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Murnane and Murnane v Petrina Riley (No. 2)[2017] QCAT 227

Murnane and Murnane v Petrina Riley (No. 2)[2017] QCAT 227

CITATION:

Murnane and Murnane v Petrina Riley t/as Focus on Spence (No. 2) [2017] QCAT 227

PARTIES:

John Murnane

Maureen Murnane

(Applicants)

v

Petrina Riley t/as Focus on Spence

(Respondent)

APPLICATION NUMBER:

GAR019-16

MATTER TYPE:

General administrative review matters

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Paratz

DELIVERED ON:

5 July 2017

DELIVERED AT:

Brisbane

ORDERS MADE:

1. The claim is partly allowed in the sum of $15,855.80, pursuant to section 105 and section 106 of the Agents Financial Administration Act 2014 (Qld),

2. At the expiration of the appeal period the Chief Executive must pay to the Applicant the sum of $15,855.80 from the Claim Fund, and if there is an appeal, payment must not be made until after the appeal is finally decided, pursuant to section 112 of the Agents Financial Administration Act 2014 (Qld).

3. Petrina Riley is named liable for the financial loss of John Murnane and Maureen Murnane, pursuant to section 105(3)(c) of the Agents Financial Administration Act 2014 (Qld).

4. Upon payment from the Claim Fund Petrina Riley is liable to reimburse the Claim Fund by paying the sum of $15,855.80 to the Chief Executive, Department of Justice and Attorney-General, pursuant to section 106 and section 116 of the Agents Financial Administration Act 2014 (Qld).

5. Petrina Riley is to pay to John Murnane and Maureen Murnane their costs of this proceeding to be agreed, or failing agreement, to be taxed on the Magistrates Court scale.

CATCHWORDS:

PROFESSIONS AND TRADES – AUCTIONEERS AND AGENTS – CONTROL OF MONEY – where a real estate agent did not pass on proceeds of rental to owners – where restitution was ordered by the Magistrates Court – whether financial loss is shown – whether claimants can recover costs

Agents Financial Administration Act 2014 (Qld) s 105, s 112, s 113, s 114, s 116

 

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 100, s 102

Darroch v O'Neill Holdings Group Pty Ltd [2010] QCAT 307

Gettens v XFar Homes Pty Ltd & Anor [2012] QCAT 150

Lyons & Anor v Millards Noosa Motors Pty Ltd & Ors [2015] QCAT 140

Money 3 Corporation Ltd v Schwenke and Anor [2011] QCAT 512

National Australia Bank Limited v McGill [2010] QCAT 478

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]
    Mr John Murnane and Ms Maureen Murnane (‘the Owners’) owned a Unit in Cairns in a building known as ‘Focus on Spence’ (Unit 205, 174 Grafton Street, Cairns, Queensland).
  2. [2]
    Petrina Riley (‘the Agent’) was the Managing Agent for the unit.
  3. [3]
    The owners allege that the Agent failed to remit all of the rental proceeds that they were entitled to between March 2014 and March 2015, and that the Agent failed to lodge rental bonds with the Residential Tenancies Authority as required.
  4. [4]
    The owners lodged a claim against the Fund established under the Agents Financial Administration Act 2014 (Qld) (AFAA) on 10 September 2015 claiming the amount of $16,723.10. The Chief Executive, Department of Justice and Attorney-General, issued a Notice dated 26 November 2015 that the claim was out of time.
  5. [5]
    The owners filed an Application to extend time as to their claim against the Fund in the Tribunal on 25 January 2016.
  6. [6]
    The Chief Executive referred the claim to the Tribunal on 17 June 2016 and submitted that the claim against the Fund could more effectively be decided by the Tribunal.
  7. [7]
    The Tribunal made Orders on 7 February 2017 declaring that the claim had been made within the required time, and listed the matter for a Directions Hearing.
  8. [8]
    The Tribunal made Directions on 2 May 2017 that the application would be determined by the Tribunal on the papers without an oral hearing, not before 16 May 2017.
  9. [9]
    This is the decision in relation to the claim against the Fund.

