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Holcombe v Key to Australia Pty Ltd[2024] QCAT 274

Holcombe v Key to Australia Pty Ltd[2024] QCAT 274

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Holcombe v Key to Australia Pty Ltd & Anor [2024] QCAT 274

PARTIES:

Paul Timothy Holcombe

(applicant)

v

KEY TO AUSTRALIA (deregistered)

(first respondent)

graham mark scarrott (a bankrupt)

(second respondent)

APPLICATION NO/S:

OCL062-21

MATTER TYPE:

Other civil dispute matters

DELIVERED ON:

4 July 2024

HEARING DATES:

12 June 2023 and 7 March 2024

HEARD AT:

Brisbane

DECISION OF:

Member Poteri

ORDERS:

  1. 1.
    Pursuant to section 105 of the Agents Financial Administration Act 2014 (Qld), the claim is allowed and the amount of $55,000 should be paid to the Applicant from the Claim Fund at the expiration of the appeal period as outlined in section 143 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
  1. 2.
    The First Respondent and Second Respondent are jointly and severally liable for the losses of the Applicant.
  1. 3.
    Pursuant to sections 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 $55,000.

CATCHWORDS:

ADMINISTRATIVE LAW – ADMINSTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – Where residents of New Zealand have invested in real estate in Australia – where the residents were 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 residents have 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 21, s 22, s 77, s 80, s 82, 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 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 Ltd No appearance

Second Respondent:

Graham Mark Scarrott  No 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 claim, 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 schedule 3 to the material 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 twelve 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 (except for one Australian claim) 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 3 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 April 2019. No applications were lodged with the Council to subdivide any other lots.
  13. [13]
    However, Scarrott must have discussed his proposal and plans with Council officers and/or ZPG prior to April 2019 because he mentioned these 6 lots to claimants P&B Crozier in Tribunal file OCL071-21, and Scarrott advised the Croziers that he had purchased lot 333 himself. See email from Scarrott to P Crozier dated 22 March 2019 in Tribunal file OCL071-21. In this email Scarrott says that he has purchased lot 333 and the project is “ready to start immediately”.
  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 3 to 4 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 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, Paul Timothy Holcombe (‘Holcombe’) was at all relevant times a resident of New Zealand.
  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 May 2019 and February 2020, Holcombe met and communicated with John Glover (‘Glover’), an employee of Key, and Scarrott 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 approved for subdivision.
    2. An initial investment was required from Holcombe. A deposit would have to be paid to the Vendor to secure the blocks of land. Scarrott and Key would facilitate the subdivision of the land.
    3. Scarrott and Key would on-sell the subdivided lots for Holcombe without the necessity of Holcombe having to pay for the balance of the land purchase. The outcome for Holcombe would be an estimated return of $232,000 (211%).
    4. Holcombe could only afford to invest $55,000 so it was agreed that Glover and Holcombe would jointly purchase a lot at Pimpama.
  5. [23]
    In September 2019, based on the representations of Scarrott and Glover, Holcombe and Glover executed a P&C for lot 400 Pimpama Village (‘the Land’). The P&C was executed by the Vendor and dated 2 October 2019. The deposit payable under the P&C was $30,400.
  6. [24]
    On 11 September 2019, 2019, Holcombe remitted the sum of $55,003.68 into the bank account of Key with the CBA. This is the account that Scarrott refers to as his “trust account”. It is in the name of Key to Australia Pty Ltd ATF Scarrott Family Trust.
  7. [25]
    In November 2019 Holcombe was advised by Scarrott that the Land could only be subdivided into two lots, not three lots. He advised that the Vendor had mutually agreed to terminate the P&C for the Land and return the deposit less $1,000.
  8. [26]
    In November 2019, Scarrott brought another contract to Holcombe for his execution. Scarrott advised Holcombe that his investment of $55,000 would be reallocated to the new lot. Holcombe never received a copy of this contract.
  9. [27]
    In June 2020, Holcombe’s lawyer, Sharney Rowe, emailed him advising him that she never received the replacement executed contract. Further, she advised that Scarrott may have fraudulently misappropriated his funds.

