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  4. Owen & Coastal Keys Pty Ltd v Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General - [2021] QCAT 31

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Owen & Coastal Keys Pty Ltd v Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General[2021] QCAT 31

Owen & Coastal Keys Pty Ltd v Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General[2021] QCAT 31

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Owen & Coastal Keys Pty Ltd v Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General & Anor [2021] QCAT 31

PARTIES:

DAVID OWEN

JOAN OWEN

COASTAL KEYS PTY LTD

(applicants)

v

CHIEF EXECUTIVE, OFFICE OF FAIR TRADING, DEPARTMENT OF JUSTICE AND ATTORNEY-GENERAL

SHARRY EAVIS

(respondent)

APPLICATION NO/S:

GAR277-19

MATTER TYPE:

General administrative review matters

DELIVERED ON:

22 January 2021

HEARING DATE:

4 November 2020

HEARD AT:

Brisbane

DECISION OF:

Member Richard Oliver

ORDERS:

The decision of the Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General dated 13 June 2019 is set aside.

CATCHWORDS:

PROFESSIONS AND TRADES – AUCTIONEERS AND AGENTS – CLAIMS AGAINST THE FUND – MISAPPLICATION OF RENTAL MONEY – LIABILITY OF AGENT TO PAY THE CLAIM – AND OTHER MATTERS – where regulator believed property agent had misapplied trust money – where Federal Circuit Court ordered a change of entitlement to rental money from a particular date – whether agent bound by the Federal Circuit Court order – whether person making the claim was a person entitled to the amount in the transaction fund – whether amounts to be offset from claim – whether agent liable to pay the claim.

Queensland Civil and Administrative Tribunal Act s 20

Agents Financial Administration Act 2014 ss 82, 15, 16, 21, 22, 25 and 26

Residential Tenancies and Rooming Accommodation Act s 5

Family Law Act 1974 (C’W) s 75

Project Blue Sky Inc v ABA (1998) 194 CLR 335

APPEARANCES &

REPRESENTATION:

Applicant:

Mr Templeton of counsel instructed by Swift Solicitors for the applicant;

Respondent:

Mr Tan solicitor from the Office of Fair Trading, Department of Justice and Attorney General for the respondent.

Respondent:

Sharry Evans self-represented.

REASONS FOR DECISION

Introduction

  1. [1]
    The genesis of this review application was a matrimonial proceeding in the Melbourne Federal Circuit Court (‘the Court’) between Sharry Eavis and Christopher Eavis concerning the division of matrimonial property. Ultimately a resolution was reached which resulted in the Court making final property Orders by consent in terms of the Minute of Consent Orders dated 10 October 2017.[1] Relevantly for this this review application both the Eavis agreed that Mrs Eavis would retain ownership of two residential properties, one in Robina and the other in Ormeau. The Minute went onto recite in paragraph 4:

That the Wife forthwith indemnify the Husband in respect to all liabilities associated with the entities retained by her including the loans of approximately $270,000 and $66,000 on Robina, $420,000 on Ormeau, $770,000 over Inverloch and be solely entitled to the rental income of Robina and Ormeau and liabilities for all outgoings and taxation.

  1. [2]
    Both the Robina and the Ormeau properties had been, and were at the time of the Court Order, managed by Coastal Keys Pty Ltd the directors of which have been at various times David Owen and Joan Owen. They had been managers of rental properties for many years with considerable experience. Unfortunately for them they unwittingly became embroiled in the matrimonial dispute when the Eavis failed, not necessarily through any fault of their own, to carry out their respective obligations under the Court Order. It became necessary for the them to return to Court in mid 2019 for further consent orders. The 2019 Order recites the fact that:

The parties intend for these orders to finalise all matters arising from the Orders made 10 October 2017.[2]

