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Prestige & Rich Pty Ltd v Chief Executive, Department of Justice and Attorney-General, Office of Fair Trading QCAT 436
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Prestige & Rich Pty Ltd & Anor v Chief Executive, Department of Justice and Attorney-General, Office of Fair Trading& Anor  QCAT 436
PRESTIGE & RICH PTY LTD
STEPHANIE ELIZABETH TO
CHIEF EXECUTIVE, DEPARTMENT OF JUSTICE AND ATTORNEY-GENERAL, OFFICE OF FAIR TRADING
General administrative review matters
18 December 2018
14 December 2018
Member Dr Collier
ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – property agents – duties of property agents – handling trust funds – disbursement of trust money held – claim against statutory claim fund – reimbursement from agent of money paid from claim fund
PROFESSIONS AND TRADES – AUCTIONEERS AND AGENTS – CONTROL OF MONEY – Trust funds – disbursement of deposit – adherence to instructions
Agents Finance Administration Act 2014 (Qld), s 26, s 26(2)(b), s 26(5), s 27, s 45(1), s 77, s 94, s 94(1)
Land Sales and Other Legislation Amendment Act 2014 (Qld)
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 24(1), Chapter 2 Part 1 Division 3
Hauff & Anor v Miller  QCA 48
APPEARANCES & REPRESENTATION:
R Hong, General Manager, Prestige & Rich Pty Ltd
A Tan, legal counsel of the Chief Executive, Department of Justice and Attorney-General, Office of Fair Trading
REASONS FOR DECISION
- Prestige & Rich Pty Ltd (‘Prestige & Rich’) is a real estate agent operating in the Sunnybank Hills area of Brisbane. Stephanie To is a director of Prestige & Rich, and the principal of the firm.
- On or about 4 February 2016 Hetalbin Milin Patel and Milin Patel (the ‘Sellers’) entered an agreement with Prestige & Rich under which Prestige and Rich was to act as selling agent for the Patel’s house at 13A Jales St Sunnybank Hills.
- On or about 21 March 2016 JianJie Li (the ‘Buyer’) signed a contract to purchase 13A Jales St Sunnybank Hills. The Buyer paid a deposit of $24,500 to Prestige & Rich for the purchase. The contract had, among other conditions, a ‘subject to finance clause’ in favour of the Buyer.
- On or about 24 March 2016 the Buyer’s solicitor wrote to the Seller’s solicitor advising that it had not been possible for the Buyer to obtain finance, terminated the contract, and requested repayment of the deposit.
- The Seller raised some concern about the genuine endeavours of the Buyer to obtain finance but, for reasons explained later, this did not represent a factor preventing the Seller and the Buyer from agreeing to terminate the contract and return the deposit to the Buyer.
- On 31 March 2016 Prestige & Rich wrote by email to the Seller and the Buyer advising that the deposit would not be returned, and stated that its reasons for refusing to do so were:
…the Seller has not authorised a release of the deposit as requested by the Buyer. A dispute on the release of deposit between the Seller and the Buyer has arisen or may arise.
We, as Agent and Deposit Holder, consider that in these circumstances, the Seller is entitled to the deposit in the dispute ($24,500) on the ground that the Buyer has failed to demonstrate that he has taken all reasonable steps to obtain finance approval for the purported purchase of the property, which is required under clause 3.1 of the Contract. The reasoning as contained in the case of Hauff & Anor v Miller  QCA 48, so far as it is relevant to the situation before us, is followed in making our decision.
We hereby give the Seller and Buyer a written notice to the following effect:
- (a)We consider that the seller is entitled to the deposit in dispute ($24,500);
- (b)We are authorised, under s 26 of the Agents Financial Administration Act 2014, to pay the amount in dispute to the Seller on or after 1 June 2016 unless-
- A proceeding disputing the Seller’s entitlement to the deposit is started and we are advised of the start of the proceeding; or
- The Buyer and Seller authorise payment of the deposit to the Seller before 1 June 2016.
