Scanlan v McCreath[2017] QCAT 461

REASONS FOR DECISION

1. [1]
   In 2012 Karen Scanlan became interested in investing for her retirement.  She was advised to consider investing in shipping containers and first invested in two containers through a company trading in China. 
2. [2]
   This investment was successful and Ms Scanlan sought to further invest in containers but to diversify the source to the United States of America.  
3. [3]
   After making internet enquiries she located an agent for shipping containers in her local area and entered into discussions for further purchases with Alistair McCreath. 
4. [4]
   Mr McCreath said he was the principal of FBC Group Pty Ltd, a real estate agency operating out of Queensland and an umbrella company, having subsidiaries in the USA.
5. [5]
   Ms Scanlan says Mr McCreath also told her his company provided a comprehensive service for people wanting to purchase property in the Detroit, Michigan area of the USA.
6. [6]
   At that time, the registered office of the FBC Group was a residential address in Maroochydore Queensland.  This was also the residential address of Alistair McCreath and his son Stuart McCreath, the only director and secretary of FBC Group Pty Ltd.
7. [7]
   The investment in shipping containers by Ms Scanlan through Mr McCreath became untenable for Ms Scanlan as, although Mr McCreath had taken approximately $100K of her money, the certificates of ownership of the 8 containers she was seeking never eventuated.
8. [8]
   Mr McCreath blamed the company in the US he was dealing with saying they had the funds.  The owner of the US Company blamed Mr McCreath saying he had not passed the funds on. 
9. [9]
   After many fruitless attempts to have her money refunded, Ms Scanlan sought legal advice and a local legal firm sent a letter of demand to Mr McCreath but the funds remained outstanding.^[1]
10. [10]
    In about March 2014 Mr McCreath told Ms Scanlan the company did not have the funds to return her money to her.  Ms Scanlan says he made a final offer to transfer to her a house he said his company owned in the US.
11. [11]
    There had been some discussions earlier concerning other properties but on 13 January 2014 Ms Scanlan had stopped these discussions telling Mr McCreath by email that she had “now lost confidence in the ability of FBC group to provide me with a house”.
12. [12]
    Despite this loss of confidence and the earlier failed purchase of the shipping containers, Ms Scanlan did sign an “Offer to Purchase” a property described as 19415 Sunderland in Detroit on 13 March 2014 for $63,187.00.^[2]
13. [13]
    Ms Scanlan says she thought this was the only way she was going to retrieve some of the money she had given to Mr McCreath.  She considered this offer of a house as an admission from Mr McCreath that he had mi-appropriated her funds.^[3]
14. [14]
    No further funds for this purchase were provided by Ms Scanlan.  The contract price was calculated using a “Property Purchase Calculator”.^[4]  The nominated purchase price included an allowance for rehabilitation of the home ($16,000) and provision of a 5-year home warranty ($2,050).  Neither of these two inclusions eventuated.
15. [15]
    Ms Scanlan’s evidence was that during this contracting process she believed Mr McCreath was acting on behalf of his company when he provided the Offer to Purchase and that the FBC Group or Mr McCreath owned the house that had been offered to her.
16. [16]
    The Offer to Purchase was never signed by Mr McCreath although Ms Scanlan did become the owner of the Detroit house. There is no reference to FBC Group Pty Ltd or Alistair McCreath as an agent.  The Offer to Purchase listed Mr McCreath as the seller.
17. [17]
    Ms Scanlan also engaged FBC Realty USA LLC, an American registered company, as the property manager of the property. Some rental payments were made to Ms Scanlan for a few weeks after the purchase but thereafter, the rental monies were withheld.^[5] 
18. [18]
    After an independent inspection, Ms Scanlan also found the property had not been renovated as promised and that the home warranty had expired in May 2014.^[6]
19. [19]
    On 16 July 2014, the Federal Court of Australia placed FBC Group Pty Ltd into liquidation.
20. [20]
    On 27 April 2015, Ms Scanlan lodged a claim against the fund established under the Agents Financial Administration Act 2014 (Qld) for return of the monies she had paid on the Sunderland property - $63,187.00.
21. [21]
    In January 2017, Ms Scanlan sold the Sunderland property, receiving $21,950.00.  At the hearing of this matter she amended her claim to reduce the original amount claimed by the amount she had received by the sale.  The final amount claimed is $41,050.00.
22. [22]
    The Chief Executive, Department of Justice and Attorney-General may refer a claim to this Tribunal if it considers that this Tribunal can more effectively or conveniently decide the claim or it would be more appropriate to do so.^[7]  As the events occurred before 1 December 2014, the claim is determined under the then legislation, the Property Agents and Motor Dealers Act 2000 (Qld) (PAMDA) under transitional provisions.^[8]
23. [23]
    The Chief Executive submitted this Tribunal could decide Ms Scanlan’s claim more effectively and efficiently and in a more appropriate venue because the claim concerns allegations of false or misleading statements.^[9]
24. [24]
    The claim can be allowed wholly or partly, or rejected.^[10] The Tribunal may allow the claim only if satisfied on the balance of probabilities that an event happened and the Ms Scanlan suffered financial loss because of the happening of the event.^[11]
25. [25]
    Ms Scanlan’s claim is made because she alleges an event under section 470(1)(e) of PAMDA, that is, 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. 

