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Weeds v Key to Australia Pty Ltd[2024] QCAT 242

Weeds v Key to Australia Pty Ltd[2024] QCAT 242

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Weeds v Key to Australia Pty Ltd & Anor [2024] QCAT 242

PARTIES:

Thomas James Weeds

(applicant)

v

KEY TO AUSTRALIA (deregistered)

(first respondent)

graham mark scarrott (a bankrupt)

(second respondent)

APPLICATION NO/S:

OCL059-21

MATTER TYPE:

Other civil dispute matters

DELIVERED ON:

13 June 2024

HEARING DATES:

12 June 2023 and 7 March 2024

HEARD AT:

Brisbane

DECISION OF:

Member Poteri

ORDERS:

  1. Pursuant to s 105 of the Agents Financial Administration Act 2014 (Qld), the claim is allowed and the amount of $113,210.52 should be paid to the Applicant from the Claim Fund at the expiration of the appeal period as outlined in s 143 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
  2. The First Respondent and Second Respondent are jointly and severally liable for the losses of the Applicant.
  3. Pursuant to ss 105(3) and 116(3) of the Agents Financial Administration Act 2014 (Qld), the First Respondent and the Second Respondent are jointly and severally liable to reimburse the Claim Fund in the amount of $113,210.52.

CATCHWORDS:

ADMINISTRATIVE LAW – ADMINSTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – Where a New Zealand citizen and a resident of Australia has invested in real estate in Australia – where the resident was induced to make this investment because of the false and or misleading representations of an Australian registered real estate agent – where the real estate agent is alleged to have disbursed funds without authorisation from the real estate agent’s trust account – where the scheme has failed – where the resident has made a claim against the Claim Fund under the provisions of the Agents Financial Administration Act 2014 (Qld) – where the claim has been referred to the Tribunal for a determination

Agents Financial Administration Act 2014 (Qld), s 6, s 8, s 21, s 22, s 33, s 77, s 80, s 82, s 84, s 85, s 95, s 105, s 113, s 116

Criminal Code Act 1899 (Qld), sch 1

The Criminal Code (Qld), s 24

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 19, s 20, s 143

Planning Act 2016 (Qld), s 43

Property Occupations Act 2014 (Qld), s 12, s 26, s 97, s 115, s 154, s 155, s 206, s 207, s 208, s 209, s 212

Airstrike Industrial Pty Ltd v Robertson [2014] QCATA 43

Dunn v Chief Executive, Department of Justice and Attorney-General [2012] QCAT 476

Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418

Goodchild v Ferrantino [2007] QCCTPAMD 2

To v Chief Executive, Department of Tourism [2006] QDC 381

APPEARANCES &

REPRESENTATION:

Applicant:

Self-represented

First Respondent:

Key to Australia Pty LtdNo appearance

Second Respondent:

Graham Mark ScarrottNo appearance

Office of Fair Trading:

Mr A Tan, Legal Officer of the Office of Fair Trading

GENERAL OVERVIEW

  1. [1]
    This is an overview of 17 claims made under the provisions of the Agents Financial Administration Act 2014 (Qld) (‘AFAA’) regarding the activities of the First Respondent, Key to Australia Pty Ltd (‘Key’), and the Second Respondent, Graham Mark Scarrott (‘Scarrott’).
  2. [2]
    Except for one claimant, I have consent of all the claimants to refer to the evidence and details of each of the various claims in considering the individual claims.
  3. [3]
    The consideration of the claims should be viewed as a whole because all of the claims refer to the proposed purchase of some 20 lots at Pimpama. The lots were the subject of put and call option agreements (‘P&C’) with Eagle Street Finance Pty Ltd, Leda (‘Vendor’).
  4. [4]
    In all Scarrott and Key were paid the total of approximately $2,380,000 by the claimants. Scarrott paid approximately $603,000 to the Vendor for deposits under the P&Cs. Approximately $72,000 was paid to The Gold Coast City Council (‘Council’) for application fees and approximately $33,000 was paid to the town planners, Zone Planning Group (‘ZPG’). The Tribunal has not been informed of any other amounts that Scarrott may have paid to other consultants or contractors.
  5. [5]
    Scarrott and Key had at their disposal approximately $1,690,000. It is not clear to me how Scarrott and Key used these funds. However, most of these funds were used without the implied or express authority of the claimants on personal expenses, company expenses and keeping the whole scheme going. That is the funds were dishonestly used by Scarrott and Key.
  6. [6]
    Scarrott and Key were charged and convicted of breaches of the Australian Consumer Law (‘ACL’) regarding their marketing of land at Pimpama. There were 18 complainants. Scarrott and Key pleaded guilty to the charges. Scarrott participated in voluntary records of interview with officers of the Office of Fair Trading (‘OFT’) in 2020. The admissions were summarised and read to the Court during the criminal proceedings. The admissions are set out in Annexure 3 attached to the Form 4 – Complaint in the Supplementary Document Bundle filed by OFT on 17 March 2023. In summary, the admissions show:
    1. Scarrott and Key fraudulently converted approximately between $1,600,000 and $1,700,000 to their own accounts or to pay another person.
    2. Scarrott forged ANZ finance approval letters to buy time.
    3. Scarrott started marketing the lots in May 2018.
    4. Scarrott had no assurances from the Council that it would approve the subdivision of the lots. This was confirmed by advice from ZPG dated 23 April 2019.
    5. Scarrott arranged for ZPG to lodge six applications with the Council on 26 August 2019. Post lodgement of the applications, Scarrott had meetings with the Council officers from September 2019 onwards where the officers raised 12 concerns with the applications and that the applications may have to be amended. Notwithstanding this advice Scarrott continued to market lots at Pimpama.
    6. The complainants’ funds were paid into the bank account known as the Key to Australia Pty Ltd trust account ATF Scarrott Family Trust. Scarrott told the complainants that he and Key were licenced agents, and this bank account was a “trust account”.
    7. The returns that Scarrott was promising to the complainants were based on imagined figures rather than evidence based.
    8. Scarrott and Key’s trading losses per month were between $75,000 and $120,000. This is the reason why he was signing up new investors and trying to expedite the process. Scarrott was running out of time.
    9. Scarrott estimated that he only spent on average approximately $4,100 of each complainant’s funds in prosecuting the subdivision approval for the lots.
  7. [7]
    The Tribunal has no investigation powers. These powers are exercised by the Chief Executive of OFT under the AFAA.
  8. [8]
    The consideration of each claim was difficult and complicated because Scarrott and Key did not appear at the hearing. Scarrott did provide an unsworn statement which is very general in nature, self-serving and is not corroborated.
  9. [9]
    The claimants were ordinary everyday New Zealanders who trusted Scarrott. Generally, I found the claimants to be entirely credible and honest. Also, I found them to be extremely courteous and at times somewhat embarrassed by the way they were convinced by Scarrott to trust him.
  10. [10]
    In almost all cases there is no question that Scarrott did not provide the claimants with full details of his proposal. That is, he did not inform them of the possible shortcomings, disadvantages, and obstacles to overcome. He almost invariably told the claimants about the expected profit and gave them certainty.
  11. [11]
    Scarrott’s plan was for the parties to enter P&Cs with the Vendor and pay a deposit to secure the purchase of a lot (or lots). Other monies were paid to Scarrott by the claimants so that Scarrott could obtain approval from the Council to subdivide the lot into three individual lots and obtain approval to erect three townhouses on the individual subdivided lots.
  12. [12]
    Scarrott arranged for ZPG to lodge applications with the Council to subdivide lots 280, 281, 282, 333, 334 and 335 in August 2019. No applications were lodged with the Council to subdivide any other lots.
  13. [13]
    Scarrott received formal advice from ZPG in April 2019. Scarrott must have discussed his proposals and plans with Council officers and/or ZPG prior to April 2019 because he mentioned the six lots (i.e. lots 280, 281, 282, 333, 334 and 334) to claimants, P&B Crozier in Tribunal file OCL071-21 and he advised the Croziers that “the project is ready to start immediately” and that he had purchased lot 333.
  14. [14]
    I presume the plan was to on-sell the subdivided lots with approved plans or to erect the townhouses on the subdivided lots and to on-sell these subdivided improved lots. However, Scarrott did promise the claimants that they would not have to invest any further funds in the scheme or would not have to become purchasers of the individual lots. It is not clear to me how this would work in practice from a legal or timing perspective.
  15. [15]
    Bridging finance may have been required because the Council took more than the expected three to four months (as advised by ZPG) to assess the applications. One of the claimants stated that at one stage, Scarrott did discuss the necessity to obtain bridging finance. Scarrott has admitted forging ANZ approval letters to buy time.
  16. [16]
    It was all a question of timing and the Council approving the subdivision of the individual lots without the necessary setbacks and relaxation of on street parking. In the end the Council took 10 months to assess and reject Scarrott’s application, financing became more difficult and the COVID epidemic made all commercial activities more complicated.
  17. [17]
    It is difficult to ascertain when Scarrott started using the funds for his personal and Key’s expenses and other financing expenses to keep the whole scheme going. However, the Vendor became impatient and in 2020 the Vendor called upon the claimants to perform their obligations under the P&Cs and to pay the balance of the purchase prices under the P&Cs. Many of the claimants could not complete the purchases so their deposits were forfeited to the Vendor.
  18. [18]
    Ironically, two claimants who had the resources to complete the purchase of a lot and retain the lot have seen a substantial increase in the value of their lot and thus they have not suffered a financial loss.