- On or about 13 April 2016 the Seller, through their solicitor, R. Sabdia & Associates, wrote to Prestige & Rich concerning the status of the contract and disbursement of the deposit held in trust as follows:
The Contract was terminated by the Buyer in accordance with clause 3.2(1) of the contract of sale and we confirm that the contract is now at an end.
We are instructed to advise you that our clients, the sellers, is [sic] not going to sell to the same buyer or party related to that buyer.
Accordingly, we hereby request that you release any deposit monies held in your trust account to the buyer.
- On or about 13 May 2016 the Buyer lodged an application in the Supreme Court of Queensland seeking a declaration that the contract between the Seller and the Buyer was terminated and an order for Prestige & Rich to release the deposit money to the Buyer.
- On 3 June 2016 the Supreme Court dismissed the application essentially on the basis that it should have been commenced in the Magistrates Court.
- Also on 3 June 2016, Prestige & Rich informed the parties that, in accordance with their letter of 31 March 2016: ‘We hereby advise you that the amount of $24,500 is now released to the seller.’ In fact, of the $24,500 Prestige & Rich held as a deposit, it paid $20,000 to itself being its claimed commission for the failed sale, and remitted $4,500 to the Seller. The Seller subsequently deposited the $4,500 with their solicitor in trust where it is presently held.
- On or about 29 December 2016 the Buyer submitted a claim to the Chief Executive of the Department of Justice and Attorney-General (‘DJAG’) against the Claim Fund established under the Agents Financial Administration Act 2014 (Qld) (‘AFA Act’) for the whole of the deposit paid but which had not been repaid to the Buyer.
- On 15 March 2018, DJAG published a decision in regard to the claim by the Buyer to recover the deposit money paid as follows:
Upon examining the substance of the claim against the Claim Fund lodged by the Claimant, it is decided that the claim:
- Be allowed and the amount of Twenty-Four Thousand Five Hundred Dollars ($24,500) be paid to the claimant from the Claim Fund at the expiration of the review period outlined in section 112 of the Agents Financial Administration Act 2014;
- The First and Second Respondent are liable for the Claimant’s financial loss; and
- Pursuant to sections 102(3) and 116(3) of the Agents Financial Administration Act 2014 the First Respondent and Second Respondent are jointly and severally liable to reimburse the Claim Fund Twenty-Four Thousand Five Hundred Dollars ($24,500).
- The Applicants seek to have the Tribunal review the DJAG decision set out in paragraph  above as allowed under s 45(1) of the AFA Act, and set aside the decision of DJAG in this matter. They also seek to recover their filing fee.
The Tribunal’s role
- The role of the Tribunal regarding review of administrative decisions is set out in Chapter 2, Part 1, Division 3 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’). The Tribunal may review a reviewable decision made by an entity under an enabling Act. The role of the Tribunal is to hear and decide the review of a reviewable decision by way of a fresh hearing on the merits and to make the correct and preferable decision.
- Jurisdiction is conferred on the Tribunal to hear this matter, being one that deals with a demand by DJAG for reimbursement to the claim fund, by s 77 of the AFA Act.
The Applicant’s position
- The essence of the Applicant’s position is that they were entitled to retain the deposit money and apply it as they believed appropriate because this approach is allowed by and consonant with the provisions of s 26 of the AFA Act. Section 26 of the AFA Act deals with disputes in relation to trust monies, and says:
- (1)This section applies if the agent considers that a party to the transaction is entitled to the amount in dispute.
- (2)The agent may give all parties to the transaction a written notice to the following effect—
- (a)the agent considers that a stated party is entitled to the amount in dispute;
- (b)the agent is authorised, under this Act, to pay the amount in dispute to the stated party on or after a stated date (at least 60 days after the notice is given), unless—
- (i)a proceeding disputing the stated party’s entitlement to the amount in dispute is started and the agent is advised of the start of the proceeding; or
- (ii)all parties to the transaction authorise payment of the amount to the stated party before the stated date.
- (3)The agent may pay the amount in dispute to the stated person if—
- (a)after the stated date, the agent is unaware of the start of a proceeding claiming an entitlement to the amount; or
- (b)on or before the stated date, the agent receives written notice under subsection (2)(b)(ii) authorising payment of the amount to the stated party.
