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  4. Richards v Chopperworks Pty Ltd (externally administered) - [2017] QCAT 453

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Richards v Chopperworks Pty Ltd (externally administered)[2017] QCAT 453

Richards v Chopperworks Pty Ltd (externally administered)[2017] QCAT 453

CITATION:

Richards v Chopperworks Pty Limited (externally administered) & Ors [2017] QCAT 453

PARTIES:

Adam Richards

(Applicant)

v

Chopperworks Pty Limited (externally administered)

(First Respondent)

Jeffrey Brian Richardson

(Second Respondent)

Samantha Jocelyn Richardson

(Third Respondent)

APPLICATION NUMBER:

OCL015-17

MATTER TYPE:

Occupational regulation matters

HEARING DATE:

22 November 2017

HEARD AT:

Brisbane

DECISION OF:

Member Olding

DELIVERED ON:

24 November 2017

DELIVERED AT:

Brisbane

ORDERS MADE:

1. The claim against the Claim Fund lodged by Adam Richards on 5 September 2012 is wholly allowed.

2. The amount of Adam Richards’ financial loss is Fifteen Thousand Dollars ($15,000).

3. Chopperworks Pty Limited (externally administered), Jeffrey Brian Richardson and Samantha Jocelyn Richardson are named as the persons liable for Adam Richards’ loss of Fifteen Thousand Dollars ($15,000).

4. Upon payment from the Claim Fund, Jeffrey Brian Richardson and Samantha Jocelyn Richardson (and Chopperworks Pty Limited (externally administered) unless or until the Tribunal orders that no amount is to be reimbursed by it) are jointly and severally liable to reimburse the Claim Fund by paying the amount of Fifteen Thousand Dollars ($15,000) to the Chief Executive, Department of Justice and Attorney-General.

5. Any party wishing to submit that an order that no amount is to be reimbursed to the Claim Fund by Chopperworks Pty Ltd (externally administered) should be made must file in the Tribunal two (2) copies and give to each of the other parties one (1) copy of written submissions, by 4:00pm on 8 December 2017.

6. Any party wishing to make submissions in response to any submission made under order 5 must file in the Tribunal two (2) copies and give to each of the other parties one (1) copy of written submissions in response, by 4:00pm on 22 December 2017.

7. If any submissions are received by the Tribunal under orders 5 and 6 above, the Tribunal will determine on the papers without a further oral hearing whether to make an order that no amount is to be reimbursed to the Claim Fund by Chopperworks Pty Ltd (externally administered).

CATCHWORDS:

PROFESSIONS AND TRADES – AUCTIONEERS AND AGENTS – STATUTORY OR OTHER FIDELITY OR COMPENSATION FUND – where claimant paid deposit to motor dealer – where motor dealer falsely represented that motorcycle being imported for sale to claimant – where claimant claimed against claim fund

Agents Financial Administration Act 2014 (Qld), s 105, s 106, s 155, Schedule 1 (“executive officer”)

Property Agents and Motor Dealers Act 2000 (Qld), s 470, s 488, s 573, s 574

Queensland Civil and Administrative Tribunal Act 2009, s 4(d), s 93

Brown & Anor v Wilen Pty Ltd & Ors [2012] QCAT 324

Mann & Mann v McCreath [2016] QCAT 477

Rees v Mighty Enterprises Pty Ltd & Ors [2015] QCAT 312

Turnbull v McCreath & Ors [2017] QCAT 190

APPEARANCES:

APPLICANT:

Adam Richards

FIRST RESPONDENT:

No appearance

SECOND RESPONDENT:

No appearance

THIRD RESPONDENT:

No appearance

REPRESENTATIVES:

APPLICANT:

Adam Richards appeared in person

RESPONDENTS:

Not applicable

REASONS FOR DECISION

  1. [1]
    Following representations from one of its directors, Mr Richards paid a deposit of $15,000 to Chopperworks Pty Ltd (the Company) for the purchase of a motorcycle, but never received the motorcycle or the return of his deposit.
  2. [2]
    He lodged a claim against the Claim Fund, continued under the Agents Financial Administration Act 2014 (Qld) (AFAA), with the Chief Executive, Department of Justice and Attorney-General, who referred the claim to the Tribunal.
  3. [3]
    For the reasons that follow, I have decided to wholly allow the claim in the amount of $15,000 and to name the Company, Jeffrey Brian Richardson and Samantha Jocelyn Richardson as persons liable for Mr Richards’ loss.