REASONS FOR DECISION

  1. [19]
    The Applicant, Thomas John Weeds (‘Weeds’), was at all relevant times a citizen of New Zealand and a resident domiciled in Victoria.
  2. [20]
    Key was at all relevant times a corporation incorporated in Australia and had offices in Queensland.
  3. [21]
    Scarrott was at all relevant times a resident of Queensland and a director and the secretary of Key.
  4. [22]
    Between April 2019 and June 2019, Weeds communicated with John Glover (‘Glover’), an employee of Key, and Scarrott in Australia to discuss a real estate scheme. Certain representations are alleged to have been made by Scarrott and Glover:
    1. A substantial profit could be made by investing in a real estate scheme regarding land which the Council had preapproved for subdivision at Pimpama, Queensland.
    2. An initial investment of $109,000 was required from Weeds. A deposit of approximately $32,000 would have to be paid to the Vendor to secure the blocks of land.  The balance of these would be used to develop a block by subdividing the lot into three subdivided lots and on sell them.
    3. Scarrott and Key would facilitate the subdivision of the land.
    4. Scarrott and Key would on-sell the subdivided lots for Weeds without the necessity of Weeds having to pay for the balance of the land purchase.
    5. The whole process could be completed in six to eight months.
    6. Funds paid by Weeds would be paid into and held in a “trust account”.
    7. Key would refund the monies ($109,000) that Weeds had paid to Key two months before Weeds was required to complete the P&C for lot 494.
  5. [23]
    In June 2019, Weeds committed to the purchase of lot 494 Pimpama Village (‘the Land’) based on the representations made by Scarrott and Glover by signing a P&C for the Land and transferring an initial $2,000 on 6 June 2024 and then a further $107,000 on 21 June 2019 into the Key bank account held with CBA in Queensland.
  6. [24]
    On or around 8 May 2020, Weed’s lawyer emailed him advising that settlement of the put and call agreement was due soon.
  7. [25]
    In June 2020, Weeds’ lawyer advised him that the arrangement with Scarrott was not going ahead and Scarrott may have misappropriated his funds.

LEGISLATION

  1. [26]
    For reference, I outline the relevant legislative provisions of the AFAA and Property Occupations Act 2014 (Qld) (‘POA’):

Sections 6, 8, 21, 22, 33, 77, 80, 82, 84, 85, 95, 105, 113 and 116 of the AFAA.

Sections 12, 26, 97, 115, 154, 155, 206, 207, 208, 209, and 212 of the POA.

CLAIM

  1. [27]
    Pursuant to s 82 of the AFAA, Weeds lodged a claim (‘Claim’) on 17 July 2020 against the Claim Fund which is administered by OFT. The Claim was made within the time stipulated in s 85 of the AFAA.
  2. [28]
    Pursuant to s 95 of the AFAA the Claim was referred (‘the Referral’) to the Tribunal on 30 August 2021 for determination.

REFERRAL

  1. [29]
    In the Referral OFT has raised several issues that should be considered by the Tribunal.
  2. [30]
    The issues are:
    1. Jurisdiction. The AFAA is legislation enacted in Queensland. There is no specific provision in the AFAA which restricts claims to Queensland. However, for a claim to be successful, a claimant must demonstrate that there is a sufficient nexus to Queensland.
    2. Section 80 of the AFAA outlines the definition of a “relevant person” as being current and former licensed real estate agents. At the relevant time OFT admits that Key and Scarrott held valid licenses.
    3. OFT point out that Scarrott and Key may have been providing property development advice rather than acting as a real estate agent when Weeds entered the arrangements.
    4. A claim may be made under s 82 of the AFAA if the claimant suffers financial loss because of a contravention of ss 21 and 22 of the AFAA. Section 82(1)(a) and (b) of the AFAA relate to payment of monies or permitted drawings from a trust account.
    5. Weeds says that on 6 June 2019 he paid $2000 by a credit card payment to Key as a holding deposit. On 21 June 2019 Weeds paid a further $107,000 into the trust account of Key.[1] These monies were to be distributed by payment of $32,200 for the deposit to the Vendor for securing the Land and the balance to prosecute the scheme.
    6. Section 82(1)(g) of the AFAA states that a claimant may make a claim if there has been a contravention of s 212 of the POA by a relevant person. Section 212 of the POA provides that in making a sale of real property, the relevant person must not make representations to someone that are false or misleading. This issue relates to the ability of Key to subdivide the Land and/or whether Weeds would not be required to pay for the balance of the purchase price of the Land to the Vendor.