LEGISLATION

  1. [28]
    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. [29]
    Pursuant to s 82 of the AFAA, Holcombe lodged a claim (‘Claim’) on 30 November 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. [30]
    Pursuant to s 95 of the AFAA the Claim was referred (‘the Referral’) to the Tribunal on 30 August 2021 for determination.

REFERRAL

  1. [31]
    In the Referral OFT has raised several issues that should be considered by the Tribunal.
  2. [32]
    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 Holcombe 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. In these proceedings Holcombe paid $55,000 into the trust account of Key. These monies were to be distributed by payment of $30,400 for deposit to the Vendor for securing the Land and the balance to Key to prosecute the scheme. In these proceedings there is also a twist on the usual modus operandi of Scarrott by introducing Glover as a joint purchaser of the Land under the P&C.
    5. 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 Holcombe would not be required to pay for the balance of the purchase price of the Land to the Vendor.

EVIDENCE

HOLCOMBE

  1. [33]
    I found Holcombe to be open and honest when giving evidence and I accept his evidence.
  2. [34]
    Holcombe provided a statement (‘Holcombe’s Statement’) to OFT dated 13 November 2020 which is exhibited on pages 18 to 22 of the Referral’s Document Bundle filed 30 August 2021. This statement also annexes other relevant material. Holcombe gave evidence at the hearings by Teams and remote conferencing.
  3. [35]
    Holcombe met with Glover on May 2019 in New Zealand to explore the opportunity of purchasing a property in Australia. Holcombe was introduced to Key through his friend and attended a seminar sponsored by Key. At this seminar, Scarrott outlined investment opportunities and asked Auckland media personality Mr Duncan Garner to endorse Key. 
  4. [36]
    In the initial discussions Holcombe intended to purchase a constructed house property in Australia. In late May 2019 Scarrott advised Holcombe that his financial income and assets would not be sufficient to enable Holcombe to borrow sufficient funds to purchase such a property.
  5. [37]
    It was at this stage that Glover suggested that Holcombe could participate in an investment scheme whereby Holcombe could purchase a property at Pimpama and this property could be subdivided into lots and the subdivided lots on-sold.
  6. [38]
    In the discussions it was agreed that Holcombe would purchase lot 400 by way of a P&C with the Vendor. The P&C would require a deposit of $30,500. An amount of $109,700 would be required to cover the deposit under the P&C and other costs to prosecute the subdivision and improvement of lot 400. In round figures, Glover and Holcombe would have to contribute $55,000 each.
  7. [39]
    Holcombe was informed by Scarrott and Glover that he would not have to provide any further funds to complete the purchase of lot 400 because the sale of the subdivided lots would cover the purchase price of lot 400. This on-sale of the subdivided lots of lot 400 would happen before Holcombe was called upon to complete the P&C.
  8. [40]
    On 11 September 2019, Holcombe transferred the sum of $55,003.68, say $55,000, into the Key bank account. See paragraph 28 of Holcombe’s Statement.
  9. [41]
    Holcombe and Glover executed the P&C for lot 400 and the Vendor also executed the P&C, which is dated 2 October 2019. See paragraphs 27 – 31 of Holcombe’s Statement and pages 133 to 290 of the Referral’s Document Bundle.
  10. [42]
    Holcombe was advised of an expected return by Glover. See Exhibit PH 9 (page 108 of the Referral’s Document Bundle) annexed to Holcombe’s Statement. I note the use of MCU, material change of use, in the feasibility study which is Exhibit PH 9. Glover always gave the impression to Holcombe that the subdivision of the lots at Pimpama had all but been signed off by the Council. In all the discussions with Holcombe prior to transfer of the $55,000 to the Key bank account and the execution of the P&C, Glover never disclosed to Holcombe that the proposals and plans for subdivision did not strictly conform with the Pimpama Village development area code and that the Council would have to approve relaxation of the relevant code (i.e. building setbacks and on street parking). Glover gave the impression to Holcombe that everything was all but signed off by the Council.
  11. [43]
    There does not appear that there was much discussion between Glover and Holcombe regarding the exact details of how the purchase of lot 400 would operate. For example, how profits would be distributed and when Glover was to contribute his $55,000 to Key/Scarrott. There is no evidence to show that Glover ever contributed any funds to Key for the P&C.
  12. [44]
    Also, Holcombe was not able to provide any details on how the funds were to be held by Key. Other claimants in New Zealand advised the Tribunal that Scarrott represented to them that any monies paid to Key would be held in a real estate agent’s trust account. This did not occur in this claim.
  13. [45]
    In paragraph 25 of Holcombe’s Statement, he refers to a letter of guarantee from Scarrott provided to Glover that Scarrott would refund Holcombe’s money in full if anything went wrong. Holcombe refers to Exhibit PH 10 of his Statement (see page 109 of the Referral’s Document Bundle) which refers to a “Letter of Guarantee”. It is not clear what are the exact terms of the refund as they are not outlined in the email. There is a reference to a link in the email, however the link is to the online banking platform, Wise, where it states, “John has given you a fee-free transfer of up to 900 NZD… you can always transfer more, but we’ll waive the fee on the first 900 NZD…”. On balance, I find such a promise was made to Holcombe because Scarrott made similar promises to other New Zealand claimants as a marketing strategy.
  14. [46]
    In November 2019 Scarrott advised Holcombe that lot 400 could only be subdivided into two lots not three lots. In negotiations with the Vendor the P&C for lot 400 was mutually terminated and the deposit of $30,400 was returned less $1,000. Scarrott advised Holcombe that his funds would be used to purchase another lot at Pimpama. A new P&C was produced by Scarrott and executed by Holcombe on 29 November 2019. However, it appears that no further steps were taken by Scarrott regarding this new contract. No new contract was executed by the Vendor and no deposit was paid by Scarrott/Key to the Vendor.
  15. [47]
    In February and April 2020 Holcombe sought updates from Scarrott/Key. See the responses from Key and Scarrott which are Exhibit PH 17 of Holcombe’s Statement (see pages 295 and 296 of the Referral’s Document Bundle). It is obvious from the responses that Scarrott was providing false and misleading answers.
  16. [48]
    After hearing of problems with Scarrott in June 2020, Holcombe arranged for Sharney Rowe of JMV Law to request a full refund of the $55,000 from Scarrott/Key. No refund was received by Holcombe.

