYPE:

General administrative review matters

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Gordon

DELIVERED ON:

18 July 2016

DELIVERED AT:

On the papers

ORDERS MADE:

  1. Pursuant to section 105 of the Agents Financial Administration Act 2014 the claim against the Claim Fund is allowed in the sum of $2,800.
  2. Pursuant to section 112 of the Act at the expiration of the appeal period the Chief Executive must pay to Sarah Scholefield the sum of $2,800 from the Claim Fund, but if there is an appeal, payment must not be made until after the appeal is finally decided.
  3. Pursuant to section 105(3)(c) and 106(1)(b) of the Act, Hi Surf Resorts Pty Ltd and Greg Kafritsas and Christos Kafritsas are named as liable for the financial loss of Sarah Scholefield.
  4. Pursuant to section 116 of the Act, Hi Surf Resorts Pty Ltd and Greg Kafritsas and Christos Kafritsas are jointly and severally liable to reimburse the Claim Fund for any payment made because of this order.

CATCHWORDS:

Where having enlarged time to bring a claim against the Claim Fund, the Tribunal decided to hear the claim – where claimant wrongfully evicted from her residential tenancy - whether financial loss arising from the eviction can be claimed from the fund – whether rental bond and unlawful security deposit can be claimed from the fund – liability of company acting as agent – whether its directors are also liable because of the breach of trust

Scholefield v High Surf Resorts Pty Ltd t/as Beachcomber Surfers Paradise [2014] QCAT 233

Hollins v Fowler (1875) LR 7 HL 757

Agents Financial Administration Act 2014 (Qld) ss 82(1), 95(2), 105, 106, 114, 116

Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 59

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 126

Corporation Act 2001 (Cth) s 179

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).

REASONS FOR DECISION

  1. [1]
    In her application to the Tribunal, Ms Scholefield asked for an extension of time by which she could bring a claim against the Claim Fund operated by the Office of Fair Trading, which pays compensation for financial loss arising from certain dealings with agents. 
  2. [2]
    The Tribunal granted that extension of time.[1]  As part of the process for dealing with the application the Chief Executive was able to make submissions.  One of the submissions was that if an extension of time were granted by the Tribunal it would also be appropriate for the Tribunal to hear the claim against the Claim Fund.  The Chief Executive pointed out that the Tribunal had the power to do this pursuant to section 95(2) of the Agents Financial Administration Act 2014 (Qld) which is the legislation which now governs these types of claims.
  3. [3]
    The Tribunal agreed with this proposition and decided that it would also decide Ms Scholefield’s claim against the Claim Fund.
  4. [4]
    The parties were asked for any further evidence or submissions about the claim against the Claim Fund.  Unfortunately there was only a limited response to this request despite ample time being allowed and efforts to get a response.  I have considered whether it is necessary to hold an oral hearing to assist to decide the matter, but I have concluded that the available material is sufficiently clear and comprehensive to be able to make a fair decision on the papers.  One of the reasons for this is that the main parties to this claim (Ms Scholefield and Hi Surf Resorts Pty Ltd) have already attended a minor civil dispute hearing in the Tribunal on the same subject matter and this resulted in an adjudicator’s written decision.[2]   Whilst there might be some uncertainty whether the essential factual findings in that decision are binding in this claim,[3] none of the parties to this claim challenge those findings.  In the circumstances, I consider that I may rely on those factual findings for the background to this claim.
  5. [5]
    The adjudicator in those proceedings found that on 16 January 2011 Ms Scholefield was granted a residential tenancy of a unit in the Beachcomber apartments in Surfers Paradise.  When she attended the unit on 21 October 2011 however, her electronic key would not work.  All her belongings had gone and the unit had been relet to someone else.[4]  
  6. [6]
    For these events the adjudicator ordered Hi Surf to pay compensation to her in the sum of $40,790 plus the filing fee of $275.
  7. [7]
    The amount awarded was made up as follows:-

General belongings lost

$28,090

Jewellery lost

$8,500

Cash lost

$1,800

Security deposit

$1,400

Cost of emergency accommodation and miscellaneous claims

$1,000

 