EVIDENCE

WEEDS

  1. [31]
    I found Weeds to be open and honest when giving evidence and I accept his evidence.
  2. [32]
    Weeds provided a statement (‘Weeds’ Statement’) to OFT dated 6 August 2020 and an email to OFT dated 26 June 2020 which are exhibited on pages 5 to 11 of the Referral’s Document Bundle filed 30 August 2021. This statement also annexes other relevant material. Weeds also gave evidence at the hearings by Teams and remote conferencing.
  3. [33]
    Weeds met with Glover on 26 April 2019 in New Zealand to explore the opportunity of purchasing a property in Australia. Weeds knew Glover through previous non-related dealings with Glover. Glover outlined investment opportunities in Australia with a short turnaround and a large return.
  4. [34]
    Weeds says that during some of the negotiations with Glover and Scarrott he was in Melbourne where he was a resident and a FIFO worker. He stated that he assumed that Scarrott would have been in Queensland.
  5. [35]
    Weeds says that Scarrott told him on a number of occasions that he would not have to settle on the land as the Land would be subdivided into three subdivided lots, developed and on sold to other purchasers. Scarrott advised Weeds that the proceeds of the sale would cover the initial purchase of the Land. Weeds was informed that his return would be between $100,000 and $130,000 on top of his initial investment.
  6. [36]
    Weeds requested further assurance from Scarrott, so, on or about 16 May 2019, he received a letter of refund from Key signed by “Mark Scarrott Director”. See page 12 of the Referral’s Document Bundle.
  7. [37]
    Weeds was informed and led to believe by Scarrott that his monies were being paid into and held in a “trust account”.
  8. [38]
    Weeds said that he executed the P&C for the Land in the presence of Glover. After he executed the P&C and paid the $109,000 to Key, he seldom heard from Scarrott, Glover or anyone connected with Key. Weeds said that he contacted Scarrott for updates and Scarrott at first told him that there were some delays with Council and then there were other excuses such as the bushfires and COVID.
  9. [39]
    In late April 2020, Weeds made contact with Scarrott to exercise his right to withdraw from the P&C. Key and Scarrott did not honour this request.

ADMISSIONS BY SCARROTT

  1. [40]
    A claim was made against the Claim Fund by a Simon Allan Wilson (‘Wilson’) in Tribunal file OCL067-21. Wilson had similar dealings with Scarrott and Key regarding the subdivision of a lot at Pimpama. In sworn testimony given to the Tribunal, Wilson stated that Scarrott had made admissions to him that he had used the money that he collected from the New Zealand claimants on personal expenses, paying for settlements, paying deposits, Key’s expenses and to other New Zealand purchasers.
  2. [41]
    Further, I refer to the admissions made by Scarrott in interviews regarding Scarrott’s criminal prosecution referred to earlier in these Reasons. See annexure 3 attached to Form 4 – Complaint exhibited in the Supplementary Document Bundle filed in the Tribunal by OFT on 17 March 2023 on pages 10-13.

SCARROTT AND KEY

  1. [42]
    Scarrott did not attend the hearings to give evidence. He provided an unsworn statement (‘Scarrott’s Statement’). See pages 23 to 29 of the Document Bundle attached to the Referral.
  2. [43]
    Key was not represented at the hearings and no material was filed by Key in these proceedings. Key has now been deregistered as a corporation.
  3. [44]
    Details of Scarrott’s activities are outlined on page 1 to 26 in the Supplementary Document Bundle attached to OFT’s submissions filed in the Tribunal on 17 March 2023. From this material Scarrott was convicted of offences under the ACL. Scarrott was not charged with or convicted of any offences under the POA.
  4. [45]
    Scarrott was not subjected to any cross-examination to test his evidence. Therefore, I have reservations about the accuracy or veracity of Scarrott’s Statement. Further, in Scarrott’s Statement, Scarrott does not outline the admissions made by Scarrott in his interviews with officers of OFT in 2020 or the summary of the admissions read to the Court in the criminal proceedings when Scarrott pleaded guilty.
  5. [46]
    I also note that Weeds says that Scarrott had zoom meetings in 2020 with him and other claimants where Scarrott denied the allegations made against him and Scarrott would provide letters to the claimants stating where and how the monies had been spent, the progress that he had made with the lots and the future plan on getting a return for them. Scarrott stated at this meeting that the allegations were untrue, he could account for all the invested money, and he would cover their legal costs if the claimants changed law firms. Weeds had further contact with Scarrott after this meeting where he requested details of council approvals and other information. Scarrott did not provide this information or the letters that he promised in the zoom meeting. See paragraphs 37 to 44 of Weeds’ Statement.
  6. [47]
    I make the following findings in relation to Scarrott and Key:
    1. The Respondents and the Vendor appear to have no formal arrangements for any of the Respondents to market the Vendor’s land at Pimpama.
    2. The Respondents appear to have never formally acted for or represented the Vendor. The Respondents did not have any authority from the Vendor to negotiate with any buyers of the Vendor’s land at Pimpama on behalf of the Vendor. See the comments relating to the “Developer” of annexure 3 of the supplementary bundle of documents filed with OFT’s submissions filed in the Tribunal on 17 March 2023.
    3. Notwithstanding that there were no formal arrangements for Scarrott to market lots of land at Pimpama for the Vendor, it is almost certain that the Vendor was aware of Scarrott’s activities and there would have been numerous interactions between Scarrott and the Vendor’s representatives in 2019 and 2020. After all, Scarrott had achieved the sale of approximately 20 lots of land for the Vendor.
    4. Scarrott had been marketing residential housing lots in the Gold Coast region and at Pimpama prior to 2018.
    5. All funds were paid to the business account of Key to Australia Pty Ltd ATF Scarrott Family Trust. Scarrott informed clients that this was a “trust account”. Weeds always believed and Scarrott gave him the impression that his funds were being paid into a real estate agent’s trust account and held in this trust account pending payment of the deposit under the P&C and payment of the expenses to facilitate the subdivision of the Land.
    6. Scarrott arranged for ZPG to lodge a development application relating to lots 280, 281, 282, 333, 334 and 335 at Pimpama with the Council on 26 August 2019. See letter from ZPG to Gold Coast Mayor Tom Tate dated 23 April 2020 on page 40 to 47 of the Document Bundle attached to the Referral.
    7. Scarrott would have had discussions with officers of the Council and/or ZPG regarding his plans and proposals for the six lots (i.e. lots 280, 281, 282, 333, 334 and 335) prior to receiving the formal advice from ZPG on 23 April 2019. Scarrott mentions the six lots in an email dated 22 March 2019 to claimants P&B Crozier in Tribunal file OCL071–21. In this email to the Weeds, Scarrott says the “project is ready to start immediately” and he has purchased lot 333.
    8. Scarrott admitted that he had meetings with Council officers from September 2019 onwards where the officers raised 12 concerns with the applications and advised Scarrott that the applications may have to be amended.
    9. Notwithstanding the advice from Council in September 2019, Scarrott continued to market lots at Pimpama on the basis that Council approval to subdivide was just a formality.
    10. No applications for subdivision of lot 494 was lodged with the Council.
    11. In the criminal prosecution of Scarrott there were approximately 18 affected parties.
    12. Scarrott admitted to forging letters from the ANZ bank to buy time.
    13. Scarrott attempted to obtain finance with Latrobe Financial Ltd, but the valuations of the land fell short of the valuations required by the financier.
    14. Scarrott always described himself as a sales consultant or a licensed real estate agent not as a development consultant.
    15. Scarrott received advice from ZPG that the subdivision approval process with the Council would take three to four months. This process took much longer than expected and eventually the Council rejected Scarrott’s application. Ransom describes the response from Council as a “refusal”.
    16. He advised some claimants that once the six applications lodged by ZPG in August 2019 were approved by Council then the applications to Council for the rest of the lots would be approved “as of right” by Council without any delay or problems. This is contrary to the advice from Ransom of ZPG.
    17. At one stage, Scarrott approached the Vendor for Vendor finance to complete the contracts. The Vendor would agree to providing 50% Vendor finance with the balance to be provided from the funds to come from New Zealand. This was not practical.
    18. Admissions were made by Scarrott that he expended the funds by paying for the deposits of various New Zealand investors for the purchase of the land under other P&Cs, Key’s expenses, expenses relating to the Council application process and personal expenses.
    19. Scarrott admitted that Key’s business was running at losses of between $75,000 and $120,000 per month. He was desperate for further sales so investors would provide him with funds to keep the scheme going. That is buying time.
    20. Ultimately, the Council process took too long, Council rejected the applications, bank lending requirements became tighter, introduction of a foreign buyer’s surcharge was introduced into New Zealand, the COVID pandemic struck, and New Zealand banking institutions’ actions were delayed.