Submissions of the Owners on the Claim

  1. [10]
    The owners filed submissions on 17 May 2017. They submitted that they have no reasonable independent means of investigating the matter themselves, and that they are entitled to rely on the Police investigation and prosecution of the agent, together with the finding of the Cairns Magistrates Court that the restitution amount due to the owners from the agent was $15,626.00.
  2. [11]
    The owners submit that their true loss was more like $16,723.10, but that in the circumstances that they were willing to accept that their loss be determined at the figure assessed by the Office of Fair Trading, and acknowledged by the agent, of $15,855.80.[1]

Submissions of the Chief Executive on the Claim

  1. [12]
    In its initial submissions, the Chief Executive queried whether there was sufficient evidence to determine any financial loss, and the extent of any financial loss:[2]

17. However, it is submitted that there is insufficient evidence in the material to enable the Tribunal to make a finding on whether or not the respondent remitted all of the net rental income to the Applicants because:

(a) some of the respondent’s records indicate that she has remitted to the Applicants all of the net rental income that they were entitled to:

(b) however, other parts of the respondent’s records indicate that she may have received further monies from the tenants at the property which she has not remitted to the applicants; and

(c) there is no documentary evidence that supports the Applicants’ contention that the Property was generating rental income continuously between 10 September 2014 and March 2015.

and

19. If the Tribunal finds that the Respondent committed a claimable event which caused the Applicants to suffer financial loss, the Chief Executive submits that the Applicant’s financial loss is the net rental income that the Respondent should have but did not remit to the Applicant between 10 September 2014 and March 2015 less agreed fees and expenses.

  1. [13]
    In its further submissions filed on 2 May 2017, the Chief Executive submitted that the Tribunal has to be satisfied of prescribed requirements before it can make an order, and refers to sections 82 to 87, which comprise Part 7, Division 2 of AFAA, and require that a ‘relevant person’ committed a ‘claimable event’ which caused the applicants to suffer financial loss.[3] It submits that the claim must be rejected.
  2. [14]
    The Chief Executive submits that the Police proceedings on their own offer little to no assistance in satisfying the Tribunal of the requirements of Part 7, Division 2 because:[4]
    1. (1)
      They would not have considered the requirements of Part 7, Division 2 at all since the Magistrates Court has no jurisdiction under AFAA to determine claims against the Fund;
    2. (2)
      There is no indication of what evidence was before the Court or what its reasons for its decision may have been; and
    3. (3)
      There is no indication of what the case against the respondent was, what legislative provision is said to have been contravened or over what timeframe.
  3. [15]
    The Chief Executive notes that the agent appears to no longer allege that the owners have already received restitution from the Police proceedings.[5]
  4. [16]
    In relation to dealings with the property, the Chief Executive notes that:
    1. The evidence establishes that at all material times the property was rented to Jonathan Eddings and Theresa Graham for $400.00 per week, and the agent charged a management fee equal to 8.5% of the gross rent received plus postage and petties of $8.80 per month.[6]
    2. According to the transaction history of the agent’s Trust Account, the Agent received a total amount of $20,000.00 from the tenants as the gross rent payable for the property between 10 February 2014 and 19 February 2015, and no amounts thereafter.[7]
    3. According to the owners bank statements they received $2,320.90 from the Agent as the net rent to which they were entitled between 1 March 2014 and 31 March 2015.[8]
  5. [17]
    The Chief Executive submits that the owners were therefore entitled to receive $15,855.80 from the agent as the net rental proceeds between 10 February 2014 and 31 March 2015 calculated as:[9]
    1. $20,000.00 – being the total gross rent collected; less
    2. $2,3090.00 being the net rent received; less
    3. $1,700.00 – being the total management fees (8.5% of $20,000.00); less
    4. $123.30 – being the total postage and petties ($8.80 x 14 months)

Submissions on Legal Costs

  1. [18]
    The owners have sought legal costs against the agent.
  2. [19]
    They submitted that in pursuing this claim they had been put to considerable expense in requiring legal assistance after their initial application to the Fund was rejected.[10]
  3. [20]
    The owners stated that their legal costs to 10 March 2017 were over $5,000.00 which was considerable in the context of the amount they were likely to recover from the Fund.
  4. [21]
    They submit that they have been obliged to pursue lengthy and complicated proceedings in the Tribunal, and that in the circumstances of this particular case it would be in the interests of justice to make an award, even though such an award ‘is likely to be quite academic’.[11]
  5. [22]
    The Chief Executive denies that it any time rejected the owners claim. It says that it referred the matter to the Tribunal to determine on the merits.[12]
  6. [23]
    The Chief Executive submits that the Tribunal has no power to ‘make one party liable for costs but order that they be paid from somewhere else, particularly from a fund comprised of public money’.[13]
  7. [24]
    The Chief Executive further submits that there is no scope in AFAA for legal costs to be paid from the Fund. It refers to Darroch v O'Neill Holdings Group Pty Ltd.[14] In that matter the Member said:

The Tribunal notes that Mrs Darroch has incurred some legal costs in respect of the claim, the Tribunal though does not consider legal costs equate to financial loss.