ADMISSIONS BY SCARROTT

  1. [49]
    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. [50]
    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. [51]
    Scarrott did not attend the hearings to give evidence. He provided an unsworn statement (‘Scarrott’s Statement’) (see pages 303 to 308 of the Referral’s Document Bundle).
  2. [52]
    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. [53]
    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. [54]
    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. [55]
    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” on page 12 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”.
    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 pages 319 to 339 of the Document Bundle attached to the Referral.
    7. Scarrott admitted that he had meetings with Council officers from September 2019 onwards where the officers raised twelve concerns with the applications and advised Scarrott that the applications may have to be amended.
    8. 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.
    9. No application for subdivision of lot 400 was lodged with the Council.
    10. In the criminal prosecution of Scarrott there were approximately 18 affected parties.
    11. Scarrott admitted to forging letters from the ANZ bank to buy time.
    12. Scarrott attempted to obtain finance with Latrobe Financial Ltd, but the valuations of the land fell short of the valuations required by the financier.
    13. Scarrott always described himself as a sales consultant or a licensed real estate agent not as a development consultant.
    14. Scarrott initially expected the subdivision approval process with the Council to take three to four months. This process took much longer than expected and eventually the Council rejected the applications.
    15. Scarrott 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.
    16. 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.
    17. 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.
    18. 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.
    19. Ultimately, the Council process took too long, Council rejected/approved the application with conditions, 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. [56]
    David Ransom (‘Ransom’) is a director of ZPG who are urban and regional planners.
  2. [57]
    Ransom has provided a sworn statement executed on 24 August 2020 which is on pages 309 to 449 of the Referral’s Document Bundle. 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. [58]
    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 312 to 317 of the Referral’s Document Bundle .
  4. [59]
    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. See page 320 of the Referral’s Document Bundle.
  5. [60]
    In the letter from ZPG to Key dated 23 April 2019 there is no mention of lot 400. Lot 400 is 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. [61]
    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 V5 (see page 312 of the Referral’s Document Bundle).
  7. [62]
    I note the advice given to Key and Scarrott in the letter, in particular paragraph 3, from ZPG dated 23 April 2019 (see page 313 of the Referral’s Document Bundle). 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. [63]
    From Ransom’s statement he says that the Council assessment took much longer than anticipated and ultimately the application was refused (approval with conditions unsatisfactory to Key/Scarrott) by the Council on 11 June 2020. According to Ransom this delay and refusal/approval with conditions was “completely wrong”.
  2. [64]
    Ransom says that ZPG has no knowledge of the details of Scarrott’s New Zealand sales scheme.
  3. [65]
    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 Council reference MCU201500641 for Pimpama Village development area approved by the Council on 14 November 2016. (See page 312 of the Referral’s Document Bundle).
    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. [66]
    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. [67]
    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. [68]
    In Freehold, the court held that the activities occurred in Queensland. However, the court at page 425 stated:[1]