DAVID RANSOM AND ZONE PLANNING GROUP

  1. [48]
    David Ransom (‘Ransom’) is a director of ZPG who are urban and regional planners.
  2. [49]
    Ransom has provided a sworn statement executed on 24 August 2020 which is on pages 30 to 170 of the Document Bundle attached to the Referral. Ransom has an Urban and Town Planning degree from the University of New England. Annexed to this statement are a fee proposal, terms of engagement and some attached correspondence with the Council.
  3. [50]
    ZPG was engaged by Scarrott to assist him in obtaining planning approval for his development application. On 23 April 2019, ZPG provided advice to Scarrott regarding the proposed development approval. See annexure ZP1 of Ransom’s statement, see pages 33 to 38 of the Document Bundle attached to the Referral.
  4. [51]
    Scarrott accepted the fee proposal and terms of engagement of ZPG and commenced work on the development application. The application to the Council appears to have been lodged with the Council on 26 August 2019. See page 2 of the letter from ZPG to Tom Tate, the mayor of the Council, making complaints about the time taken to process the development application (page 41 of the Document Bundle attached to the Referral).
  5. [52]
    In the letter from ZPG to Key dated 23 April 2019, there is no mention of lot 494 in the letter. Lot 494 are not included in the application to the Council lodged on 26 August 2019. Scarrott says that this was the case because he wanted to save costs and ZPG advised him that once the initial applications were approved then the other applications would be approved “as of right.” In giving oral evidence, Ransom says that this is not correct and that he never gave this advice to Scarrott. Ransom says that if any lot was to be subdivided then an application to Council was required. Such applications would be assessed by Council in the normal manner.
  6. [53]
    The planning scheme that applies to the Land and the properties that were purchased by other New Zealand purchasers at Pimpama is the Gold Coast 2016 City Plan VS – page 33 of the Document Bundle attached to the Referral.
  7. [54]
    I note the advice, in particular paragraph 3, given to Key and Scarrott in the letter from ZPG dated 23 April 2019 (page 34 of the Document Bundle attached to the Referral). That is:

The proposed Dwelling Houses are also Code Assessable as they do not strictly conform with the acceptable outcomes of the Pimpama Village Residential Code… More specifically the dwellings will need to seek alternative outcomes in relation to boundary setbacks, site cover and communal open space.

Typically, applications of this nature will take Council in the order of 3–4 months to assess and decide…

  1. [55]
    From Ransom’s statement he says that the Council assessment took much longer than anticipated and ultimately the application was refused by the Council on 11 June 2020. According to Ransom this delay and refusal/approval with conditions was “completely wrong”.
  2. [56]
    Ransom says that ZPG has no knowledge of the details of Scarrott’s New Zealand sales scheme.
  3. [57]
    The Tribunal called Ransom to give oral evidence on 7 March 2024. His evidence was:
    1. “Preapproval” refers to preliminary approval in s 43 of the Planning Act 2016 (Qld). The preliminary approval refers to the approval in the material change of use (‘MCU’) Council reference MCU201500641 for Pimpama Village development area approved by the Council on 14 November 2016. (See page 33 of the Document Bundle attached to the Referral).
    2. Lots 280, 281, 282, 333, 334 and 335 are part of the Pimpama Village development area.
    3. If an owner intends to subdivide a lot and build on the subdivided lot in the Pimpama Village development area and the proposed subdivision and buildings do not strictly comply with the Pimpama Village Planning Scheme (as contained in MCU201500641) then an application to the Council to seek relaxation of the conditions under the preliminary approval is required.
    4. This is what occurred in respect to the applications to Council for lots 280, 281, 282, 333, 334 and 335. There was no preliminary approval (‘pre-approval’) for these lots or any of the other lots in Pimpama being marketed by Scarrott.
    5. The applications to Council are usually straightforward because they do not require advertising and no third party has rights to object.
    6. Ransom never had a pre-lodgement meeting or any discussions with any Council officers before the actual application was lodged.
    7. Ransom was confident that the applications would succeed as there were similar developments at Southport and Varsity Lakes on the Gold Coast where the Council approved the developments with relaxed setbacks and parking requirements.
    8. Ransom acknowledged that there is no certainty of outcomes when making such applications with Council.
    9. Ransom also acknowledged that if the subdivision of any other lots at Pimpama was required then further applications to Council were required to be lodged and assessed by Council. There is no “as of right” procedure available whereby the other lots would be automatically approved (with relaxed setbacks and parking) if the applications for lots 280, 281, 282, 333, 334 and 335 were approved. Ransom denied giving any “as of right” advice to Scarrott.
    10. Ransom did discuss other consultants and contractors with Scarrott but he had no direct dealings with these consultants and contractors and he is not aware how much Scarrott paid them.
    11. He provided payment details to the Tribunal after giving evidence. ZPG were paid a total of $33,000 by Scarrott.

