Crawford v Ikinofo[2018] QCAT 98

REASONS FOR DECISION

1. [1]
   The Applicants, Catherine Crawford and Darryl Crawford wish to make a claim against the Claim Fund operated by the Office of Fair Trading for rent received by their real estate agent but which did not reach them.
2. [2]
   The claim against the Fund was out of time and for that reason was not dealt with as a claim.  The Applicants now ask the tribunal to extend time so that their claim against the Fund can proceed.

The statutory provisions

3. [3]
   These matters are governed by the Agents Financial Administration Act 2014 (Qld) (AFAA).  By section 77(c) of the AFAA, the tribunal can decide whether to extend the time to make a claim.
4. [4]
   The time limit for bringing such claims is set by section 85 of the AFAA, which reads:

85 General time limit for making claims

1. (1)
   This section applies to a claim against the fund other than a claim because of, or arising out of, a marketeering contravention relating to the purchase of a non-investment residential property.

2. (2)
   A person may make the claim against the fund for financial loss for the happening of an event only if the person makes the claim within the earlier of the following—

1. (a)
   1 year after the person becomes aware that the person has suffered the loss;

2. (b)
   3 years after the happening of the event.

3. (3)
   However, if the person starts a proceeding in a court to recover the person’s financial loss within the time permitted to make a claim under subsection (2), the person may make the claim within 3 months after the proceeding in the court ends.

4. (4)
   Subsection (3) does not limit the time allowed under subsection (2) to make a claim.

5. (5)
   In this section—

court includes QCAT.

5. [5]
   The tests for the tribunal to apply when deciding whether to extend the time are contained in section 122 of the AFAA, which reads:

122 QCAT may extend time

1. (1)
   QCAT may extend the time within which to make a claim or seek review of a decision of the chief executive if QCAT is satisfied—

1. (a)
   the application is made—

1. (i)
   for a claim—within the time mentioned in the notice given under section 88(5)(b); or

2. (ii)
   for a review of a decision of the chief executive—within 42 days after the person is given notice of the decision to be reviewed; and

2. (b)
   it is appropriate to extend time having regard to—

1. (i)
   the reasons for not making the claim or seeking the review within the time allowed; and

2. (ii)
   the application generally; and

3. (iii)
   for a claim, the relative hardship that an extension of time or a refusal to extend time would place on the claimant or respondent; and

4. (iv)
   the justice of the matter generally.

2. (2)
   No appeal lies against QCAT’s decision under this section.

3. (3)
   To remove any doubt, it is declared that the QCAT Act, section 61 does not apply for a proceeding to which this section applies.

6. [6]
   Submissions were received by the tribunal from the Chief Executive, on behalf of the Claim Fund.  This is permitted by section 123 of the AFAA under which the Chief Executive may make submissions to the tribunal despite not being a party to the proceeding.

The circumstances giving rise to the claim

7. [7]
   The Respondent Lorina Ikinofo of PR Rentals acted as the Applicants’ real estate agent and property manager from about mid-2013.  On an unknown date in 2015 a different entity took over this role.
8. [8]
   In July 2015 there was email correspondence between the Applicants and Respondent about the closing balance on the owner’s account which ought to be handed over to the new agents.  From this correspondence it can be seen that there was agreement between the Applicants and the Respondent about the amount of that closing balance.^[1]  The Respondent promised to hand this over but did not do so.  The last email in the chain is on 29 July 2015 when the Applicants informed the Respondent that the delay was “unacceptable”.
9. [9]
   The next thing which happened on the material before me is that on 12 October 2015 the Office of Fair Trading contacted the Applicants by email and explained that they were enquiring “into property management and rent collection activities conducted by Lorina Ikinofo of PR Rentals”.  They asked for a number of documents including the Form 20a (appointment of agent), all owners statements, bank statements and correspondence.
10. [10]
    On 15 October 2015 an OFT Investigations Officer spoke with the Applicants about the matter.  At that time the Applicants estimated their financial loss as $6,800 plus unpaid water usage.  The OFT Investigations Officer informed the Applicants on that day that they could make a claim against the Fund and the Applicants said that they would consider doing so.
11. [11]
    On 19 October 2015 a Claims Support Officer from the OFT sent to the Applicants a factsheet about making a claim against the Claim Fund and a blank claim form for them to use.  This is called a “claim kit”.  There was also an accompanying letter which warned them to “pay attention to the appropriate timeframes” of such a claim.  The Factsheet stated the time limits in terms similar to that used by section 85 of the AFAA which sets the time limit for claims.
12. [12]
    On 22 January 2016 an OFT Investigations Officer emailed the Applicants stating that they should already have been provided with the claim kit and asking for confirmation that they had received it.
13. [13]
    On 9 June 2016 a Claims Support Office from the OFT sent to the Applicants another claim kit containing the same material as before and another letter inviting the Applicants to pay particular attention to the appropriate timeframes in order to make a claim.
14. [14]
    On 18 November 2016 the Applicants lodged their claim against the Claim Fund.  In this claim they estimated the financial loss as $4,137. 