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. [69]
    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. [70]
    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. [71]
    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. Holcombe paid monies into the bank account of Key which is situated in Queensland.
    5. There was communication between Holcombe and Glover (in New Zealand) and Scarrott (in Queensland) prior to the execution by Holcombe of the P&C. Further Holcombe communicated with Scarrott/Key and JMV Law in Queensland between November 2019 and June 2020.
  4. [72]
    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. [73]
    OFT have outlined a number of “representations” made by Scarrott and Glover to Holcombe 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. [74]
    Representations 1, 2, 3 and 4 can be examined together and I outline these alleged representations. They are:
  1. (a)
    Representation 1 – The Respondents discovered land parcels in Pimpama Village, Queensland that could be configured into smaller lots.
  1. (b)
    Representation 2 – The Gold Coast City Council had preapproved this land to be configured into 3 smaller lots with townhouses to be built on each lot.
  1. (c)
    Representation 3 – The Respondents planned to reconfigure this land and on-sell the smaller lots to generate substantial profit for investors.
  1. (d)
    Representation 4 – The Applicant could participate in this scheme by:
  1. (i)
    Securing an option to purchase Pimpama Village land by signing a Put and Call Option Agreement; and
  1. (ii)
    Investing $55,000 with the Respondents.
  1. (e)
    Representation 5 – The Applicant would not have to complete their purchase because the Respondents would complete the Scheme beforehand.
  1. (f)
    Representation 6 – Refund Option – The Respondents offered to refund Holcombe’s initial investment of $55,000 if the Scheme was not delivered.
  1. [75]
    There is sufficient evidence for me to find that, prima facie, Representations 1, 2, 3 and 4 are true. However, Scarrott was not telling the full story when he was selling the scheme and Land to Holcombe. When these representations were made Scarrott knew 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.
  2. [76]
    Holcombe gave oral evidence that Scarrott advised him and gave him the impression that the Council approval to subdivide was just a formality. That is the Council would likely “sign off” by the end of October 2019. See paragraph 22 of Holcombe’s Statement.
  3. [77]
    In this period of time, between May and September 2019, Scarrott had the benefit of Ransom’s advice, and he had meetings with Council officers from September 2019 onwards where the officers raised twelve concerns with the applications and advised him that the applications would need to be amended. From this information and his own experience as a real estate agent Scarrott would have known that the application process was far from being a formality or likely be signed off by the Council. Scarrott did not inform Holcombe of the following:
    1. That the plans and proposals did not strictly comply with code for the Pimpama Village development area and that an application to seek relaxations from the Council was required to be lodged and assessed by Council. This was the status in the beginning of negotiations in May 2019 where Scarrott had the benefit of Ransom’s advice.
    2. The applications to subdivide lots 280, 281, 282, 333, 334 and 335 were lodged with the Council on 26 August 2019. Holcombe transferred $55,000 to the Key account on 11 September 2019. I conclude that Scarrott would have had feedback from the Council or ZPG that the approval process for the six applications was not going to be smooth sailing as Scarrott and Glover were representing to Holcombe at various stages of the negotiations. Certainly, by late September 2019 Council officers advised ZPG and Scarrott that the Council had concerns with the applications and the applications may have to be amended. Holcombe was not informed of these issues.
    3. At this point Scarrott was using every trick (i.e. not disclosing any obstacles to be resolved in the approval process) at their disposal to get Holcombe across the line. Holcombe had some concerns at the latter part of the negotiations, especially about the “sunset date” that is when the project would come to fruition, because Scarrott offered Holcombe the Refund Option.