JURISDICTION

  1. [58]
    OFT has raised the issue of jurisdiction of the AFAA. There are no specific provisions in the AFAA which expressly limit the operations of the legislation to activities that take place in Queensland. Therefore, I must look to the caselaw to decide this issue.
  2. [59]
    The High Court decision of Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 CLR 418 (‘Freehold’) is instructive. Freehold involved a claim for commission where negotiations for a contract for the sale of land occurred inside and outside of Queensland. The court in Freehold examined the provisions for the Auctioneers, Real Estate Agents, Debt Collectors and Motor Dealers Acts 1922 to 1961 (Qld). This legislation is similar to the legislation in the AFAA.
  3. [60]
    In Freehold, the court held that the activities occurred in Queensland. However, the court at page 425 stated:[2]

The Act clearly enough is not concerned with what is done outside Queensland, even if it be done in accordance with a contract the proper law of which is the law of Queensland. On the other hand, whatever may be the proper law of an agency contract, the Act applies to a person who acts as, or carries on the business, of a real estate agent in Queensland and a Queensland court would give effect to it. It is not, therefore, possible to support the conclusion which his Honour reached on the ground upon which his Honour based it.

The critical question is rather, did the claimant, in doing what it did pursuant to its agency contract with the owner, act as, or carry on the business of a real estate agent in Queensland? The circumstances here are such that unless the claimant acted as a real estate agent in Queensland in the transaction with which we are concerned it did not carry on business as a real estate agent in Queensland, so that the question can be narrowed down to whether or not, in the course of the negotiation of the sale from Queensland Estates Pty Ltd to Golden Acres Ltd, it acted as a real estate agent in Queensland.

  1. [61]
    The matter of Goodchild v Ferrantino [2007] QCCTPAMD 2 (‘Goodchild’) involved a claim under the Property Agents and Motor Dealers Act 2000 (Qld) (‘PAMD Act’) for certain fraudulent activities that occurred in Queensland. In Goodchild the land was situated in New South Wales, but as all the activities occurred in Queensland the claim was allowed, notwithstanding the fact that the land was outside of Queensland. In Goodchild, the Tribunal noted that one of the objects of the PAMD Act was the protection of consumers. The main object of the AFAA is “to protect consumers from financial loss in dealing with agents”. The analysis of the law in Goodchild is relevant to the facts and circumstances in these proceedings.
  2. [62]
    I conclude that the protection given to claimants under the provisions of the AFAA is restricted to cases where the activities take place in or predominantly in Queensland.
  3. [63]
    In these proceedings, the following facts apply:
    1. The Land is in Queensland.
    2. Scarrott and Key are licenced and were based in Queensland.
    3. The Vendor is in Queensland.
    4. Weeds paid monies into the bank account of Key which is situated in Queensland.
    5. There was communication between Weeds and Scarrott (in Queensland) prior to the execution of the P&C and the payment of monies to Key by Weeds in 2019. Further, Weeds communicated with Scarrott, Key and JMV Law at various times after execution of the P&C.
  4. [64]
    By taking the above facts into account I find that the activities of Scarrott/Key took place predominantly in Queensland and the provisions of the AFAA apply to the Claim. As far as the issue of jurisdiction is concerned the Claim is valid.

REPRESENTATIONS OF SCARROTT

  1. [65]
    OFT have outlined a number of “representations” made by the Respondents to Weeds between April and June 2019 in of OFT’s submissions filed on 17 March 2023. OFT have submitted that these representations are central to the Claim and the answers to these representations were the subject of cross-examination by Mr Tan of OFT. I will now comment on these representations.
  2. [66]
    In these proceedings, John Glover (‘Glover’) also made representations to Weeds. At all relevant times Glover was an employee or consultant of the Respondents. On this basis the Respondents are responsible for any representations made by Glover to Weeds.
  3. [67]
    Representations 1, 2, 3, 4, 5 and 6 are:
    1. Representation 1 – The Respondents discovered land parcels in Pimpama Village, Queensland that can be configured into smaller lots;
    2. Representation 2 – The Gold Coast Council had preapproved this land being reconfigured into three smaller lots with townhouses to be built on each lot;
    3. Representation 3 – The Respondents planned to reconfigure this land and on-sell the smaller lots (Scheme) to generate substantial profit for investors;
    4. Representation 4 – The Applicant could participate in this Scheme by:
      1. Securing an option to purchase land through the Respondents; and
      2. Investing $109,000 with the Respondents.
    5. Representation 5 – The Applicant would not have to complete their purchase because the Respondents would complete the Scheme beforehand; and
    6. Representation 6 – Refund Option – The Respondents offered to refund the Applicant their initial investment if the Scheme was not delivered.
  4. [68]
    There is sufficient evidence for me to find that, prima facie, Representation 1, 2, 3 & 4 are true. However, Scarrott was not telling the full story when he was selling the Land to Weeds. When this representation was made Scarrott must have known about the full details of his plans regarding the proposed subdivision of the Land, plans to seek on-street parking and setback relaxations from the Council and that any such application was subject to Council procedures and timelines to assess the application and the application may or not be successful.
  5. [69]
    Weeds gave oral evidence that Scarrott advised him and gave him the impression that the Council approval to subdivide was just a formality.
  6. [70]
    At this point of time between April and June 2019, Scarrott had the benefit of Ransom’s advice and he would have had some communications with officers of the Council. From this information and his own experience as a real estate agent Scarrott would have known that the application process was far from a formality and there was a process to be followed with Council and this would take time. None of this information was disclosed to Weeds.
  7. [71]
    Also, Scarrott never disclosed or explained the issue of “preapproval” of the Pimpama Village development area. Scarrott never disclosed to Weeds that the Council had preapproved the subdivision of lots situated in the Pimpama Village development area as an area as a whole. The preapproval referred to the subdivision of lots that complied with code relating to this area. When there was not strict compliance with the code then any subdivision application must be assessed by the Council before it is approved or rejected. This process takes time. This application assessment process was required for all the subdivisions, including the subdivision of the Land, that were planned and proposed by Scarrott because the plans and proposals did not strictly comply with the code. Scarrott was seeking relaxations from the Council for building setbacks and on street parking. None of this information and details was disclosed to Weeds. In the initial discussions and negotiations, it was full steam ahead and there are no problems or obstacles in the way.
  8. [72]
    At this point, Scarrott was using every trick (i.e. not disclosing any obstacles to be resolved in the approval process) at his disposal to get Weeds across the line. Weeds must have expressed some doubt because on 16 May 2019, Weeds received the Refund Option which is contained in letter from Scarrott dated 16 May 2019. This is on page 12 of the Document Bundle attached to the Referral.
  9. [73]
    Representations were made to Weeds that the “material change of use” approvals for lot 494 would be approved by the Council within six to eight months and prior to settlement of the P&C. This relates to issue referred to in the previous paragraph. The Respondents never disclosed the full details of what is required for approval to subdivide the Land. It is probable that Scarrott and Glover were referring to the preapproval when discussing the MCU with Weeds. There was no preapproval to subdivide the Land with Scarrott’s plans and proposals (i.e. with Council relaxations).
  10. [74]
    Scarrott and Glover were making promises of a return on the initial investment.
  11. [75]
    In the negotiations the Respondents’ representations were in essence that the Council application process to subdivide the Land would proceed smoothly and was certain to be approved or was already approved and there were no time imperatives involved. Weeds was assured that everything would sail through smoothly and that sales of the subdivided lots would happen easily, and the proceeds of these sales would cover the initial purchase price, less the deposit and other costs, of the Land.
  12. [76]
    I also refer to the admission of Scarrott read to the Court in the criminal proceedings that his feasibility study was not based on any evidence.
  13. [77]
    Accordingly, I find that Representations 1, 2, 3 and 4 were prima facie true. However, I find that when Scarrott and Glover made these representations they were purposely being vague, and he failed to properly explain or disclose the underlying issues and problems involved. They failed to disclose the advice that Scarrott had received from Ransom in April 2019.
  14. [78]
    A representation that is false and/or misleading can be either an expressed representation or can be in the form of silence or non-disclosure of a very relevant fact or what was within the knowledge of Scarrott. This principle was discussed in the matter of Airstrike Industrial Pty Ltd v Robertson [2014] QCATA 43. At paragraph 30 of the decision the Learned Members refer to a misrepresentation by silence. They say:

for there to be a representation by silence the representee must establish that there was some relevant fact or matter within the knowledge of the representor and the representor chooses not to disclose the fact or matter to create a false impression.