Statutory framework

  1. [4]
    The AFAA provisions govern the process for deciding the claim.
  2. [5]
    However, the claim was commenced before the repeal of the former Property Agents and Motor Dealers Act 2000 (Qld) (PAMDA) with effect from 1 December 2014. In those circumstances, transitional provisions have been held to have the effect that determination of the claim requires consideration of whether Mr Richards was entitled to claim under s 470(1) of PAMDA.[1]
  3. [6]
    Under PAMDA, s 488, a claim could only be allowed if the Tribunal is satisfied on the balance of probabilities that:

(a) an event mentioned in section 470(1) happened; and

(b) the claimant suffered financial loss because of the happening of the event.

  1. [7]
    Events mentioned in s 470(1) include the contravention of s 573 and the contravention of s 574 by a relevant person, which includes a licensee or former licensee.
  2. [8]
    Section 573 states:

(1) This section applies if a licensee, in the performance of the activities of a licensee, receives an amount belonging to someone else.

(2) A licensee who-

(a) dishonestly converts the amount to the licensee’s own or someone else’s use; or

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

commits a crime.

Maximum penalty- 1000 penalty units or 5 years imprisonment.

  1. [9]
    Section 574(1) provides that:

A licensee or registered employee must not represent in any way to someone else anything that is false or misleading in relation to the letting, exchange or sale of property.

Maximum penalty – 540 penalty units

  1. [10]
    The Tribunal may allow the claim wholly or partly, or reject the claim.
  2. [11]
    PAMDA, s 488(3)(a)(i) provided, and AFAA, s 105(3)(i) now provides, that if the Tribunal allows the claim, wholly or partly, the Tribunal must:[2]

take into account - any amount the claimant might reasonably have received or recovered if not for the claimant’s neglect or default.

  1. [12]
    Also, if the Tribunal allows the claim wholly or partly, it must:

(a) “decide the amount of the claimant’s financial loss”: AFAA, s 105(3)(b); and

(b) “name the person who is liable for the claimant’s financial loss”: AFAA, s 105(3)(c).

  1. [13]
    AFAA, s 106 sets out the orders the Tribunal may make:

106    Orders QCAT may make on claim hearing

(1) QCAT may make the following orders for a claim against the fund-

(a) an order allowing the claim, wholly or partly, or rejecting the claim;

(b) an order stating that a named person is liable for a claimant’s financial loss and the amount of the loss;

(c) an order about recovery of an amount payable for a claim.

(2) QCAT may make an order that no amount is to be reimbursed to the fund for a claim by the respondent if QCAT is satisfied any of the following have been appointed for the respondent-

(a) for a corporation – a liquidator, controller, administrator or receiver under the Corporations Act;

(b) a trustee in bankruptcy.

  1. [14]
    By operation of s 106(1) and s 106(3) of AFAA, a person named in a Tribunal order as liable for a claimant’s financial loss is, if an amount is paid from the fund in settlement of the claim, a “responsible person” for the amount of the loss.
  2. [15]
    Section 106 goes on to provide:

(4) Each of the following persons is jointly and severally liable to reimburse the fund to the extent of the amount paid from the fund for the claim . . .

(a) the responsible person;

(b) if the responsible person is a corporation, each person who was an executive officer of the corporation when the relevant event in section 82 happened.

(5) The chief executive may recover as a debt from each person mentioned in subsection (4) an amount for which the person is, under the subsection, liable to reimburse the fund.