Discussion of the Claim

  1. [25]
    Is there sufficient evidence to substantiate the claim of $15,855.80 now made by the owners?
  2. [26]
    The owners do not have close knowledge of the lettings, but their view is that their full loss is a higher figure of $16,723.10, although they are unable to provide evidence to that effect.
  3. [27]
    The Chief Executive is satisfied that if an order is able to be made, that the amount of $15,855.80 is an appropriate amount, as noted earlier.
  4. [28]
    The amount of $15,855.80 is not contested by the agent. The agent has not contested the claim, except to submit by her daughter that the claim is disputed on the basis that a restitution order has already been made by the Cairns Magistrates Court and restitution monies had been paid (which has not been substantiated).[15]
  5. [29]
    The Magistrates Court has ordered that the agent make restitution in the amount of $15,626.00. The decision of the Magistrates Court is made in the context of criminal proceedings in that court, and is not binding on the civil proceedings before this tribunal. The opinion of the Magistrates Court may however be seen as advisory, and notice may be taken of it.
  6. [30]
    Significantly, the order of the Magistrates Court is made according to the criminal standard of proof, which is proof beyond reasonable doubt. That is a higher standard than is required to be established in a claim proceeding, which would be proof on the balance of probabilities.
  7. [31]
    Even without being appraised of the actual evidence before the Magistrates Court, in the absence of any suggestion that the Magistrates Court proceedings were flawed in any way (and none appears in this matter) the fact that the Magistrates Court has been satisfied beyond reasonable doubt as to, and has seen fit to make, the restitution order, is highly persuasive in satisfying the Tribunal that a similar order should be made on the balance of probabilities.
  8. [32]
    The amount awarded by the Magistrates Court is $837.30 more than the amount calculated by the Chief Executive. This difference is not explained, and does not directly correlate to any of the amounts referred to by the Chief Executive.
  9. [33]
    Whilst the basis of the calculation by the Magistrates Court is not known, it was made after submissions would have been invited from the owner and the agent. It is conceivable that some of the minor costs may have been calculated on a different basis. The amounts are so similar however that I am comfortably satisfied that the Magistrates Court did find beyond reasonable doubt that an amount of that order was owing to the owners.
  10. [34]
    I prefer the calculation of the Chief Executive as it based on identified components, and the owners have not challenged them. I will therefore base my order upon the calculation of the Chief Executive.
  11. [35]
    I consider those three factors – the lack of contest by the agent; the finding by the Magistrates Court; and the assessment of the Chief Executive – to be of sufficient cumulative weight to satisfy me on the balance of probabilities that the amount of $15,855.80 is financial loss suffered by the owners.
  12. [36]
    I am satisfied on the balance of probabilities that the owners may make the claim under Division 2, as required by s 105(2) of AFAA.
  13. [37]
    I order that the claim be partly allowed, and that the amount of $15,855.80 be paid from the Fund, pursuant to s 105(1) of AFAA.
  14. [38]
    The agent, Petrina Riley, has not challenged her role in the matter. She was a licensee, and I name her as a ‘responsible person’ and liable to reimburse the fund pursuant to s 116 of AFAA.
  15. [39]
    The agent has raised the concept of ‘double-dipping’ by the owners, if an order is made in these proceedings, but that would not be the result. If the agent were to make restitution to the owners under the Magistrates Court order, after the owners were paid from the Fund, then the owners would be required to give notice of that amount to the Chief Executive pursuant to s 114 of AFAA. The amount recovered by the owners as restitution would then not be recoverable from the Fund pursuant to s 113(1)(a), and the amount of up to $15,855.80 would be repayable to the Fund by the owners.