  1. [79]
    If Scarrott and Glover had fully explained and been truthful about the processes required for Council approval and that the whole scheme very much depended on timing, then it is probable that Weeds would not have committed to the purchase of the Land and transfer of funds to Key. Therefore, I find Representations 1, 2, 3 and 4 were false or misleading.
  2. [80]
    Representation 5 – The Applicant would not have to complete their purchase because the Respondents would complete the Scheme beforehand.
  3. [81]
    Weeds answered “yes” when asked about Representations 5.
  4. [82]
    Representation 5 is part of Representations 1, 2, 3 and 4. Some of the above commentary is applicable to Representation 5.
  5. [83]
    Scarrott and Glover always gave Weeds the impression that everything was in place to undertake the subdivision. Weeds formed the impression that there would be no problems, and everything was ready to go. There were no approvals in place, the “pre-approval” only related to the Pimpama Village development area and not the Land, there was no certainty that the Council would approve the application with the requested relaxations and the success of the proposal depended on timing.
  6. [84]
    Scarrott and Glover did not disclose the caveat in Ransom’s advice of April 2019.
  7. [85]
    For Scarrott to bring the scheme to fruition would have required the Council to approve the applications to subdivide lot 494, and if necessary, build townhouses on the subdivided lots. There was really no prospect of this happening in the six to eight months as promised by Scarrott and Glover because of the time that would have been required to achieve these milestones.
  8. [86]
    Scarrott did not even have any plans or proposals for the Land at this point. He certainly had plans and proposals for lots 280, 281, 282, 333, 334 and 335. Scarrott referred to these six lots to other claimants (P&B Crozier Tribunal file OCL071-21) in an email dated 22 March 2019. Scarrott also stated in this email that he had purchased lot 333. If Scarrott had plans and proposals, even drafts, prepared he would have shown these documents to Weeds in the negotiations between April and June 2019. This would have been a marketing tool. No such plans or drafts were disclosed or shown to Weeds.
  9. [87]
    Further, Scarrott and Glover advised Weeds what return he could expect if he purchased the Land, the Land was subdivided and the improved subdivided lots were on sold. That indicative return was some $100,000 to $130,000 on top of Weeds original investment. See paragraph 15 of Weeds’ Statement. In other New Zealand claims, Scarrott has provide some type of feasibility study. This does not appear to be the case with Weeds’ claim. Notwithstanding this fact, Scarrott and Glover have represented to Weeds what his possible return will be and the subdivision and on sales of the subdivided lots will be completed in six to eight months. See paragraph 12 of Weeds’ Statement. It should be noted that Scarrott has admitted that his feasibilities studies and his projected returns were not based on any extrinsic evidence but were figures that he had “imagined” could be achieved. See page 13 of the Supplementary Bundle of Documents filed in the Tribunal by OFT on 17 March 2023.
  10. [88]
    It should also be noted that Weeds says in his Statement at paragraph 12 that Glover constantly mentioned to Weeds that he would not have to settle on the Land.
  11. [89]
    Further, what corroborates the false, misleading and deceptive behaviour of Scarrott and Glover in making of the Representations is the fact that Weeds seldom heard from Scarrott or Glover after he paid the money into the Key bank account. When Weeds asked for updates, he was informed that all was good, there were some delays with the Council, bushfires or COVID. The details provided in these communications were false or misleading and a way to keep the wolves at bay. See also the admissions made by Scarrott to officers of OFT in 2020 and the material read to the Court in Scarrott’s and Key’s criminal proceedings where guilty pleas were entered by Scarrott and Key.
  12. [90]
    I find that Representation 5 taken as a whole, which includes the non-disclosure issues, were false or misleading.
  13. [91]
    Representation 6 – Refund Option –
    1. If Key was unable to develop the Land into three titles and have them sold prior to the expiration of the P&C, Key would refund the Applicant’s initial funding.
    2. “two months before the term is up…”, the Applicant could settle on the Land after they had been reconfigured or the Respondents would refund their investment and take ownership of these lots.
  14. [92]
    Weeds accepted that Scarrott made this representation. He stated in his Statement at paragraph 14 that he wanted some assurances or guarantees because he had previous failings with NZ Invest Limited. Glover had previously worked for this organisation. That is how Weeds came to be contacted on behalf of Scarrott. As a result of this request Scarrott gave Weeds the refund commitment to convince him to go ahead with the purchase of the Land. This commitment is contained in a letter from Scarrott to Weeds dated 16 May 2019. See page 12 of the Document Bundle attached to the Referral.
  15. [93]
    Again, Scarrott was not telling the whole story and not making full disclosure when he made the offer of a refund.
  16. [94]
    I do not accept that Scarrott could ever have delivered on this promise because:
    1. There is no evidence that Scarrott had any plans or proposals, even draft plans/proposals, for the subdivision of the Land;
    2. Scarrott’s commitment to refund Weeds his initial funding is worthless because he did not have the resources or finance to purchase the Land. This is corroborated by Scarrott’s admissions about his fraudulent and dishonest use of the various claimants’ funds fraudulently and his failed attempts to obtain bridging finance from ANZ and Latrobe Financial. Scarrott has admitted that Key’s business was running at a monthly loss of between $75,000 and $120,000 per month and he was forging ANZ bank approval letters to buy time. There was no possibility of Scarrott or Key being able to honour their refund commitment unless they fraudulently converted other investors’ funds.
    3. Scarrott was making the refund or buy back promise to other New Zealand claimants. Scarrott had no prospect of fulfilling any of these promises.
    4. By this point in May 2019, when Scarrott made this promise, he must have been under some pressure because there were concerns and time delays regarding the applications to Council. It appears that at the same time he was trying to buy time by arranging bridging or Vendor finance.
    5. What corroborates the false and misleading conduct of Scarrott and Key is the behaviour of Key and Scarrott after the P&C was executed by Weeds and Weeds transferred $109,000 to the Key bank account in June 2019. That is Weeds seldom heard from Scarrott and Key and when he asked for updates, he was given various excuses. See paragraph 25 of Weeds’ Statement.
    6. It is noted that Weeds requested Scarrott to honour the Refund Option in late April 2020. Scarrott and Key did not honour this request.
  17. [95]
    Accordingly, I find the Refund Option Representation was false or misleading.
  18. [96]
    In summary, I find that Scarrott/Key made the following representations to Weeds to induce him to enter into the P&C which were false and/or misleading:
    1. Scarrott, if required, would proceed with the Refund Option.
    2. The proposal to subdivide the Land into 3/4 lots with approved plans to build townhouses was a formality and not difficult for Council.
    3. The funds paid by Weeds to Key would be paid into a trust account and held there and only paid out for the deposit under the P&C and payment of other expenses to prosecute the subdivision of the Land.
    4. The subdivision of the Land, the erection of town houses on the subdivided lots and on sales of the subdivided lots would occur before Weeds was called upon to complete the P&C.
    5. The subdivision, erection of the townhouses and on sales of the subdivided lots would be completed and returns paid to Weeds in six to eight months.
  19. [97]
    As a matter of clarification when I refer to representations made by Scarrott in my findings, the same findings also apply to Key as Scarrott was the director and controller of Key.
  20. [98]
    A general observation of Weeds and the other New Zealand investors who made claims is that Scarrott gained their trust and it is clear from the evidence that Scarrott played on this trust and their lack of knowledge of Queensland legal processes relating to the purchase and subdivision of real property. He was always vague and gave them certainty when this was not the case. This is corroborated by his subsequent actions, lying or being deceptive when Weeds and other claimants asked for updates.
  21. [99]
    In some of the other New Zealand matters, OFT have raised the issue that s 24 of the Criminal Code may be available to Key and Scarrott if either was charged with a criminal offence under the POA or other legislation. OFT have cited the decisions of To v Chief Executive, Department of Tourism [2006] QDC 381 at paragraphs 40 to 45 and Dunn v Chief Executive, Department of Justice and Attorney-General [2012] QCAT 476 at paragraph 11 as precedents for their submissions.
  22. [100]
    I accept the application of s 24 of the Criminal Code to these claims. However, the defence under s 24 of the Criminal Code must be “an honest and reasonable, but mistaken belief in the existence of any state of things”. I also note that Scarrott and Key never used s 24 of the Criminal Code as a defence in the criminal charges brought against them.
  23. [101]
    In these proceedings, this mistaken belief may relate to the “preapproval” by the Council to the subdivision of the Land into three lots and the construction of 3 townhouses (with relaxed setbacks, site coverage and communal open space) on the 3 subdivided lots. Scarrott relied on the advice of ZPG/Ransom and his own enquiries that Council approval was code assessable, and a material change of use application would result in an approval in 3 to 4 months.
  24. [102]
    Scarrott always knew or should have known that the pre-approval for the lots only referred to the Code for the Pimpama Village development area as a whole. The pre-approval did not apply to the relaxation of having to strictly comply with the Code regarding the lots that he was marketing. No reasonable person could describe this as any sort of approval by Council.
  25. [103]
    At this stage, notwithstanding Ransom’s confidence, no reasonable person could honestly describe this as an approval or a certainty to be approved.
  26. [104]
    Therefore, s 24 of the Criminal Code is not a defence if Key or Scarrott are charged with any criminal offence.