  1. [16]
    An “executive officer” means any person concerned in the management of a company[3] and includes a director.[4]

The hearing

  1. [17]
    Mr Richards appeared in person at the hearing.
  2. [18]
    The Department advised the Tribunal before the hearing that there would be no appearance for the Chief Executive but provided written submissions.
  3. [19]
    The liquidator of the Company, Mr Nick Combis, did not appear at the hearing, but on short notice, during a brief adjournment, helpfully provided a letter confirming that the liquidation of the Company had not concluded and awaited finalisation of this proceeding and any associated statutory obligations.
  4. [20]
    Mr and Mrs Richardson did not appear at the hearing.  In December 2016, a letter was sent to the Chief Executive in the name of both Mr and Mrs Richardson. The letter asked that any correspondence relating to the claim be sent to a nominated Post Office Box.  Before the hearing, I confirmed with registry staff that the Tribunal’s notice of hearing and other correspondence were forwarded to that address.
  5. [21]
    Accordingly, I was satisfied that Mr and Mrs Richardson were given notice of the hearing and proceeded to hear the matter in their absence.[5] 

The facts

  1. [22]
    The account of the facts set out below is based on the affidavit evidence of Mr Richards and the documents exhibited to the affidavit. In the absence of any contrary evidence or submissions, or any inconsistencies or other concerns arising on the face of the written evidence, I have no reason to doubt the accuracy of the evidence given by Mr Richards, who presented as straightforward and honest, and confirmed the accuracy of the affidavit under oath.
  2. [23]
    The Company was a licensed motor dealer, and Mr and Mrs Richardson were directors of the Company, at all relevant times.
  3. [24]
    In early 2012, Mr Richards approached the Company with a view to purchasing a motorcycle. Mr Richardson recommended a motorcycle to be imported from the United States, which the Company would provide at a price of $20,000 compared with what he said would be a usual price of $25,000.
  4. [25]
    The Company required a deposit of $15,000.  Although at first reluctant to pay the deposit, Mr Richards was persuaded by Mr Richardson that it would be necessary.
  5. [26]
    On 20 March 2012, Mr Richardson sent Mr Richards an email with photographs of the motorcycle said to be available to be imported from the United States. The email included specific details of the make and model and “miles on the clock” and described the motorcycle as “an absolute minter”.
  6. [27]
    Mr Richards replied advising that he wished to purchase the motorcycle. He received by email a document bearing the Company’s name and other details, styled “Quotation”, which Mr Richards refers to in his affidavit as an invoice and indeed it contains the words “Invoice to: Adam Richards”, along with the details of the motorcycle, the price of $20,000 and a notation that a $15,000 deposit is required.
  7. [28]
    Mr Richards paid the amount of $15,000 to the Company’s bank account on 26 March 2016.  Given Mr Richards’ expressed concerns about paying the deposit, I find that he would not have done so but for the representations by Mr Richardson on behalf of the Company that the Company would import the motorcycle for sale to Mr Richards.
  8. [29]
    After following up with the Company’s office, Mr Richards received a receipt and sales order, both also bearing the Company’s name and other details, the latter including the words “sold by JR”.
  9. [30]
    Mr Richards tried over a couple of weeks by email and telephone to engage with Mr Richardson to obtain transport tracking details for the motorcycle, but received no reply.  He also called the Company’s office but was told that Mr Richardson was handling the matter personally.
  10. [31]
    Eventually Mr Richardson called and advised that the motorcycle would arrive in Australia on 17 May 2012, but Mr Richards heard nothing further from Mr Richardson around that time, apart from one later call in which he said that the motorcycle had arrived in Australia on 19 May 2012.
  11. [32]
    On 1 June 2012, having heard nothing further from the Company, Mr Richards sent an email seeking either written confirmation of the progress of the sale and the location of the motorcycle or return of his deposit. Mr Richardson subsequently sent a text saying that the motorcycle had arrived in Australia.
  12. [33]
    Over the period from 7 June 2012 to 25 June 2012, Mr Richards had a series of text message exchanges with Mr Richardson, in which Mr Richardson variously indicated that the motorcycle was at Customs/AQIS; that it should be released in the near future; that was cleared for release; and finally on 25 June 2012 at 12:51pm that he “Just got the call to go” and would call the next day. 
  13. [34]
    On 26 June 2012, Mr Richards heard nothing further.  The following day, he called Mr Richardson several times until lunchtime without success, then called the Company’s office and spoke to a representative of the liquidator who advised that the Company had been placed into liquidation.
  14. [35]
    Subsequent, to these events, Mr Richards made contact by telephone and email with Mr Nick Trask, who identified himself as the CEO of Trask Performance and other “Trask” businesses in Phoenix, Arizona.  Mr Trask confirmed by email dated 29 June 2012 that:

I was the contact for purchasing bikes for Jeff Richardson for exporting bikes into Australia.  I haven’t shipped a bike to Jeff for over a year, due to him still owing me for 3 bikes. I have not shipped or hold (sic) in my possession a 2009 nightrain [the model of motorcycle promised to Mr Richards]. I’m positive that if a bike was purchased here in the states by Jeff I would have known about it or received it for storage until ready for export. Let me know if I can assist further.

  1. [36]
    This advice from Mr Trask suggests that there never was a motorcycle fitting the description stated by Mr Richardson imported for sale to Mr Richards.  The liquidator confirmed that the Company had no motorcycle fitting the description for Mr Richards.
  2. [37]
    Having regard to the advice from Mr Trask and the advice that the Company held no motorcycle for Mr Richards’ when the liquidator was appointed, the inference is open that the Company never intended to import the motorcycle. In the circumstances, I am persuaded on the balance of probabilities that the Company did not import the motorcycle for Mr Richards and did not ever intend to do so.
  3. [38]
    The liquidator, in the letter provided on the day of the hearing, advised that “there has not been a dividend paid to any class of unsecured creditor and there is no prospect of any such dividend being paid”.

Should Mr Richards’ claim against the fund be allowed?

  1. [39]
    Mr Richards’ claim against the fund is based on contraventions of PAMDA s 573 and s 574(1).
  2. [40]
    On the factual findings above, the Company has clearly contravened s 574(1). The Company falsely represented to Mr Richards that the Company would import a particular motorcycle for sale to Mr Richards and on that basis received the deposit of $15,000 from Mr Richards.  Mr Richardson on behalf of the Company also falsely represented that the motorcycle had arrived in Australia and was working its way through the importation processes.
  3. [41]
    Further consideration of, and perhaps evidence, regarding the nature of the “deposit” might be required to determine whether the Company also contravened s 573. This is unnecessary in view of the conclusion in respect of s 574(1).
  4. [42]
    The next question is whether Mr Richards suffered financial loss because of these representations. In view of the findings that Mr Richards would not have paid the deposit, or refrained from seeking to recover it, but for Mr Richardson’s false representations on behalf of the Company, and that unsecured creditors have no prospect of receiving a dividend in the liquidation, it is clear that Mr Richards suffered financial loss because of the representations.

What is the amount of Mr Richards’ loss?

  1. [43]
    There is nothing in the evidence to suggest any neglect or default by Mr Richards – he pursued the Company promptly – and Mr Richards confirmed that no amount had been ordered to be paid to him as compensation.
  2. [44]
    I therefore accept that Mr Richards’ loss is, as he submits, the full amount of $15,000 paid to the Company and for which there is no prospect of recovery.

Who is liable for Mr Richards’ loss?