When did the clock start?

15. [15]
    Under section 85 of the AFAA, this is when the Applicants were first aware that they have suffered financial loss by the happening of the event.  The event referred to in that section is the event alleged to give rise to the claim, which in this case is the misappropriation or misapplication of the rent payments.^[2]
16. [16]
    In the case of a simple debt, the clock will start in the usual case when the real estate agent has refused to or failed to make payment after demand.  Until that time there may be an entitlement to claim for moneys, but not necessarily any loss.^[3]
17. [17]
    In the case of rental payments held by an agent on a transfer of trust accounts as here, the position is somewhat different.  In those circumstances the closing balance should be retained by the original agent until the person who conducts the final audit certifies that the trust money has been properly accounted for and reconciled.^[4]  It would appear that this requirement is to ensure that any shortfalls are borne generally.
18. [18]
    This means that some delay would be expected in the handover of closing balances.  In this case, the Respondent informed the Applicants that the delay would be “a further 5 days” from 9 July 2015.  Subsequent correspondence shows that there was some further delay, but then on 27 July 2015 the Respondent said that all payments were “authorised”.
19. [19]
    The test in section 85 is a subjective one (“when the person becomes aware”) and not objective (for example “when a reasonable person with the same knowledge as the claimant would have been aware”). 
20. [20]
    It seems to me likely that after the July 2015 sequence of emails the Applicants would have been aware that something had gone wrong.
21. [21]
    This seems to be confirmed in their application to extend time which says that:

We only realised that we were not going to receive any payment when the respondent advised us that her accountant had transferred all the money over to the new agents and they advised us that they had not received it along with the bonds for approximately 49 tenants as well as the keys to our properties.  These had all been retained by the respondent.

22. [22]
    The date when this happened is not given in the application.  It seems likely to have been on a date between 29 July 2015 and when the Applicants were contacted by the OFT on 12 October 2015.  The clock therefore started on an unknown date between 29 July 2015 and 12 October 2015.  Certainly by 12 October 2015 the clock had started because on that date the Applicants were aware that OFT were investigating the Respondent, and from the tenor of the OFT’s email and the documents they were asking for it would be obvious to the Applicants that there was a serious problem getting their money.
23. [23]
    It is clear that the claim made against the Claim Fund on 18 November 2016 was made more than a year after the relevant date.

Consideration of the tests to apply

24. [24]
    Under section 122 of the AFAA it is necessary for a claimant to apply to extend the time within 14 days of the “Claim Out of Time Notice”.   The Applicants did do this, so their application to extend time is technically within that time limit.
25. [25]
    As for the reasons given by the Applicants as to why they were late with their claim against the Claim Fund, they say that they were not aware of the urgency of making the claim until November 2016.  They say they believed that their claim would be settled at the end of any court case against the Respondent.
26. [26]
    The difficulty with this is that the time limit of one year from the date of knowledge was very clear from the documents provided to the Applicants on 19 October 2015 and on 9 June 2016, and the Applicants had been directly warned to heed the time limits in the accompanying letters.  There was nothing to mislead the Applicants about the effect of any court case.
27. [27]
    It is right for the tribunal to consider the merits of a claim because an extension of time with poor merits ought not to be granted.  Here clearly the merits of the claim against the Claim Fund are good.  It is true as submitted on behalf of the Claim Fund that the exact amount lost has not yet been ascertained but this is a task which can be achieved.
28. [28]
    As for hardship to each side if the application to extend time succeeds or fails, I have no information whether the Respondent can be found or whether she will be able to make up any loss as the ultimate person liable to reimburse the fund for its payment to the Applicants.^[5]   The Applicants do however claim hardship because they have had to make up the shortfall from their own funds and “have had to withdraw money from our own mortgage … which has significantly disadvantaged us financially”.  Bearing in mind the amounts involved, and the fact that nearly half the money was owed not to them but to the trustee of the Applicants’ superannuation fund, I am sceptical about the claim for hardship.  It may well be that the claim for hardship is badly expressed.  Either way, I don’t think it is very persuasive.
29. [29]
    As for the justice of the matter generally I would take a different view if the Applicants had been misled as to the time limit.  To the contrary they were put on notice of the time limit well in time to bring the claim.  The time limits exist to provide certainty and to ensure that claims on the Claim Fund can be dealt with efficiently.  There is really nothing in this particular case which leads me to the view that it is unjust to refuse to extend the time limit.
30. [30]
    In the circumstances the application to extend the time limit must fail.