  1. [3]
    It is not disputed that the intent of the 10 October 2017 Order was that Mrs Eavis would affect a transfer of title of Robina and Ormeau from Mr Eavis as registered proprietor to herself as registered proprietor. This did not occur until 13 April 2018. However, Coastal Keys continued to receive rent on both properties. Being on notice of the 2017 Order the rent money was held on trust pending a transfer of title.
  2. [4]
    Problems arose towards the end of 2017 when Mr Eavis found himself under financial pressure to meet mortgage repayments on the Robina and Ormeau, for which the rental income had been used. As the properties had not been transferred to Mrs Eavis he was still responsible for the mortgage payments. Mrs Eavis was having some difficulty in obtaining finance to pay out the mortgages in Mr Eavis’ name and effecting the transfer.
  3. [5]
    Because of Mr Eavis’ financial position he was pressuring the Owens to pay him the accumulated rent because the rental agency agreement was with him and he remained the registered proprietor of both properties.  Because of this situation Coastal Key decided there really was no choice but to start paying the rent money to him. Between 29 December 2017 and 29 March 2018 a total of $12,613 was paid to him in respect of the Robina property. Between 29 December 2017 and 5 April 2018 a total of $11,767.97 was paid in respect of the Ormeau property.   The total amount paid was $24,378.97.
  4. [6]
    Mrs Eavis contends that under the October 2017 Court Order the rental money should have been paid to her from the date of the Order. Subject to the indemnity in clause 4 it would follow that if Mrs Eavis received the rental money she ought also be responsible for the mortgage, but the Order was silent as to that consequence.
  5. [7]
    Because Mrs Eavis did not receive the rental income from the properties she made a claim against the Claim Fund established under the provisions of the Agents Financial Administration Act 2014 administered by the Respondent (‘OFT’). After due consideration and an internal review, the OFT made a decision on 13 June 2019 that:
  1. The claim be allowed in the amount of Twenty-four Thousand, Six Hundred and Sixty-One Dollars and Forty-Nine Cents ($24,661.49) be paid to the Claimant from the Claim Fund at the expiration of the review period outlined in s. 112 of the Agents Financial Administration Act 2014.
  1. The first, second, and third respondent are liable for the Claimant’s financial loss.
  1. Pursuant to ss. 102(3) and 116(3) of the Agents Financial Administration Act 2014 the first, second and third respondents are jointly and severally liable to reimburse the Claim Fund Twenty-four Thousand, Six Hundred and Sixty-One Dollars and Forty-Nine Cents ($24,661.49).
  1. [8]
    On receiving the decision, on 15 July 2019 the Owens and Coastal Keys filed an application to review that decision. Attached to the application is an extensive submission together with a number of documents including the Court orders referred to above. They contend, in short, that the decision of the OFT should be set aside because they paid the money to Mr Eavis as they were obliged to do under their agency rental agreement with him as the registered proprietor of both the Robina and Ormeau properties. They were not a party to the Federal Circuit Court proceedings and therefore, are not bound by that order. There was no obligation upon them, until there was a change of ownership and a new agency agreement entered into with Mr Eavis to pay the rent money to her.
  2. [9]
    As this is a review of an administrative decision, s. 20 of the QCAT Act provides that the Tribunal must produce the correct and preferable decision by way of a fresh hearing on the merits.[3]
  3. [10]
    In producing the correct and preferable decision, the Tribunal has consideration to the evidence produced not only to the decisionmaker, but the further evidence that has been filed in this proceeding. That includes affidavits by Joan Owen[4], affidavit by David Owen[5] as well as an affidavit of Christopher Eavis[6]. The OFT has filed all relevant documents under s. 21(2) of the QCAT Act and has also filed, which is annexed to the application, an information notice setting out the reasons for its decision to seek to recover the amount of the claim from the applicants.
  4. [11]
    During the course of the hearing Mr and Mrs Owen were cross-examined as was Mr Eavis by both the legal representative for the respondent, and Mrs Eavis herself who appeared in person by video-link. The parties have filed written submissions in support of their respective positions.

Brief Factual Background

  1. [12]
    There is no real dispute of fact as to what preceded the OFT’s decision because the Owens have admitted that they paid the rental money to Mr Eavis. Mrs Owen, in her affidavit, sets out the circumstances of her becoming aware of the Court order as a result of a telephone call to her office informing Mrs Owen that Mrs Eavis was now the owner of the Robina property and the Ormeau property and wanted the rent paid to her. On the basis of that information, Mrs Owen prepared two Form 6’s which appointed Coastal Keys as the managing agent for the properties. Only one of the forms was returned.
  2. [13]
    On 18 October 2017 Mrs Owen received an email from Chris Eavis stating that:

At this point of time the loans for the two properties have not been paid out and as such I still own them. Until the title has been transferred and ownership resides with Sharry can I ask you that the rental money is paid into my account.