$40,790

  1. [8]
    The adjudicator also found that:-
    1. (a)
      Ms Scholefield had paid both a “security deposit” of $1,400 and a rental bond of $1,400.[5]   The rental bond was never forwarded to the Residential Tenancies Authority as it should have been.
    2. (b)
      There had been a significant breach of the residential tenancy agreement by her exclusion from her unit and the removal of her belongings.[6] 
    3. (c)
      Hi Surf was in the position of bailee of Ms Scholefield’s belongings which it had removed from the unit but had failed to take care of them.[7]
  2. [9]
    Ms Scholefield says that Hi Surf was insolvent and it would appear that no part of the Tribunal’s order has been paid.  The Chief Executive has provided the result of a company search and this shows that on 19 September 2014 a winding up order was made against Hi Surf by the Federal Court on the petition of the Deputy Commissioner of Taxation. 
  3. [10]
    There is no information available to me as to whether Ms Scholefield has received any payment from Hi Surf’s liquidator.  By section 114 of the Act, Ms Scholefield is obliged to notify the Chief Executive if she does receive any such payment for her financial loss.  It is reasonable for me to assume that since she has not made any such notification, this has not happened.
  4. [11]
    By section 105(3)(i) of the Act when considering the financial loss suffered by Ms Scholefield I am obliged to take into account any amount which she might reasonably have received or recovered if not for her neglect or default.  There is nothing to suggest that she would have received or recovered any amount if she had taken greater care.

The claim against the Claim Fund

  1. [12]
    Turning to the claim now made by Ms Scholefield against the Claim Fund, she says she suffered the following loss arising from the events:-

Property

$36,590

Contracts and business stock

$33,000

Cash lost

$1,800

Security deposit

$1,400

Rental bond

$1,400

Court filing fees

$1,080

 

$75,270

  1. [13]
    Ms Scholefield also claims an unspecified amount for “Documents and Qualifications”.  She calculates the total of her loss as $118,270 although it is unclear how she reaches that figure.  She claims half that amount from the Claim Fund, being the sum of $59,135.
  2. [14]
    By section 82(1) of the Act, a person may claim against the Claim Fund if they suffer “financial loss because of the happening of any of the following events”.  There is then a list of events which can support such a claim.  The only one which is of relevance to these circumstances is in paragraph (b) which reads as follows:-
  1. (b)
    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;...
  1. [15]
    A “relevant person” is defined in section 80 of the Act as:-