CLAIM AGAINST FUND

  1. [105]
    To succeed in their claim Weeds must satisfy the provisions of s 82 of the AFAA. The provisions that may apply to Weeds’ claim are ss 82(1)(a), (b) and (g). In s 80 there is a definition of “relevant person”. At all relevant times Scarrott was an “agent”.
  2. [106]
    What is an “agent”? The relevant sections are ss 8, 33, 41 and 80 of the AFAA. Pursuant to these provisions Scarrott was as “agent” regarding the relevant provisions of the AFAA.
  3. [107]
    Section 16 of the POA outlines who is a “real estate agent” and in s 16 of the POA there is a reference to s 26 of the POA which outlines the activities that the holder of a real estate agent is authorised to undertake as an agent for others. OFT have raised the issue that Scarrott may not have been carrying out the activities of a real estate agent when he was prosecuting his scheme, that he was acting as a property developer or giving advice as a property developer.
  4. [108]
    Section 26 of the POA states:
  1. A real estate licence authorises the holder of the licence to perform the following activities an agent for others for reward-
    1. To buy, sell (other than by auction), exchange or let real estate property or interests in real estate:
    2. …….
    3. To negotiate for the buying, selling, exchanging or letting of something mentioned in paragraph (a) or (b);
    4. …..
  1. [109]
    I find that the activities that Scarrott was undertaking for all the parties that have made claims against the Claim Fund fall squarely in the activities that are outlined in ss 26(1)(a) and (c) of the POA.
  2. [110]
    Has Scarrott complied with ss 82(1)(a) and (b) of the AFAA? Notwithstanding the issue of any false and misleading representations made by Scarrott, I am of the view that only some of the monies paid to Scarrott and Key were disbursed in accordance with the parties’ understanding of how the scheme was to operate. The deposit of $32,000 for the deposit under the P&C was certainly paid in accordance with Weeds’ express authority.
  3. [111]
    No feasibility study or figures were provided to Weeds by Scarrott or Glover as was the case in other New Zealand claims. In these studies or figures there is a reference to a management fee. In these proceedings, it appears that the studies or the figures were not discussed. The discussions and communication between Weeds, Scarrott and Glover centred around the when the on sales could be achieved, the Refund Option and that any monies paid to Scarrott and Key would be held in a trust account and only dispersed to prosecute the subdivision of the Land, erection of the townhouses and the sale of the subdivided lots. However, the other funds (i.e. in excess of $78,000) were to be used to prosecute the application to the Council to subdivide the Property and Scarrott has admitted using the funds deposited in the Key account to pay deposits for other NZ investors and for personal and Key’s expenses.
  4. [112]
    No actual application was lodged by Scarrott or ZPG to obtain approval to subdivide the Land. The application lodged by ZPG was for a MCU and to reconfigure lots 260, 261, 262, 333, 334 and 335.
  5. [113]
    Further, there is no evidence before me that Scarrott had any plans or proposals, even in draft form, to subdivide the Land and build on the subdivided lots. If Scarrott had such plans or proposals, he would have shown them to Weeds in the lead up to Weeds executing the P&C and transferring the $107,000 plus $2,000 to Key.
  6. [114]
    Weeds transferred a total $109,000 into Key’s bank account. After the payment of the deposit of $32,200, Scarrott had at his disposal the sum of $76,800.
  7. [115]
    On page 4 of the Document Bundle attached to the Referral is a ledger which refers to KTA fees of $50,000. Even if Scarrott and Key had implied authority to pay their fees immediately, it left an amount of $28,800 left for Scarrott to prosecute the subdivision of the Land.
  8. [116]
    I am of the view that there was no implied or express authority for Scarrott to disperse at least $28,000 from the Key account when no applications were lodged by ZPG for lot 494.
  9. [117]
    It is difficult to determine the full details of the express and implied authority that Scarrott was to hold the monies on behalf of Weeds for the payment of expenses to progress the Council applications from the conversations and correspondence between Weeds and Scarrott/Key. Also, the details of payments to other consultants and contractors (if any) have not been produced to the Tribunal to ascertain how much was paid to these parties. Notwithstanding this lack of clarity, I find that there was an express/implied authority that Scarrott was to hold Weeds’ funds in trust and only disperse the funds for the deposit for the P&C, possibly the management fee and to prosecute the Council applications to subdivide lot 494, not for other expenses. Therefore, I find that Scarrott/Key have breached ss 82(1)(a) and (b) of the AFAA.
  10. [118]
    The only way to determine exactly when and how much Scarrott and Key disbursed from their account without implied or express authority would be for an accountant to forensically examine the bank accounts of Scarrott and Key. I do not have these details. However, I have little doubt funds were disbursed without authority, given the amount of money available to Scarrott, the lack of progress in prosecuting the applications to Council on many of the lots and his admissions that he was dishonest and acting without authority in his dealing and disbursement of money held by him.
  11. [119]
    Did Scarrott contravene s 82(1)(g) of the AFAA? To determine this question, it is necessary to consider whether there have been any contraventions of ss 154, 155, 206, 207, 208, 209 and 212 of the POA.
  12. [120]
    In s 80 of the AFAA is the definition of “relevant person”. At all relevant time Scarrott was a relevant person because he was an “agent”.