Discussion of Legal Costs

  1. [40]
    The owners have sought their costs of the proceedings. The question of recovery of costs against the fund has been considered diversely in the Tribunal. In some instances costs have been declined on a discretionary basis, whilst in other instances costs of a certain character have been allowed.
  2. [41]
    In National Australia Bank Limited v McGill[16] the Tribunal considered a claim by a bank for legal costs in relation to a claim against the fund. The Tribunal considered the costs issue having regard to the question of the interests of justice, but did not allow costs on that basis as it was ‘a claim by an astute experienced operator in the finance industry against a  statutory fund designed to protect consumers’[17]. This was a discretionary view.
  3. [42]
    In Money 3 Corporation Ltd v Schwenke and Anor[18] a claimant sought the costs that had been allowed in a default judgment by the Magistrates Court of Victoria against the agent, in a claim against the fund. The Tribunal noted that a court judgment is not a pre-condition to a claim on the fund and said[19] ‘I can see no reason why the fund should bear the burden of Money 3’s legal costs’. This was a view as to the character of the costs as being related to proceedings distinct from the claims process.
  4. [43]
    In Gettens v XFar Homes Pty Ltd & Anor[20] a claimant sought to recover half of his solicitor’s bill which he said were incurred in trying to recover the monies from the agent. The Tribunal noted that ‘There is clear authority in the former Commercial and Consumer Tribunal and in this Tribunal that a party can recover legal fees reasonably incurred in pursuing recovery of a financial loss’.[21]  
  5. [44]
    I considered this line of authority in Lyons & Anor v Millards Noosa Motors Pty Ltd[22] where I commented that:

[26] A claimant may recover legal costs that were reasonably incurred in pursuing recovery of a financial loss. This is distinct from the costs of litigation engaged in before the making of a claim. A claimant who obtains a judgment, which includes an order for costs, would still be able to seek to recover those costs from the judgment debtor under the judgment – that is a distinct matter to recovery of financial loss from the Claim Fund.

[27] Lyons does not provide any break-up of the legal costs. It is not possible to assess how much of the legal costs, if any, can be attributed to the pursuit of the financial loss that was not attributable to the litigation.

[28] I note that Mr Lyons comments that their solicitor never informed them of the process to claim on the fund – it is therefore most likely that the Solicitor’s efforts were not directed to pursuing the financial loss, but were focussed on demand, issue of proceedings and recovery through civil litigation.

[29] I cannot therefore be satisfied that the legal costs claimed fall within the treatment of financial loss under the Act, or are a proper impost on the Fund, and will not order that the legal costs be paid from the fund.

  1. [45]
    In this matter, the claimant is seeking its costs incurred in making and pursuing the claim – this is distinct from its costs incurred in establishing its financial loss, which form part of its financial loss.
  2. [46]
    AFAA provides for limits on recovery of specified matters from the Fund. For example, s 113(2) provides for a cap to be placed on single claims by regulation; and s 113(5) provides that interest is not payable from the Fund for a claim allowed against the Fund.
  3. [47]
    Whilst AFAA does not expressly prohibit the recovery of costs incurred in pursuing a claim against the fund, it does not expressly allow for them either. In the absence of a clear provision in AFAA, payment cannot be ordered from the Fund, as submitted by the Chief Executive.
  4. [48]
    I therefore do not consider that the claimants costs of pursuing the claim are payable from the fund.
  5. [49]
    However, costs are allowable by the Tribunal in a ‘proceeding’.[23] This application is a proceeding.[24] Whilst the costs are not claimable from the Fund, I consider that they may be separately considered against the agent as costs in the proceeding.
  6. [50]
    Costs in the Tribunal are awarded on well-established principles. The power of the Tribunal to order costs is contained in Division 6 of the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act). The basic provision is s 100 which provides that each party usually bears their own costs as follows:

100 Each party usually bears own costs

Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.

  1. [51]
    The basic provision is subject to s 102 which provides that a costs order may be made in the interests of justice as follows:

102 Costs against party in interests of justice

(1) The tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the tribunal considers the interests of justice require it to make the order.