    4. The feasibility study, which is on page 108 of the Referral’s Document Bundle, discloses that a development application and MCU (material change of use) was required. Scarrott never elaborated on this process and what obstacles had to be overcome to have the development application approved by Council. These obstacles were that the pre-approval only applied to the Pimpama Village development area, the Council would need to approve relaxation of setbacks and parking and time was of the essence. This was never disclosed to Holcombe.
    5. I interpret the phrase “the GCCC would most likely sign off by the end of October 2019” as Scarrott’s guarantee that the Council application process to subdivide the six lots would proceed smoothly and was certain to be approved and there were no time imperatives involved. Scarrott gave Holcombe the impression 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.
    6. 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.
  4. [78]
    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 they failed to properly explain or disclose the underlying issues and problems involved. They failed to disclose the advice that they had received from Ransom and any feedback from the Council about the concerns that the Council had with the six applications currently before Council.
  5. [79]
    I am not able to make any conclusions about Glover’s role in the provision or the non-disclosure issues raised in the previous paragraphs. It is my view that Glover may have been an unwitting messenger for Scarrott. That is Glover was providing information and making representations to Holcombe about the plans and proposals, but Glover was being armed with the information by Scarrott.
  6. [80]
    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. [81]
    If Scarrott had fully explained and been truthful about the processes required for Council approval, any concerns raised by Council with the six applications currently before Council and that the whole scheme very much depended on timing, then Holcombe 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. [82]
    Representation 5 – The Applicant would not have to complete their purchase because the Respondents would complete the Scheme beforehand.
  3. [83]
    Holcombe answered “yes” when asked about Representation 5.
  4. [84]
    Representations 5 and 6 are part of Representations 1, 2, 3 and 4. Some of the above commentary is applicable to Representation 5.
  5. [85]
    Scarrott and Glover always gave Holcombe the impression that they had everything in place to undertake the subdivision. They gave Holcombe the impression that there would likely be no problems. Scarrott and Glover did not disclose the full story to Holcombe. There were no approvals in place, the “pre-approval” only related to the Pimpama Village development area and not lot 400, 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. [86]
    Scarrott did not disclose the caveat in Ransom’s advice of April 2019 and he did not disclose any concerns that the Council officers raised with Scarrott in feedback or meetings with the Council in September 2019.
  7. [87]
    For Scarrott to bring the scheme to fruition would have required the Council to approve the applications to subdivide lot 400, and if necessary, build townhouses on the subdivided lots. There was really no prospect of this happening because of the time that would have been required to achieve these milestones. Scarrott was having problems with the current applications before Council, and he had not even started the Council approval process for lot 400.
  8. [88]
    The other fraudulent behaviour of Scarrott that corroborates false and/or misleading representations made by Scarrott to Holcombe is the way he convinced Holcombe to withdraw from the purchase of lot 400 in November 2019 because he advised Holcombe could only be subdivided into two lots instead of three lots. The deposit of $30,400 less $1,000 was returned to Key by the Vendor and Scarrott promised to reallocate these monies to the purchase of another lot by Holcombe. As events transpired, although a new contract was drafted and executed by Holcombe on 29 November 2019 it appears that Scarrott took no steps to have this contract executed by the Vendor and the $29,400 was kept and fraudulently converted by Key/Scarrott.
  9. [89]
    The other reason that Representation 5 was false and/or misleading is because it is unclear how the on-sales of the subdivided lots of lot 400 would work from a practical and legal perspective. This was never explained or outlined by Scarrott or Glover. It is probable that some sort of bridging finance or Vendor indulgence/finance was required. Certainly, there would have been a time imperative and the process was always going to be difficult because there were concerns by the Council with the six current applications before it. By November 2019 Scarrott did not have any plans or proposals for lot 400 and an application to subdivide lot 400 had not been lodged with Council.