Can a claim be brought against the fund by Ms Scanlan?

26. [26]
    Mr McCreath has been before this Tribunal on two previous occasions.  In the decision of Mann & Mann v McCreath^[12] the Fund claim by the Mann’s was rejected because the learned member found Mr McCreath was selling his own real property or shares in a company which owned the property to the Manns and that they were aware they were dealing with Mr McCreath directly.  The learned member found

Mr Mann believed that Mr McCreath was selling the properties himself: so he could not give Mr McCreath any authority of the sort which would be given to an agent, to deal with the money on his behalf and that of Mrs Mann.^[13]

27. [27]
    In a later decision of Turnbull v McCreath & Ors,^[14] this Tribunal held on the facts of that matter that

Mr Turnbull never held that belief.  At all times he considered Mr McCreath to be his agent, acting on his behalf is the pre and post property transactions. I do not place any weight on the contract detail showing Mr McCreath as the seller.  As I have found, Mr McCreath never owned the Littlefield property and was never able to transfer clear title to Mr Turnbull.

28. [28]
    Ms Scanlan gave evidence that she believed Mr McCreath owned the property and that he was offering it to her to recompense her for the loss of the funds in the failed shipping container purchase – funds he could not return to her.
29. [29]
    On the facts before me, there was never any named third party in relation to the property. On the balance of probabilities, I am satisfied the property was owned by Mr McCreath or a company he controlled.
30. [30]
    Ms Scanlan was therefore contracting directly with Mr McCreath or a company he controlled – a belief she also held.
31. [31]
    As with the circumstances of the Mann decision, as Ms Scanlan believed Mr McCreath was selling the properties himself, she could not give Mr McCreath any authority of the sort which would be given to an agent in such a property transaction. 
32. [32]
    I accept and adopt the learned member’s reasoning in the Mann decision. When considering whether a claim could have been brought in that matter, the learned member said:

The first way is under section 470(1)(e) of PAMDA. Under this provision the Applicants would need to show that there was 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.

“Relevant person” is defined in section 469 and includes a licensee, a former licensee and a person who is not licensed but who acts as a licensee. Mr McCreath is clearly a relevant person for this provision. The property entrusted to Mr McCreath was the $320,000. A difficulty arises with the requirement that the money must have been “entrusted to the person as agent for someone else in the person’s capacity as a relevant person”. This means that the money must have been entrusted to Mr McCreath as agent for someone else in his capacity as licensee (as a real estate agent) or as a person who is not licensed but who acts as a licensee.

There are two possibilities in this case for the “someone else”. It could be:-

a)  the person who would receive the money if the sale proceeded; or

b)  the person entrusting the money (in this case the Applicants as purchasers).

As for (a), the difficulty is that as I have found above, the person who would receive the money if the sale proceeded was Mr McCreath himself. He, as an individual, was the legal entity who traded as FBC Realty. It is not possible in law, for someone to be an agent for themselves. Under (a) there can be no agency involved.

As for (b), this would be the scenario if the Applicants entrusted the money to Mr McCreath as their agent in his capacity as real estate agent or in some other way where he was acting as a licensee but did not have a licence.

33. [33]
    Ms Scanlan did not provide Mr McCreath with further funds.  Instead, she agreed to offset monies he owed her by receiving a property instead of cash.  There was no third party involved and Ms Scanlan believed Mr McCreath owned the property he was offering in lieu of returning funds to her.
34. [34]
    I am satisfied Ms Scanlan did not entrust money to Mr McCreath as her agent.  I am further satisfied the claim cannot be brought by Ms Scanlan against the fund relying on section 470(1)(e) of PAMDA.
35. [35]
    Ms Scanlan’s claim against the fund must be rejected.