- (4)The agent is not liable civilly or under an administrative process in relation to the payment of the amount in dispute to the stated party as provided under this section if it is subsequently found that the stated party was not entitled to the amount.
- (5)To remove any doubt, it is declared that this section—
- (a)provides a process for the payment of an amount in dispute; and
- (b)does not decide legal entitlement to the amount or prevent a person legally entitled to the amount recovering it from the person to whom it was paid.
- (6)Nothing in this section requires the agent to give notice under subsection (2) if the agent decides to retain the amount in dispute until payment of the amount is authorised by all parties to the transaction or entitlement to the amount is decided by a court.
- The Applicants contended at the hearing that they were not entitled to alter the decision they made and expressed in their letter dated 31 March 2016 (paragraph , above) and, as a result, paid the deposit to the benefit of the Seller on 3 June 2016, immediately the Supreme Court application by the Buyer had been dismissed. They said that they were entitled to pay out the deposit on 3 June 2016 because it was later than the 60 days prescribed in s 26(2)(b) of the AFA Act from the date of the notice contained in their letter of 31 March 2016.
- The Applicants submitted that the Court of Appeal case, Hauff & Anor v Miller  QCA 48, supports their position that they are entitled to retain the deposit and apply it as they originally proposed in their letter of 31 March 2016. But that case dealt with a different set of circumstances in that the key issue was whether the buyer had used all reasonable efforts to obtain finance and, because the buyer had failed to use all reasonable efforts, examined the remedies then open to the seller. The Court in that case had nothing to say in respect of the AFA Act or any rights that may accrue to a party involving that Act; the decision turned solely on the issue of satisfying the ‘subject to finance’ clause.
- The circumstances here are different. There was no persuasive evidence presented at the hearing that the Buyer in this case had failed to discharge his obligations in regard to financing but, in any event, whether he had or had not done so became irrelevant once the Buyer and Seller agreed that the contract should be terminated. Thus, once the Applicants were advised that the Buyer and Seller had agreed on termination of the contract and that the deposit should be returned to the Buyer, the opinion of the Applicants became irrelevant if, indeed, it was ever relevant.
- Thus, certainly from 13 April 2016, when the solicitors for the Seller advised the Applicants that the contract was terminated and the deposit should be returned to the Buyer, the Applicants, as agents of the Seller, were duty bound to follow those instructions unless they were unlawful.
- The Applicants said that, once they had advised the parties in their letter of 31 March 2016 how the deposit money was to be handled, they had no lawful option but to abide by their election. They said that s 26 of the AFA Act gave them no scope to change their mooted conduct. There are several problems with this position.
- The first problem is that the Applicants were agents of the Seller and were obliged to act according to the instructions they received from the Seller. The instructions they received from the Seller were unequivocal: the contract had been terminated and the deposit was to be returned to the Buyer.
- Second, the Applicants were not a party to the contract for the sale and purchase of the property. It is not their role to enforce the provisions of the contract and, in the absence of instructions from the Seller, they have no right to engage in enforcing the sale of property contract or any part of it.
- Third, the AFA Act is intended to provide protection for parties to the transaction, not for an agent to seize a commission or fees. The payment by the Applicants to themselves of a commission out of the deposit they held based on the terms contained in the Form 6 appointing them as property sales agent appears founded on a notion of self-interest rather than their duty to the Seller as agent.
- Fourth, s 26(5) of the AFA Act makes it quite clear that s 26 allows a mechanism to protect the parties to a transaction including the agent but does not, in itself, resolve the issue of legal entitlement to the amount in dispute.
- The former s 26 of the AFA Act, before it was amended by the Land Sales and Other Legislation Amendment Act 2014 (Qld) makes clear the basis on which the agent may deal with the deposit held in trust, it said, in part:
The agent must not pay out the amount in dispute unless the agent—
- (a)receives written notice—
- (i)from all parties to the transaction stating the person who is entitled to the amount in dispute; or
- (ii)a legal proceeding has been started in a court to decide who is entitled to the amount in dispute …
- That is, the agent, as trustee, holds the money subject to such directions as are given by the parties to the transaction, in this case, the Buyer and the Seller, and the later amendments to this section are not intended to derogate from the protection afforded to the parties and to place decisions about the payment of funds held in trust in the hands of the agent. Even more so, when the agent, as in this case, has refused to pay the deposit held in trust in accordance with the express instructions of the Seller.