  10. [90]
    Further what corroborates the false, misleading and deceptive behaviour of Scarrott in making all 5 Representations is the email communications between Holcombe, Scarrott and Geri Richardson of Key in late 2019 and 2020 where Scarrott/Key were providing updates on the subdivision. See pages 292 to 296 of the Referral. The details provided in these communications were false or misleading and a way to keep the wolves at bay. See 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.
  11. [91]
    I find that all five Representations taken as a whole, which includes the non-disclosure issues, were false or misleading.
  12. [92]
    Representation 6 – Refund Option – The Respondents would refund Holcombe’s initial investment if the Scheme was not delivered.
  13. [93]
    Holcombe accepted that Scarrott made this representation. He stated in his Statement at paragraphs 24 and 25 that he had questions about a sunset date for the on-sales of the subdivided lots to be completed. To resolve Holcombe’s concerns, Scarrott provided a letter of guarantee to Glover. Holcombe says in his Statement that this letter is marked as Exhibit PH 10 to his Statement. Exhibit PH 10 is titled “letter of guarantee” and refers to a link. I accept that this guarantee of a refund was made to convince him (and probably Glover) to go ahead with the purchase of lot 400. What is also relevant is the fact that Scarrott was making this offer to other New Zealand claimants.
  14. [94]
    Again, Scarrott was not telling the whole story and not making full disclosure when he made the offer of a refund.
  15. [95]
    I do not accept that Scarrott could ever have delivered on this promise because:
    1. There is no evidence that there were any builders, developers or other interested parties who may have committed to the purchase of lot 400; and
    2. If Scarrott had such a commitment in some form of writing, then he certainly would have shown this commitment to Holcombe and other New Zealand claimants. After all this would have been a marketing weapon for him to convince other possible purchasers. Further, if Scarrott had verbal commitments then these commitments are worthless because a contract for Land (i.e. real estate) must be in writing.
    3. Scarrott’s commitment to offer a refund is worthless because he did not have the resources or finance to offer this refund or purchase lot 400. This is corroborated by Scarrott’s admissions about his fraudulent and dishonest use of the various claimants’ funds 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 commitment to purchase the Land unless they fraudulently converted other investors’ funds.
    4. Scarrott was making the refund or buy back promise to other New Zealand claimants. Scarrott had no prospect of fulfilling any of these promises.
    5. By this stage between June and September 2019 Scarrott 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.
  16. [96]
    Accordingly, I find the Refund Option Representation was false or misleading.
  17. [97]
    In summary I find that Scarrott/Key made the following representations to Holcombe 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 lots 400 into three lots with approved plans to build townhouses was all but signed off by Council, a formality and not difficult for Council.
    3. Holcombe would not have to complete the P&C because lot 400 would be subdivided and the improved subdivided lots on-sold. The proceeds of the on-sales of the subdivided lots would cover the purchase price of lot 400.
    4. After the mutual termination of the P&C the deposit monies paid under the P&C were refunded (less $1,000 i.e. $29,400) to Key. Scarrott/Key gave a commitment that these monies would be used as a deposit to secure another lot and another P&C executed by Glover, Holcombe and the Vendor. Scarrott/Key did not deliver on this commitment and instead fraudulently converted these monies for their own benefit.
  18. [98]
    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. Also, Key/Scarrott are responsible for any representations made by Glover in these proceedings. However, it seems to me that Glover may have been the unwitting messenger for Scarrott and he was also duped by Scarrott’s duplicity.
  19. [99]
    A general observation of Holcombe 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 Holcombe and other claimants asked for updates.