  1. [14]
    The following day there was a further email from Mr Eavis stating that:

Until then she technically does not own the properties and as such it is business as usual about the rents. I most likely will have to transfer the rents back to her in due course.

  1. [15]
    Further correspondence from the Eavis’ respective solicitors maintained their respective positions so it was then that the Owen’s decided that the money would not be paid to either party but held in trust.
  2. [16]
    By December 2017, with mounting pressure from Mr Eavis mortgagee, the money was then paid out to Mr Eavis in various amounts which are particularised on page 7 of her affidavit. Some costs were also taken out in respect of the management of the property.
  3. [17]
    It is obvious that the Owens were in a difficult position because even though they were aware of the Court order by which Mrs Eavis was to obtain title to the properties, until she did so, there could not be any agency agreement between Mrs Eavis and Coastal Keys because she was not the registered proprietor.
  4. [18]
    Had they paid the money to Mrs Eavis, they could potentially be exposed to a claim from Mr Eavis under the rental agency agreement. 

The Legislation

  1. [19]
    Mrs Eavis made her claim against the fund under s. 82 of the Agents Financial Administration Act 2014 (‘AFA Act’) which provides:

A person may claim against the fund if the person suffers financial loss because of the happening of any of the following events –

  1. (a)
    a contravention of ss. 21 or 22;
  1. (b)
    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;
  1. (c)
    …
  1. [20]
    Sections 21 and 22 are enlivened because under s. 21(1):
  1. (1)
    An amount paid to a trust account must be kept in the account until it is paid out under this Act …
  1. (2)
    An amount may be paid from a trust account only in a way permitted under this Act.
  1. [21]
    Section 22 then sets out the way in which it is permitted to draw monies from the trust account relevantly as follows:
  1. (1)
    An agent may draw an amount from an agent’s trust account to pay the agent’s transaction fee or transaction expenses for a transaction only if:

 (a)the amount is drawn against the transaction fund for the transaction; and

 (b)the agent is authorised to draw the amount under this section;

 …

  1. (2)
    The agent is authorised to draw an amount from the transaction fund to pay a transaction expense when the expense becomes payable.
  1. (3)
    After the transaction is finalised, the agent is authorised:
  1.  to draw an amount from the transaction fund to pay the person entitled to the amount, or someone else in accordance with the person’s written direction, and is equal to the difference between –

  (i) the balance of the transaction fund; and

  (ii) the total of the agent’s transaction fee and any outstanding transaction expense; and

  ….

  1. [22]
    For the claim to succeed there must be a breach of s 82, here that there was a misapplication of the use of the trust money and a breach of s 22. The central issue then to this review application is whether Mrs Eavis was ‘the person entitled to the amount, referred to in s. 22(3)’. If she was, then the OFT submits that under s. 82 she is entitled to be compensated for any loss incurred. The OFT can recover the amount paid under s 116.

Discussion

  1. [23]
    The OFT rely on the Court Order to contend that Mrs Eavis is the person entitled to the rent money but the applicant argues that even though that is certainly the case as between Mr and Mrs Eavis, the applicant or Coastal Keys is not a party to that litigation and therefore is not bound by the Court Order in terms of its obligations with respect to paying the amounts under s. 22 of the AFA Act. Mr Templeton of Counsel who appeared on behalf of the applicants submitted that as they were not parties to the Federal Circuit Court proceeding and no order was made against them directly in respect of the rent money, the orders only operated as between the parties to the Court proceeding. Even though the Court has power to make orders against third parties[7] and the Court can direct a party to do a thing or alter rights in relation to the property in relation to a third party[8] that power was not involved and Coastal Keys were not on notice of any such order directly involving them. I therefore agree and accept the submission that the Court Order was not intended to, nor did it bind anyone other than the Eaves, the parties to the proceeding.
  2. [24]
    The above is exemplified in the proposition that until Mrs Eaves became the registered proprietor of the properties, and entered into a rental agreement with each of the tenants, she had no contractual right to recover any rent from the tenants. Similarly, until she entered into a rental agency agreement with Coastal Keys, it had no authority to  take any action on her behalf such as, collect rents, carry out inspections or any other task to protect the properties.
  3. [25]
    The history of the matter indicates that even though Ms Eavis had an entitlement to an immediate transfer of the Robina the Ormeau properties into her name as at the date of the Court Order, she did not become the registered proprietor until 13 April 2018. Until that time, the rental agency agreement continued to be between Mr Eavis and Coastal Keys. Contractually, both had rights and remedies against each other. The Court Order did not interfere with those contractual rights.
  4. [26]
    It is necessary to determine whether Mrs Eavis is a person with an entitlement to the transaction fund within s. 22(3) of the AFA Act which is a matter of statutory construction.
  5. [27]
    The usual principles of statutory interpretation that apply are not novel. Firstly, the applicants rely on s. 14A of the Acts Interpretation Act which provides that the interpretation ought be that which achieves the purpose of the Act. The purpose of the Act is to protect consumers from financial loss in dealings with agents. Its purpose is also regulates the way agents manage and audit trust accounts. It is obvious that there must be a ‘principal/agent’ relationship established for the Act to apply. Typically here it is a rental property owner engaging an agent to manage the property.  Secondly, the relevant provision must be construed so that it is consistent with the language and purpose of all of the provisions of the statute. In other words, the statute should be viewed as a whole.[9] Again, this statue regulates the conduct of agents who have entered into an agency agreement with a consumer.
  6. [28]
    So what then is the transaction fund? The definition under s. 22(6) means:

