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Wainui v Key to Australia Pty Ltd[2024] QCAT 288

Wainui v Key to Australia Pty Ltd[2024] QCAT 288

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Wainui v Key to Australia Pty Ltd & Anor [2024] QCAT 288

PARTIES:

Luke Steven Wainui

(applicant)

v

KEY TO AUSTRALIA (deregistered)

(first respondent)

graham mark scarrott (a bankrupt)

(second respondent)

APPLICATION NO/S:

OCL066-21

MATTER TYPE:

Other civil dispute matters

DELIVERED ON:

18 July 2024

HEARING DATES:

12 June 2023, 7 March 2024 and 21 June 2024

HEARD AT:

Brisbane

DECISION OF:

Member Poteri

ORDERS:

  1. Pursuant to section 105 of the Agents Financial Administration Act 2014 (Qld), the claim is allowed and the amount of $55,400.00 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).
  2. The First Respondent and Second Respondent are jointly and severally liable for the losses of the Applicant.
  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 $55,400.00.

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 six (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 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, Luke Steven Wainui (‘Wainui’) 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]
    In or around July 2019, Wainui met and communicated with Scarrott to discuss a real estate scheme. Certain representations are alleged to have been made by Scarrott:
    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 Wainui. 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 Wainui without the necessity of Wainui having to pay for the balance of the land purchase. The outcome for Wainui would be an estimated return of $215,400 (196%).
  5. [23]
    In August 2019, Wainui paid $1,000 into the bank account of Key with the Commonwealth Bank of Australia (see email from Wainui to the Tribunal dated 12 February 2024). 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. In November 2019, Wainui paid $29,400 into the nominated bank account.
  6. [24]
    In January 2020, Wainui and the Vendor executed a P&C for lot 392 Pimpama Village. The deposit payable under the P&C was $30,400 to the Vendor once Wainui signed the P&C.
  7. [25]
    On 12 February 2020, Wainui remitted a further $25,000 into the nominated bank account. 
  8. [26]
    In June 2020, Wainui’s lawyer, Sharney Rowe, from JMV Law advised him that they believed Scarrott may have fraudulently misappropriated his funds.

LEGISLATION

  1. [27]
    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. [28]
    Pursuant to s 82 of the AFAA, Wainui lodged a claim (‘Claim’) on 17 August 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. [29]
    Pursuant to s 95 of the AFAA the Claim was referred (‘the Referral’) to the Tribunal on 31 August 2021 for determination.

REFERRAL

  1. [30]
    In the Referral OFT has raised several issues that should be considered by the Tribunal.
  2. [31]
    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 Wainui 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 Wainui paid $55,400 into the trust account of Key. These monies were to be distributed by payment of $30,400 for deposit to the Vendor for securing lot 392 and the balance to Key to prosecute the scheme.
    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 lot and/or whether Wainui would not be required to pay for the balance of the purchase price of the lot to the Vendor.