And

(3) In deciding whether to award costs under subsection (1) or (2) the tribunal may have regard to the following –

(a) whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g);

(b) the nature and complexity of the dispute the subject of the proceeding;

(c) the relative strengths of the claims made by each of the parties to the proceeding;

(d) for a proceeding for the review of a reviewable decision –

(i) whether the applicant was afforded natural justice by the decision-maker for the decision; and

(ii) whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits;

(e) the financial circumstances of the parties to the proceeding;

(f) anything else the tribunal considers relevant

  1. [52]
    In this matter the relative strength of the claims is of significance. The agent has not challenged either the liability for, or the quantum of, the owners claim in these proceedings (except for the email submission from her daughter that an order should not be made as it would constitute double dipping as restitution had been paid, which has not been substantiated).
  2. [53]
    The owners have had to pursue their claim which has led directly to these proceedings, and seek recovery from the Fund, due to the failure of the agent to make payment as required in the first place, and her failure to make restitution as ordered by the Magistrates Court.
  3. [54]
    In these proceedings the relative strength of the claims is completely in favour of the owners.
  4. [55]
    In all the circumstances I am satisfied, having regard to the considerations provided for in s 102(3) of the QCAT Act, that it is in the interests of justice, and appropriate, to order that the owners recover allowable costs.
  5. [56]
    I am satisfied that this is an appropriate matter in which to order costs, and make a separate order as to the costs of this proceeding by the agent to the owners. Those costs are to be agreed, or failing agreement to be taxed. Having regard to the amount of the claim, I consider that the appropriate scale in this matter is on the Magistrates Court scale.

Conclusion

  1. [57]
    I make orders as to partial payment of the claim in the amount of $15,855.80 from the Fund; I name Petrina Riley as liable for the financial loss of the owners, and liable to reimburse the Fund after payment; and order that Petrina Riley pay costs to the owners. 

Footnotes

[1]Submissions of the Owners filed 17 May 2017.

[2]Chief Executive’s Submissions filed 17 June 2016.

[3]Chief Executive’s Submissions filed 02 May 2017, para 6.

[4]Ibid, para 7.

[5]Ibid, para 10. 

[6]Ibid, para 11.

[7]Ibid, para 12.

[8]Ibid, para 13.

[9]Chief Executive’s Submissions filed 02 May 2017, para 14.

[10]Applicants’ submissions filed 22 March 2017, para (2).

[11]Applicants’ further submissions filed 17 May 2017, para 9.

[12]Chief Executive’s submissions filed 2 May 2017, para 17.

[13]Ibid, para 19.

[14][2010] QCAT 307, [27].

[15]Email Kirsty Riley to Office of Fair Trading, 16 May 2016.

[16][2010] QCAT 478.

[17]Ibid, [18].

[18][2011] QCAT 512.

[19]Ibid, [13].

[20][2012] QCAT150.

[21]Ibid, [28].

[22][2015] QCAT 140.

[23]QCAT Act, s 102(1).

[24]QCAT Act, Schedule 3, Definition of ‘proceeding’.

Close

Editorial Notes

  • Published Case Name:

    Murnane and Murnane v Petrina Riley t/as Focus on Spence (No. 2)

  • Shortened Case Name:

    Murnane and Murnane v Petrina Riley (No. 2)

  • MNC:

    [2017] QCAT 227

  • Court:

    QCAT

  • Judge(s):

    Member Paratz

  • Date:

    05 Jul 2017

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
Darroch v O'Neill Holdings Group Pty Ltd [2010] QCAT 307
2 citations
Jump To
Cite 1 - [2010] QCAT 307
Cite 2 - [2010] QCAT 307
Gettens v XFar Homes Pty Ltd & Anor [2012] QCAT 150
3 citations
Jump To
Cite 1 - [2012] QCAT 150
Cite 2 - [2012] QCAT 150
Cite 3 - [2012] QCAT 150
Lyons v Millards Noosa Motors Pty Ltd (In liq) [2015] QCAT 140
2 citations
Jump To
Cite 1 - [2015] QCAT 140
Cite 2 - [2015] QCAT 140
Money 3 Corporation Ltd v Schwenke and Anor [2011] QCAT 512
3 citations
Jump To
Cite 1 - [2011] QCAT 512
Cite 2 - [2011] QCAT 512
Cite 3 - [2011] QCAT 512
National Australia Bank Limited v McGill [2010] QCAT 478
3 citations
Jump To
Cite 1 - [2010] QCAT 478
Cite 2 - [2010] QCAT 478
Cite 3 - [2010] QCAT 478

Cases Citing

Case NameFull CitationFrequency
Klaus v Chief Executive, Department of Justice and Attorney-General, Office of Fair Trading [2021] QCAT 3502 citations
1

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