An amount held in the agent’s trust account for a transaction.

  1. [29]
    Sections 15 and 16 informs the agent of what it must do if an amount is received for a transaction, which is to pay it into the agent’s trust account. The example given refers to rent received for a ‘property owner’. It is not contested that the only transaction relevant to this matter is the receipt of rental funds by the Coastal Keys for the subject rental properties, which is held in the trust account for and on behalf of the owner with whom the agent has a rental agency agreement. The money is held on trust until paid out, less any reasonable deductions eg. agent’s fee or maintenance expenses. The owner at all relevant times was Mr Eavis until the transfer was registered.
  2. [30]
    Section 22(3) then goes onto to set out what is to happen to the transaction fund once the transaction has been finalised. Authority is given to the agent, Coastal Keys, to pay the money to the person entitled to the amount. The section also provides that some other person can be paid but only upon the written direction of the person entitled to the payment e.g. Mr Eavis. Bu, this is not relevant to the application. Under s 22(4) the transaction is not taken to be finalised until the agent is authorised to pay out the transaction fund under Division 5.
  3. [31]
    In light of the Court Order the OFT submits that Coastal Keys was authorised to pay Mrs Eavis as the person entitled to the amount. The essence of the submissions is as follows:

The phrase ‘person entitled’ in section 22(5) of the AFAA is central to the parties’ contentions. The applicants say that it ought to be read to mean whichever ‘party to the transaction’ has the better entitlement to the money in trust, which was Chris Eavis. The Chief Executive says that ‘person entitled’ means whoever is entitled to the trust money, whether or not they are a party, which was Sharry Eavis.

  1. [32]
    It is obvious from the outset that Mrs Eavis is not a party to the transaction, being the agency rental agreement which governs the relationship between the Costal Keys and Mr Eavis. Further Mrs Eavis is not a party to the transaction if the transaction refers to the rental receipts from a tenant to be held by the agent.
  2. [33]
    Even leaving aside the Court order, even if it could be argued that Mrs Eavis had an entitlement to the rent because of a ‘dispute’ as to the entitlement which might engage Division 5 of the Act, the argument must fail. The difficulty in applying this Division to the ‘dispute’ is that it only relates to ‘parties to the transaction’.[10] Clearly Mrs Eavis does not fall within that description as the transaction, here, is the entitlement of Mr Eavis as lessor and the tenant as to any entitlement to the disputed monies. Some support is also gained by having regard to the objects of the Residential Tenancies and Rooming Accommodation Act (s 5) which is one of the Acts to which the AFIA applies. The RTRA is to regulate the rights and obligations of:
  1. (1)
    The main objects of this Act are to state the rights and obligations of—

(a) tenants, lessors and agents for residential tenancies; and..

………….

  1. (2)
    objects are mainly achieved by—

(a) regulating the making, content, operation and ending of residential tenancy agreements and rooming accommodation agreements; and

(b) providing for the resolution of disputes about residential tenancy agreements  and rooming accommodation agreements; and

(c) providing for the authority to receive, hold and pay rental bonds; and

………….