EVIDENCE

WAINUI

  1. [32]
    Wainui provided an unsigned statement (‘Wainui’s Statement’) to OFT dated 19 November 2020 which is exhibited on pages 22 - 25 of the Referral’s Document Bundle filed 31 August 2021. This statement also annexes other relevant material. Wainui did not attend the Tribunal Hearings on 12 June 2023 and 7 March 2024, but he attended the Tribunal Hearing on 21 June 2024 by remote conferencing. On 21 June 2024, Wainui adopted the statement under oath.
  2. [33]
    I found Wainui to be honest when giving evidence and I accept his evidence.
  3. [34]
    Wainui heard about Key through its media advertising in New Zealand, and on or around 17 July 2019, Wainui made a ‘cold call’ to Scarrott. Wainui had initial phone calls with Scarrott to find out more about investing in residential properties in Australia.
  4. [35]
    During these initial phone calls, Scarrott said that he would take $10,000 AUD off Key’s fees if Wainui knew anyone else who would be interested (see page 22 of the Referral’s Document Bundle). Wainui then introduced Scarrott to his friend, Teila Faumina (‘Faumina’), and they both agreed to meet with Scarrott in New Zealand.
  5. [36]
    Wainui and Faumina met with Scarrott in July 2019 in Auckland, New Zealand and discussed potential residential land developments at Pimpama on the Gold Coast, Queensland in Australia. Scarrott had said to Wainui that he had found, marketed and sold residential investment properties to New Zealand clients like Wainui and Faumina. In particular, Key were handling an investment scheme whereby Wainui could purchase a property at Pimpama and this property could be subdivided into lots and the subdivided lots on-sold.
  6. [37]
    In the discussions Scarrott said that $110,000 AUD investment with Key would cover a 10% deposit on a lot at Pimpama Village, Town Planning and Council Costs and KTA Commission which Scarrott said would be around $30,000. Scarrott said that once he sold the lot, Wainui would be left with $215,000 in profit and provided this in the feasibility document provided to Wainui (see page 26 of the Referral’s Document Bundle).
  7. [38]
    Between 30 September 2019 and 13 February 2020, Wainui registered an interest in Key by transferring a total of $54,400 into Key’s trust account (see pages 114 and 115 of the Referral’s Document Bundle).
  8. [39]
    In January 2020, Wainui executed the P&C, assured by Scarrott who had told him that the Council had already approved the subdivision and it was ‘well underway with some lots already sold…’ (see paragraph 32 of Wainui’s Statement).
  9. [40]
    Wainui was advised of an expected return by Scarrott. See Exhibit LW1 (page 26 of the Referral’s Document Bundle) annexed to Wainui’s Statement. I note the use of MCU, material change of use, in the feasibility study which is Exhibit LW1 (page 26 of the Referral’s Document Bundle). Scarrott always gave the impression to Wainui that the subdivision of the lots at Pimpama had all but been signed off by the Council. In all the discussions with Wainui prior to transfer of the $55,400 to the Key bank account and the execution of the P&C, Scarrott never disclosed to Wainui 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 relaxations of the relevant code (ie building setbacks and on street parking). Scarrott gave the impression to Wainui that everything was all but signed off by the Council.
  10. [41]
    Also, Wainui 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. Wainui was unable to recall if this had occurred in this claim and therefore, I am unable to make any findings in regard to this issue. 
  11. [42]
    Between 20 February 2019 and 2 April 2020, Wainui heard from Scarrott that made him maintain his belief that everything was on track for the subdivision approval. Scarrott said the lots all had preapproval from the Council and the type of subdivision they would do would be accepted and approved in no longer than four weeks. Scarrott wrote to Wainui on 31 July 2019 and said, ‘due to the Residential Code it takes about 1 month for council approval as the sites are pre approved for subdivision’ (See page 280 of the Referral’s Document Bundle).
  12. [43]
    Scarrott also said if there was any ‘hold up’ with the approval, Wainui would not have to settle on the land as he had builders that would buy it off him (see page 23 of the Referral’s Document Bundle).
  13. [44]
    After receiving notice from JMV Law in June 2020 regarding Scarrott misappropriating his funds, Wainui reached out to Scarrott to seek updates and Scarrott said that he had ‘hit a snag with GCCC approving the 3 x Townhouses on my Lot [lot 392] however he was confident my Lot would be approved for a “duplex development” …’ It is obvious from the responses that Scarrott was providing false and misleading answers.