relevant person means the following—

  1. (a)
    an agent;
  1. (b)
    an agent’s employee or agent, or a person carrying on business with the agent;
  1. (c)
    a person having charge or control, or apparent charge or control, of an agent’s registered office or business.
  1. [16]
    In this context an “agent” is a licensee[8] and a licensee means a holder of a licence under the Agents Act.[9]  Agents Act is defined as including the Property Occupations Act 2014.  This Act covers the licensing of residential letting agents.  Ms Scholefield says on her claim form that Hi Surf Resorts Pty Ltd and also Beachcomber Management Pty Ltd were licensed as a residential letting agent.  This is not disputed by the Chief Executive.  Therefore each of these companies were a relevant person for the purpose of section 82(1)(b).
  2. [17]
    For Ms Scholefield successfully to establish a claim against the Claim Fund about the loss of her belongings, section 82(1)(b) requires (in this context) that:-
    1. (a)
      Ms Scholefield must have entrusted her belongings to the relevant person; and
    2. (b)
      the relevant person must have held the belongings as agent for someone else;
    3. (c)
      the belongings must have been held by the relevant person in its capacity as a residential letting agent; and
    4. (d)
      the relevant person stole or misappropriated the belongings.
  3. [18]
    The difficulty here is that Ms Scholefield did not entrust her belongings to the agent as required by (a).  This is the submission of the Chief Executive and I agree with this submission.
  4. [19]
    I say that because I think the words in section 82(1)(b) require some action and intent on the part of the person owning the belongings that they should be held by the relevant person (in this case, Hi Surf Resorts Pty Ltd).  To the contrary, Hi Surf removed the belongings from her unit without her consent or knowledge.
  5. [20]
    It appears from the adjudicator’s findings that thereafter the belongings were either lost or stolen or in some other way went missing.  The adjudicator expressly found that she had not decided what belongings she wanted and left the remainder with Hi Surf as it claimed.[10]  There is no question therefore that she entrusted the belongings to Hi Surf at any time after they were removed from the unit.
  6. [21]
    The adjudicator expressly found that Hi Surf Resorts Pty Ltd was a bailee of Ms Scholefield’s belongings.[11]  Normally a bailee would have been entrusted with goods by the bailor, but this is not always the case.  For example a bailment can arise where the bailee finds goods in a public place and takes charge of them.[12]  I do not think the adjudicator’s finding of a bailment means that Ms Scholefield did entrust her belongings to Hi Surf after all.
  7. [22]
    In the light of the above I must find against Ms Scholefield in her claim against the Claim Fund in so far as it concerns loss of her belongings.  This would include the claim for loss of property, business stock, cash and documents and qualifications.  There is also a claim for “loss of contracts”.  If this is a claim for loss of belongings, it suffers from the same difficulty.  If it is a claim for loss of earnings or business profits, again it suffers from the same difficulty because nothing was entrusted to Hi Surf.
  8. [23]
    The rental bond however, is different.  This should have been forwarded to the Residential Tenancies Authority but it was not.  This money was entrusted to Hi Surf by Ms Scholefield, but it was misapplied by Hi Surf because it was not forwarded to the RTA.  This caused financial loss to Ms Scholefield because if it had been held by the RTA she could have asked for its payment to her.  Hi-Surf would have been unable to resist this, bearing in mind that in the final account between the parties there was a considerable sum owed to Ms Scholefield as found by the adjudicator.  This part of Ms Scholefield’s claim against the Claim Fund succeeds.
  9. [24]
    As for the security deposit, it is important that taking a security deposit as well as a rental bond is not permitted in residential tenancy agreements.[13]  This means that its request, receipt and retention was always unlawful.  Therefore the deposit should have been returned to Ms Scholefield voluntarily even without her demand, and without any reduction to allow for any money which she may have owed at any time.  This was a continuing obligation of Hi-Surf and it was also an obligation which arose when Ms Scholefield claimed this money in her minor civil dispute claim, and when Hi-Surf was ordered to pay it to her.
  10. [25]
    By failing to return this money to Ms Scholefield, Hi-Surf misapplied it.  She suffered financial loss as a result.  Her claim against the Claim Fund in this respect also succeeds.

Who is liable for the financial loss?

  1. [26]
    I now turn to the question of who is liable for Ms Scholefield’s financial loss of the two amounts that I have allowed, that is the rental bond and the security deposit.  I am required to decide this question by section 105(3)(c) of the Act.  What I have to decide here is who is legally liable for that loss. 
  2. [27]
    As far as the rental bond is concerned, Hi Surf was trustee of that money while it was in its possession because it was obliged to forward it to the RTA.  Its failure to do so was a breach of trust.  Ultimately, the loser has been Ms Scholefield because of the final account between the parties.  Therefore, Hi Surf is liable to reimburse this money to her and is liable for her financial loss because it has failed to do so.
  3. [28]
    As for the security deposit, no doubt the intention was that, depending on what happened, Hi Surf would either return it to Ms Scholefield or give it to the owner.  However, as we have seen, the request, receipt and retention of this money was always unlawful and it should have been returned to Ms Scholefield at all times.  Since there was no valid contractual basis for retaining this money, in my view Hi Surf held it on trust for Ms Scholefield.  Failing to give it back to her was a breach of trust and caused her financial loss for which Hi Surf is liable.
  4. [29]
    Is there anyone else liable for Ms Scholefield’s financial loss of these two amounts?  In some circumstances it is possible to lift the corporate veil, with the result that those who control a company or who have a direct influence upon it in relation to the events concerned, are directly liable.  Here it is unnecessary to do this because of the provisions of section 197 of the Corporation Act 2001 (Cth):-

197   Directors liable for debts and other obligations incurred by corporation as trustee

  1. (1)
    A person who is a director of a corporation when it incurs a liability while acting, or purporting to act, as trustee, is liable to discharge the whole or a part of the liability if the corporation:
  1. (a)
    has not discharged, and cannot discharge, the liability or that part of it; and
  1. (b)
    is not entitled to be fully indemnified against the liability out of trust assets solely because of one or more of the following:
  1. (i)
    a breach of trust by the corporation;
  1. (ii)
    the corporation’s acting outside the scope of its powers as trustee;
  1. (iii)
    a term of the trust denying, or limiting, the corporation’s right to be indemnified against the liability.