  1. [34]
    The only rental agent agreement Coastal Keys had was with Mr Eavis. It sought to accommodate the outcome of the Federal Circuit Court proceedings by holding the rental money in its trust account until the properties were transferred and it could enter into a rental agent agreement with Mrs Eavis, or she engaged another agent, which she subsequently did. Although she was entitled to the rental from the properties from the date of the Order, any loss incurred by her was to be indemnified by Mr Eavis under the order.
  2. [35]
    As Coastal Keys was not a party to the Court order I find that there was no obligation on it to pay the transaction fund to Mrs Eavis because she was not, under the RTRA or under the AFI Act a person entitled to the fund.

Offsets

  1. [36]
    Even if the claim were allowed, there would have been offsets because some of the rental income was used to make mortgage payments, which would have been avoided if the transfers had occurred in a timely fashion. There are other expenses as well incurred by Coastal Keys which are to be deducted. However, there remains a contested issue as to what amount should be deducted from the total rental received.
  2. [37]
    Mr Eavis, in his affidavit affirmed on 9 May 2019[11] sets out the payments he made from the rental money he received. There is no doubt from the bank statements that mortgage payments were made on both properties to forestall the banks from taking action. He contends he paid $9,162.91 in mortgage payments and insurance. However the evidence presented by Mrs Eavis as to the payment of insurances is convincing in that when she went to make claims, the policies had not been renewed. Furthermore I accept the OFT’s submission that these costs predate the Court order. I therefore reject his evidence that $2,333.01 was paid for premiums. This is to be deducted from the $9,162.91 leaving $6,829.90
  3. [38]
    Mr Eavis says he paid a $2,000 for arrears of rent on each property, then goes onto say he then made further monthly mortgage payments of about $4,000 for Robina and Ormeau. This is an additional $8,000  taking the total payments to $14,829.90. In final submissions Coastal Keys submit the following should be deducted:
    1. (a)
      $9,162.91 (which includes the insurance premiums);
    2. (b)
      Robina:  Jan, Feb, March rent = 3 x 1840 = $5,520;
    3. (c)
      Ormeau: $4,000
    4. (d)
      Totals $18,682.91
  1. [39]
    There were other payments, agents commission and repairs deducted. I accept these as legitimate expenses. Therefore, excluding the insurance payments I find the total offset from the amount claimed is $16,349.90.

Conclusion

  1. [40]
    Coast Keys was not bound by the Federal Circuit Court order to hold the rental money on trust for Mrs Eavis.
  2. [41]
    I find that on its proper construction as submitted by Coastal Keys, Mrs Eavis is not a person entitled to the amount of the investment fund under s 22(3) of the AFA Act.
  3. [42]
    Having come to that conclusion, the correct and preferable decision is that Mrs Eavis  has not suffered loss as a result of any contravention of the AFA Act by Coastal Keys. Therefore, the decision of the Chief Executive of 13 June 2019 is set aside.

Footnotes

[1] Section 21 Documents filed by the Respondent page 30.

[2] Attachment 11 to the Application for Review filed 15 July 2019.

[3] Queensland Civil & Administrative Tribunal Act, s.20.

[4] Exhibit 2

[5] Exhibit 4, 5 and 6

[6] Exhibit 3

[7] Family Law Act ss 90AA, 90AE and 90AF

[8] Family Law Act 1975 s 79

[9] Applicants submissions, paragraph 27.  Project Blue Sky Inc v ABA (1998) 194 CLR 335, [69] and [78].

[10] AFAA s 25(1)(b).

[11] Exhibit 3 Annex B paragraphs 12 14 and affidavit affirmed 11 July 2019 (p 112)

Close

Editorial Notes

  • Published Case Name:

    Owen & Coastal Keys Pty Ltd v Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General & Anor

  • Shortened Case Name:

    Owen & Coastal Keys Pty Ltd v Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General

  • MNC:

    [2021] QCAT 31

  • Court:

    QCAT

  • Judge(s):

    Member Richard Oliver

  • Date:

    22 Jan 2021

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
Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 335
2 citations
Jump To
Cite 1 - (1998) 194 CLR 335
Cite 2 - (1998) 194 CLR 335

Cases Citing

Case NameFull CitationFrequency
Owen & Coastal Keys Pty Ltd v Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General & Anor No 2 [2023] QCAT 1721 citation
Owen & Coastal Keys Pty Ltd v Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General No 2 [2023] QCAT 2071 citation
1

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