ADMISSIONS BY SCARROTT

  1. [45]
    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. [46]
    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. [47]
    Scarrott did not attend the hearings to give evidence. He provided an unsworn statement (‘Scarrott’s Statement’) (see pages 285 to 291 of the Referral’s Document Bundle).
  2. [48]
    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. [49]
    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. [50]
    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. [51]
    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 302 to 309 of the Referral’s Document Bundle.
    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 392 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 David Ransom (‘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. [52]
    Ransom is a director of ZPG which is a business specialising in urban and regional planning.
  2. [53]
    Ransom has provided a sworn statement executed on 24 August 2020 which is on pages 292 to 294 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. [54]
    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, on pages 295 to 298 of the Referral’s Document Bundle.
  4. [55]
    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 303 of the Referral’s Document Bundle.
  5. [56]
    In the letter from ZPG to Key dated 23 April 2019 there is no mention of lot 392. Lot 392 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. [57]
    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 296 of the Referral’s Document Bundle).
  7. [58]
    I note the advice, given to Key and Scarrott in the letter, in particular paragraph 3, from ZPG dated 23 April 2019 (see page 296 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. [59]
    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. [60]
    Ransom says that ZPG has no knowledge of the details of Scarrott’s New Zealand sales scheme.
  3. [61]
    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 296 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. [62]
    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. [63]
    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. [64]
    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. [65]
    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. [66]
    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. [67]
    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. Wainui paid monies into the bank account of Key which is situated in Queensland.
    5. There was communication between Wainui and Scarrott in New Zealand and in Queensland prior to the execution by Wainui of the P&C. Further Wainui communicated with Scarrott/Key and JMV Law in Queensland between September 2019 and June 2020.
  4. [68]
    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. [69]
    OFT have outlined a number of ‘representations’ made by Scarrott to Wainui in 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. [70]
    Representations 1, 2, 3 and 4 can be examined together and I outline these alleged representations. They are:
    1. Representation 1 – The Respondents discovered land parcels in Pimpama Village, Queensland that can be reconfigured into smaller lots.
    2. Representation 2 – These land parcels had all been preapproved by the Gold Coast City Council to be reconfigured into three smaller lots.
    3. Representation 3 – The Respondents planned to reconfigure land parcels in Pimpama Village into three smaller lots each and on-sell them to generate substantial profit for investors.
    4. Representation 4 – The Applicant could participate in this by:
  1. Securing an option to purchase Pimpama Village land; and
  2. Investing monies with the Respondents to bring their scheme to fruition. 
  1. Representation 5 – The scheme posed no real risk because the Respondents were confident it would succeed.
  2. Representation 6 – Buy Back Option – The Applicant would not have to settle on the land if the three lots were not on-sold as the Respondents had builders that would settle on the land instead.
  1. [71]
    In some of the other New Zealand claims, there was a representation that involved the Respondents offering to refund the initial investment if the Scheme was not delivered. There was no evidence of this in this matter. In this case, Scarrott reassured Wainui that he had other buyers (builders) that were willing to buy the lot if Wainui could not settle.
  2. [72]
    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 lot 392 to Wainui. When these representations were made Scarrott knew the full details of his plans regarding the proposed subdivision of the lot, 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.
  3. [73]
    Wainui provided evidence in his Statement 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 approve the plan. See paragraph 13 and 14 of Wainui’s Statement.
  4. [74]
    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 Wainui of the following:
    1. That the plans and proposals did not strictly comply with code for the Pimpama Village development area code 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. Wainui transferred $29,400 to the Key account on 1 November 2019 and a further $25,000 on 12 February 2020. 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 was representing to Wainui 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. Wainui was not informed of these issues.
    3. At this point Scarrott was using every trick (ie not disclosing any obstacles to be resolved in the approval process) at his disposal to get Wainui across the line. Wainui had some concerns at the latter part of the negotiations, especially about paying the initial $110,000 as he had limited funds. But Scarrott advised him that he could pay in instalments.
    4. The feasibility study, which is on page 26 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 Wainui.
    5. Scarrott gave Wainui 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 lot.
    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.
  5. [75]
    Accordingly, I find that Representations 1, 2, 3 and 4 were prima facie true. However, I find that when Scarrott made these representations he was purposely being vague, and he failed to properly explain or disclose the underlying issues and problems involved. Scarrott failed to disclose the advice that he had received from Ransom and any feedback from the Council about the concerns that the Council had with the six applications currently before Council.
  6. [76]
    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. [77]
    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 Wainui would not have committed to the purchase of lot 392 and transfer of funds to Key. Therefore, I find Representations 1, 2, 3, and 4 were false or misleading.
  2. [78]
    Representation 5 – the scheme posed no real risk because the Respondents were confident it would succeed.
  3. [79]
    Representation 5 is part of Representations 1, 2, 3 and 4. Some of the above commentary is applicable to Representation 5.
  4. [80]
    Scarrott always gave Wainui the impression that they had everything in place to undertake the subdivision. He gave Wainui the impression that there would likely be no problems. Scarrott did not disclose the full story to Wainui. There were no approvals in place, the ‘pre-approval’ only related to the Pimpama Village development area code and not lot 392, there was no certainty that the Council would approve the application with the requested relaxations and the success of the proposal depended on timing.
  5. [81]
    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.
  6. [82]
    For Scarrott to bring the scheme to fruition would have required the Council to approve the applications to subdivide lot 392, 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 392.
  7. [83]
    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 392 would work from a practical and legal perspective. This was never explained or outlined by Scarrott. 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.
  8. [84]
    Further, what corroborates the false, misleading and deceptive behaviour of Scarrott in making all 5 Representations is the email and in person communication between Wainui and Scarrott in July 2019 where Scarrott said that the lots were ‘pre approved for subdivision’ (see pages 17 and 19 of the Referral’s Document Bundle). 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.
  9. [85]
    I find that all five Representations taken as a whole, which includes the non-disclosure issues, were false or misleading.
  10. [86]
    Representation 6 – Buy Back Option – The Applicant would not have to settle on the land if the three lots were not on-sold, and the Respondents had builders willing to buy the lot instead.
  11. [87]
    See page 27 of the Referral’s Document Bundle. Where Scarrott said:

If in the event that these have not been sold I have builders that will settle on the land as they now have three titles so you will not have to settle.