CLAIM AGAINST FUND

  1. [100]
    To succeed in his claim Holcombe must satisfy the provisions of s 82 of the AFAA. The provisions that may apply to Holcombe’s claim are s 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. [101]
    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. [102]
    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. [103]
    In s 26 the POA states:
  1. (1)
    A real estate licence authorises the holder of the licence to perform the following activities an agent for others for reward-
  1. (a)
    To buy, sell (other than by auction), exchange or let real estate property or interests in real estate:
  1. (b)
    …….
  1. (c)
    To negotiate for the buying, selling, exchanging or letting of something mentioned in paragraph (a) or (b);
  1. (d)
    …..
  1. [104]
    I find that the activities that Scarrott was undertaking for Holcombe and the parties that have made claims against the Claim Fund fall squarely in the activities that are outlined in s 26(1)(a) and (c) of the POA.
  2. [105]
    Has Scarrott complied with s 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 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 $30,400 under the P&C was certainly paid in accordance with Holcombe’s express authority. Holcombe gave evidence that the management fee of $44,000 noted in the development proposal (page 108 of the Referral) was not mentioned or discussed in any meeting with Scarrott. There may be some question whether Scarrott was to receive the management fee up front or when the subdivided lots were sold. Because of the uncertainty it is arguable that Scarrott was entitled any surplus monies held by him to pay for the management fee or part thereof.
  3. [106]
    Holcombe gave evidence that the issue of a trust account or a real estate agent’s trust account was not discussed with Glover and Scarrott. Therefore, the status of the Key bank account is unclear.
  4. [107]
    No actual applications were lodged by Scarrott or ZPG to obtain approval to subdivide lot 400. In late 2019 there was agreement between the stakeholders to arrange for mutual termination of the P&C for lot 400 and the refund of $29,400 to Key to be used to purchase another lot. Scarrott did not keep this commitment. Therefore, Scarrott had at his disposal $24,600 initially and another $29,400 when the deposit (less $1,000) was returned to Key. It seems to me that Key/Scarrott have fraudulently converted at least $10,000 (i.e. $54,000 less the management fee of $44,000).
  5. [108]
    It is difficult to determine the full details of the express and implied authority that Scarrott was to hold the monies on behalf of Holcombe for the payment of expenses to progress the Council applications from the conversations and correspondence between Holcombe, Glover and Scarrott/Key. Also, the details of payments to other consultants and contractors (if any) have not been produced to the Tribunal. There is also a question of whether the funds were to be held in a trust account or regulated real estate agent’s trust account.
  6. [109]
    There is no doubt that Key/Scarrott have fraudulently converted the monies that were returned to Key by the Vendor when the P&C for lot 400 was mutually termination. But it is not clear that Key/Scarrott have breached s 82(1)(a) and (b) of the AFAA. Therefore, on balance I find that Scarrott/Key have not breached s 82(1)(a) and (b) of the AFAA.
  7. [110]
    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.
  8. [111]
    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.
  9. [112]
    Section 80 of the AFAA contains the definition of “relevant person”. At all relevant time Scarrott was a relevant person because he was an “agent”.
  10. [113]
    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.
  11. [114]
    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.
  12. [115]
    On balance Scarrott has not contravened ss 21, 22 and 82(1)(a) and (b) of the AFAA.
  13. [116]
    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.
  14. [117]
    The provisions of ss 206, 207, 208 and 209 do not apply to the facts and circumstances of the Claim.
  15. [118]
    The facts and circumstances of the Claim that relate to Scarrott making false and misleading representations about a scheme that induced Holcombe 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. [119]
    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. [120]
    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. [121]
    In essence objects of both pieces of legislation are to provide for a system of licencing agents and to protect consumers.
  4. [122]
    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. [123]
    On the balance of probabilities, in their dealings with Holcombe regarding lots 400, I find as follows:
    1. Key and Scarrott have complied with s 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. Holcombe lodged a valid claim pursuant to s 82 of the AFAA.
    5. Holcombe has suffered a financial loss.
    6. Key and Scarrott are responsible for the financial losses of Holcombe.
    7. Holcombe 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. Holcombe has made a claim for $55,000. I allow this claim. Holcombe has not provided sufficient evidence to substantiate any loss of opportunity and other financial losses. Further I cannot award any interest on the claim pursuant to s 113 of the AFAA.
    10. Therefore, I allow the amount of $55,000 for Holcombe’s claim.
    11. Scarrott and Key are jointly and severally responsible for Holcombe’s financial losses.
    12. Pursuant to s 116(3) of the AFAA Scarrott and Key are jointly and severally liable to reimburse the Claim Fund in the amount of $55,000.             

Footnotes

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

Close

Editorial Notes

  • Published Case Name:

    Holcombe v Key to Australia Pty Ltd & Anor

  • Shortened Case Name:

    Holcombe v Key to Australia Pty Ltd

  • MNC:

    [2024] QCAT 274

  • Court:

    QCAT

  • Judge(s):

    Member Poteri

  • Date:

    04 Jul 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
1 citation
Jump To
Cite 1 - [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
1 citation
Jump To
Cite 1 - [2006] QDC 381

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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