The person is liable both individually and jointly with the corporation and anyone else who is liable under this subsection.

Note: The person will not be liable under this subsection merely because there are insufficient trust assets out of which the corporation can be indemnified.

  1. [30]
    This section therefore imposes a legal liability upon the directors of a company in cases of breach of trust where the company is unable to discharge that liability.
  2. [31]
    I have already found that Hi Surf acted as trustee for both the rental bond and the security deposit.  In breach of trust, Hi Surf failed to pay the rental bond to the RTA and failed to return the security deposit to Ms Scholefield. Hi Surf is now unable to do this.
  3. [32]
    For this reason, section 197 is engaged for both these amounts and under that section the directors at the time are also liable for Ms Scholefield’s financial loss arising from the breach of trust.  Since the trust imposed a continuing obligation, the directors concerned are those from January 2011 onwards.  From the company search provided by the Chief Executive it can be seen that the relevant directors are Greg Kafritsas and Christos Kafritsas.
  4. [33]
    As for the first Respondent, the trustee for the Kafritsas Family Trust, it can be seen from the papers that at the time of Ms Scholefield’s unlawful eviction this trustee was Hi Surf Resorts Pty Ltd.  Some time afterwards, on 27 March 2012, Beachcomber Management Pty Ltd replaced Hi Surf as trustee.  There is no need to repeat the order made against Hi Surf against the trustee for the Kafritsas Family Trust.
  5. [34]
    As for the second Respondent, Beachcomber Management Pty Ltd, this company was registered on 27 March 2012 and so did not even exist at the time when the events occurred.  It would appear from Ms Scholefield’s claim form that this company took over management of the apartments afterwards.  But this does not mean it took over any liability owed to Ms Scholefield.  I make no order against this company.

The responsible persons

  1. [35]
    By section 116 of the Act, those persons named in the Tribunal’s decision as liable for the claimant’s financial loss are liable as responsible persons to reimburse the Claim Fund upon the fund making the payment to the claimant.  The section also makes the company’s executive officers at the time of the section 82 event liable to reimburse the fund.  Even if I had not found Greg Kafritsas and Christos Kafritsas directly liable for Ms Scholefield’s financial loss because of section 197(1) of the Corporation Act 2001, they would ultimately be liable to reimburse the fund under this provision because they were both executive officers of the company over the relevant dates in 2011.  I shall make an appropriate order for the recovery of the amount payable.

Footnotes

[1] Order of 13 January 2016.

[2] Scholefield v High Surf Resorts Pty Ltd t/as Beachcomber Surfers Paradise [2014] QCAT 233, a claim commenced on 11 May 2012.

[3] The uncertainty arises from the wording of section 126 of the Queensland Civil and Administrative Tribunal Act 2009 which provides that a court or “other tribunal” is not bound by a decision about an issue in such cases; query whether a differently constituted tribunal within QCAT is an other tribunal.

[4] Paragraphs [4] and [5] of the decision.

[5] Paragraph [43].

[6] Paragraph [56].

[7] Paragraphs [64] and [65].

[8] Section 8 of the Act.

[9] Schedule 1 of the Act (definitions).

[10] Paragraph [57].

[11] Paragraph [64].

[12] Hollins v Fowler (1875) LR 7 HL 757 at 766 (English House of Lords).

[13] Section 59 of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld).

Close

Editorial Notes

  • Published Case Name:

    Sarah Scholefield v The Trustee for the Kafritsas Family Trust, Beachcomber Management Pty Ltd, Hi Surf Resorts Pty Ltd (In liq), Greg Kafritsas and Christos Kafritsas

  • Shortened Case Name:

    Scholefield v The Trustee for the Kafritsas Family Trust

  • MNC:

    [2016] QCAT 382

  • Court:

    QCAT

  • Judge(s):

    Member Gordon

  • Date:

    18 Jul 2016

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Hollins v Fowler (1875) LR 7 HL 757
2 citations
Jump To
Cite 1 - (1875) LR 7 HL 757
Cite 2 - (1875) LR 7 HL 757
Scholefield v High Surf Resorts Pty Ltd t/as Beachcomber Surfers Paradise [2014] QCAT 233
2 citations
Jump To
Cite 1 - [2014] QCAT 233
Cite 2 - [2014] QCAT 233

Cases Citing

No judgments on Queensland Judgments cite this judgment.

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