  1. [45]
    It is clear that the Company is liable for Mr Richards’ loss.
  2. [46]
    It is also clear that, once the amount of $15,000 is paid from the fund, Mr and Mrs Richardson are, with the Company, jointly and severally liable to reimburse the fund for that amount.  That is so regardless of their individual level of involvement in the management of the Company generally or in the particular events that lead to the claim.[6]
  3. [47]
    What is less clear is whether the Tribunal should name Mr and Mrs Richardson as persons “liable for Mr Richards’ loss”.  Unassisted by previous decisions, I would have inclined to the view that the correct position is that the Company is the only person “liable for the claimant’s loss” – that is, legally responsible – and that Mr and Mrs Richardson as directors have a different liability, being the liability to “reimburse” the fund. 
  4. [48]
    On that basis, I would have been inclined to name only the Company as the person liable for the loss.  Once the Company is so named, and the payment is made from the fund, the Chief Executive would seem to be entitled by operation of the statutory provisions to recover from the directors if they fail to meet their liability to reimburse the fund.  That would not require the directors to be named or any other order of the Tribunal.
  5. [49]
    However, it seems to have been the practice of the Tribunal in these circumstances to make orders naming both the Company and the directors and stating their joint and several liability to reimburse the fund. The Chief Executive’s submissions appear to seek such orders.[7]  As a matter of consistency,[8] and since the practical result is the same, I will follow that practice.

Should an order be made that no amount is to be reimbursed by the Company in liquidation?

  1. [50]
    As noted above, where a respondent has a liquidator appointed, s 106(2)(a) allows, but does not require, the Tribunal to make an order that no amount is to be reimbursed to the fund by the respondent.
  2. [51]
    Advice from the liquidator suggests there is no prospect of any reimbursement being made by the Company. In those circumstances, I assume that the Chief Executive will not seek to recover any reimbursement from the Company and there would be no utility in making an order, other than perhaps relieving the liquidator from any obligation to include reference to the reimbursement obligation in his final report of the liquidation.  The making or refraining from making an order does not appear to impact upon the liability of the directors to reimburse the fund.
  3. [52]
    Since no party has submitted that I should, I will not make such an order, but will allow a short period for submissions if any party wishes to seek such an order.

Footnotes

[1]AFAA, s 155. See Rees v Mighty Enterprises Pty Ltd & Ors [2015] QCAT 312, [53]; Mann & Mann v McCreath [2016] QCAT 477, [7]; Turnbull v McCreath & Ors [2017] 190, [13].

[2]PAMDA, s 488(1)(3)(a)(ii) and AFAA, s 105(3)(a)(ii) require the Tribunal to take into account any amount ordered to be paid to the claimant as compensation under PAMDA or its relevant successor.  As Mr Richards confirmed that no amounts of compensation were ordered to be paid to him, no further consideration of this is required.

[3]AFAA, Schedule 1.

[4]Brown & Anor v Wilen Pty Ltd & Ors [2012] QCAT 324, [16] - [21].

[5]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 93.

[6]Brown & Anor v Wilen Pty Ltd & Ors [2012] QCAT 324, [16] - [21].

[7]Brown & Anor v Wilen Pty Ltd & Ors [2012] QCAT 324; Turnbull v McCreath & Ors [2017] QCAT 190.

[8]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 4(d).

Close

Editorial Notes

  • Published Case Name:

    Adam Richards v Chopperworks Pty Ltd (externally administered), Jeffrey Brian Richardson and Samantha Jocelyn Richardson

  • Shortened Case Name:

    Richards v Chopperworks Pty Ltd (externally administered)

  • MNC:

    [2017] QCAT 453

  • Court:

    QCAT

  • Judge(s):

    Member Olding

  • Date:

    24 Nov 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
Brown & Anor v Wilen Pty Ltd & Ors [2012] QCAT 324
4 citations
Jump To
Cite 1 - [2012] QCAT 324
Cite 2 - [2012] QCAT 324
Cite 3 - [2012] QCAT 324
Cite 4 - [2012] QCAT 324
Mann v McCreath [2016] QCAT 477
2 citations
Jump To
Cite 1 - [2016] QCAT 477
Cite 2 - [2016] QCAT 477
Rees v Mighty Enterprises Pty Ltd [2015] QCAT 312
2 citations
Jump To
Cite 1 - [2015] QCAT 312
Cite 2 - [2015] QCAT 312
Turnbull v McCreath [2017] QCAT 190
3 citations
Jump To
Cite 1 - [2017] QCAT 190
Cite 2 - [2017] QCAT 190
Cite 3 - [2017] QCAT 190

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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