COMPLIANCE

  1. [121]
    Weeds was given the impression by Scarrott and Glover that the funds that he transmitted to Key were to be paid into a trust account. Weeds transferred $2,000 and $107,000 to the “Key to Australia” bank account in June 2019. It is not necessary for me to establish if Scarrott/Key established a trust account under Part 2 of AFAA.
  2. [122]
    It is sufficient for me to say that Weeds paid the funds to Key.
  3. [123]
    It is noted that Scarrott was not charged with or convicted of any contravention of the AFAA or POA. He was charged with and pleaded guilty of a contravention of the ACL.
  4. [124]
    Scarrott and Key pleaded guilty to breaches of the ACL. Scarrott’s admissions that he used investors’ funds dishonestly and fraudulently were outlined to the Court in these proceedings.
  5. [125]
    On balance, Scarrott has contravened ss 21, 22 and 82(1)(a) and (b) of the AFAA.
  6. [126]
    Sections 154 and 155 of the POA refer to disclosure of a beneficial interest. These provisions do not apply to the facts and circumstances of the Claim.
  7. [127]
    The provisions of ss 206, 207, 208 and 209 do not apply to the facts and circumstances of the Claim.
  8. [128]
    The facts and circumstances of the Claim that relate to Scarrott making false and misleading representations about a scheme that induced Weeds to commit funds to Key and to enter into the P&C are a breach of s 212 of the AFAA. This scenario fits squarely into s 212 of the POA. Therefore, I find that Scarrott has contravened s 82(1)(g) of the AFAA.

OBJECTS OF AFAA AND POA

  1. [129]
    The main object of the AFAA is set out in s 6 of the AFAA. In summary, the object is to protect consumers from financial loss in dealings with agents and this is to be achieved by regulating the ways agents operate trust accounts and establishing a claim fund to compensate persons in particular circumstances for financial loss arising from dealings with agents.
  2. [130]
    The main objects of the POA are set out in s 12 of the POA. In summary, one of these objects is to provide a system of licencing of property which balances between the need to protect consumers and promote freedom of enterprise in the marketplace. Another object is to provide a way of protecting consumers against particular undesirable practices associated with the promotion of residential property.
  3. [131]
    In essence objects of both pieces of legislation are to provide for a system of licencing agents and to protect consumers.
  4. [132]
    If there are any inconsistencies or ambiguity in the facts, circumstances and interpretation of relevant legislation in these proceedings then given the objects of the legislation are squarely aimed at consumer protection, then any such inconsistencies and ambiguities should be exercised in the claimant’s favour.

FINDINGS

  1. [133]
    On the balance of probabilities, in their dealings with Weeds regarding lot 494, I find as follows:
    1. Key and Scarrott have not complied with ss 82(1)(a), (b) and (g) of the AFAA.
    2. Key and Scarrott were “relevant persons” and “licenced agents” as contemplated in the provisions of the AFAA and POA, in particular s 80 of the AFAA.
    3. Key and Scarrott were carrying out the activities of real estate agents as outlined in s 26(1)(a) and (c) of the POA. That is facilitating/negotiating the purchase and sale of interests in real property.
    4. Weeds lodged a valid claim pursuant to s 82 of the AFAA.
    5. Weeds has suffered a financial loss.
    6. Key and Scarrott are responsible for the financial losses of Weeds.
    7. Weeds cannot claim any capital losses and interest. See s 113(5) of the AFAA.
    8. The limit for any claim is $200,000. See s 113(4) of the AFAA and regulation 25 of the Agents Financial Regulation 2014 (Qld).
    9. Weeds has made a claim for the following:
      1. $109,000 being the total amount paid by Weeds to Key. I allow this claim.
      2. $4,794.62. This is for lending interest. Because of the operation of s 113(5) of the AFAA, I do not allow this claim; and
      3. $3,300 and $910.52 for legal fees. I allow these claims.
  2. [134]
    Therefore, the total claim allowed is $113,210.52.
  3. [135]
    Scarrott and Key are jointly and severally responsible for Weeds’ financial losses.
  4. [136]
    Pursuant to section 116(3) of the AFAA, Scarrott and Key are jointly and severally liable to reimburse the Claim Fund in the amount of $113,210.52.

Footnotes

[1]Chief Executive’s Submissions filed 17 March 2023, [6].

[2]Freehold, 425-6 (citations omitted).

Close

Editorial Notes

  • Published Case Name:

    Weeds v Key to Australia Pty Ltd & Anor

  • Shortened Case Name:

    Weeds v Key to Australia Pty Ltd

  • MNC:

    [2024] QCAT 242

  • Court:

    QCAT

  • Judge(s):

    Member Poteri

  • Date:

    13 Jun 2024

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
Airstrike Industrial Pty Ltd v Robertson [2014] QCATA 43
2 citations
Jump To
Cite 1 - [2014] QCATA 43
Cite 2 - [2014] QCATA 43
Dunn v Chief Executive, Department of Justice and Attorney General [2012] QCAT 476
2 citations
Jump To
Cite 1 - [2012] QCAT 476
Cite 2 - [2012] QCAT 476
Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 C.L.R 418
2 citations
Jump To
Cite 1 - (1970) 123 C.L.R 418
Cite 2 - (1970) 123 C.L.R 418
Goodchild v Ferrantino [2007] QCCTPAMD 2
2 citations
Jump To
Cite 1 - [2007] QCCTPAMD 2
Cite 2 - [2007] QCCTPAMD 2
To v Chief Executive, Department of Tourism, Fair Trading and Wine Industry Development [2006] QDC 381
2 citations
Jump To
Cite 1 - [2006] QDC 381
Cite 2 - [2006] QDC 381

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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