- The issue of how the deposit should have been handled is placed beyond doubt when the terms of s 27 of the present AFA Act are considered. These state as follows:
27 Dealing with amount in dispute if not dealt with under s 26
- (1)This section applies if the amount in dispute is not dealt with under section 26.
- (2)The agent must not pay out the amount in dispute unless the agent receives written notice—
- (a)from all parties to the transaction stating the person who is entitled to the amount; or
- (b)a proceeding has been started to decide who is entitled to the amount.
- Section 27 makes it clear, again, that payment of the deposit money by the agent should be done in accordance with the direction of the parties where an amount is in dispute. While s 26 has been invoked in this case, and therefore s 27 does not apply, the intent of Part 2, Division 5 of the AFA Act dealing with disputed trust money is that the agent is required to act in accordance with instructions from the parties. The agent has no power to make unilateral decisions concerning the disbursement of trust funds.
- In the event that there was any uncertainty concerning how trust funds should be handled, a prudent agent would seek legal advice. When asked by the Tribunal whether the Applicants had sought legal advice in this matter, the Applicants’ answer was non-committal and the Tribunal drew the inference that no legal advice had been sought. The Applicants had decided that they had the unilateral power to decide on disbursement of the trust funds irrespective of the instructions of the parties and appeared not overly concerned with proper execution of their duties as trustees or managers of the trustee.
- The Applicants raised a concern that they had not been provided with a report that they claim had to be prepared by DJAG in this case pursuant to s 94 of the AFA Act which provides, inter alia:
- (1)The chief executive may direct an inspector to investigate a claim that has not settled.
- (2)If an inspector investigates a claim, the inspector must prepare a report about the claim and give a copy of the report to the chief executive.
- (3)The chief executive must give a copy of the report to the claimant and the respondent and, if the report is about a claim to be decided by QCAT, to the principal registrar under the QCAT Act.
- However that was simply answered by DJAG: no inspector had been appointed and no report prepared. Section 94(1) makes such an appointment discretionary on DJAG who was entitled not to make such an appointment, and elected not to do so in this case. Therefore there was no report that could be given to the Applicants.
- The Applicants also expressed concern that they believed that the Buyer had not personally signed the contract for the purchase of the property. There was no persuasive evidence presented at the hearing concerning this issue but, more importantly, it is irrelevant to this Application because no dispute between the parties ever turned on the identity or signature of the Buyer.
- The conduct of the Applicants demonstrated little regard for the person to whom they owed their principal duty in this matter, the Seller. The Applicants had a duty to act in the best interests of the Seller at all times and failed in this duty. Their arguments have no merit in law. They are not entitled to have the decision of DJAG set aside. The decision of DJAG in this matter is lawful and represents a proper exercise of the power given to DJAG under the AFA Act.
The First Respondent’s position
- The First Respondent’s position can be simply stated as being that the decision made in this case by DJAG was a valid exercise of the power conferred on that position under the AFA Act. I agree with the First Respondent.
- The Tribunal makes the following decision in this matter:
- (a)The decision of the Chief Executive of the Department of Justice and Attorney-General, Office of Fair Trading is confirmed.
- (b)The Application is dismissed.
- No order is made in respect of costs.
 Prestige & Rich also trades as ‘Stephanie To Realty’.
 JianJie Li is also known as Qiang Li.
 No 4859 of 2016.
 Section 26 was in this form at all relevant times. This form replaced the earlier version through changes introduced in the Land Sales and Other Legislation Amendment Act 2014 (Qld).
- Published Case Name:
Prestige & Rich Pty Ltd and Stephanie Elizabeth To v Chief Executive, Department of Justice and Attorney-General, Office of Fair Trading and Jianjie Li
- Shortened Case Name:
Prestige & Rich Pty Ltd v Chief Executive, Department of Justice and Attorney-General, Office of Fair Trading
 QCAT 436
18 Dec 2018