  1. [88]
    What is also relevant is the fact that Scarrott was making this offer to other New Zealand claimants.
  2. [89]
    Again, Scarrott was not telling the whole story and not making full disclosure when he reassured Wainui with the promise of builders assuming the purchase of lot 392 if Wainui was not able to do so.
  3. [90]
    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 392; and
    2. If Scarrott had such a commitment in some form of writing, then he certainly would have shown this commitment to Wainui 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 (ie real estate) must be in writing.
    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. From June 2019 and up to the time Wainui executed the P&C in January 2020, 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.
  4. [91]
    Accordingly, I find the Buy Back Representation was false or misleading.
  5. [92]
    In summary I find that Scarrott/Key made the following representations to Wainui to induce him to enter into the P&C which were false and/or misleading:
    1. Scarrott, if required, would sell the lot to builders if the subdivided lots were not sold before Wainui had to settle.
    2. The proposal to subdivide lot 392 into three lots with approved plans to build townhouses was all but signed off by Council, a formality and not difficult for Council.
    3. Wainui would not have to complete the P&C because lot 392 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 392.
    4. Scarrott failed to advise Wainui that no analytical evidence was used by him in the preparation of the feasibility study (see exhibit LW1 on page 26 of the Referral’s Document Bundle). This study was based on Scarrott’s experience and intuition as a real estate agent.
  6. [93]
    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.
  7. [94]
    A general observation of Wainui 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 Wainui and other claimants asked for updates.

SECTION 24 CRIMINAL CODE (QLD)

  1. [95]
    In this matter and other claims OFT have raised the issue of section 24 of the Criminal Code Act 1899 (Qld) (‘Criminal Code’) which 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.
  2. [96]
    I accept OFT’s submission on the application of section 24 of the Criminal Code. However, the defence, ‘Mistake of fact’, must be ‘an honest and reasonable, but mistaken belief in the existence of any state of things’.  In these proceedings, this mistaken belief may have related to the ‘pre-approval’ by the Council for the subdivision of lot 392 into three (3) or four (4) lots and the construction of three (3) townhouses (with relaxed setbacks, site coverage and communal open space) on those subdivided lots. Scarrott relied on the advice of ZPG/Ransom and his own enquiries that the Council approval was code assessable, and a material change of use application would result in an approval in three (3) to four (4) months.
  3. [97]
    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 only applied where there was strict compliance with the Code regarding the lots that he was marketing.
  4. [98]
    At this stage, notwithstanding Ransom’s confidence, no reasonable person could honestly describe this as an approval or a certainty to be approved. This was the impression and representation that he was conveying to Wainui and the other New Zealand claimants.
  5. [99]
    Further, in November 2019 when Wainui committed to the purchase of lot 392 and transmitted $1,000 and a further $29,400 into Key’s account, Scarrott would have received some feedback that the Council had concerns with the current applications (ie for Lots 280, 281, 282, 333, 334 & 335). This indication should have or must have alerted Scarrott that there would be obstacles to overcome if he was to lodge applications for Wainui or any of the other claimants.
  6. [100]
    The section 24 defence could not apply to the making of any of the Representations because Scarrott was not being truthful and not making full disclosure when making any of the Representations to the Wainui. I refer to Scarrott’s admissions about the parlous state of his and Key’s financial position.
  7. [101]
    Therefore, section 24 of the Criminal Code would not be a defence if Key or Scarrott were charged with any criminal offence.

CLAIM AGAINST FUND

  1. [102]
    To succeed in his claim Wainui must satisfy the provisions of s 82 of the AFAA. The provisions that may apply to Wainui’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. [103]
    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. [104]
    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 licence 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. [105]
    In s 26 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. [106]
    I find that the activities that Scarrott was undertaking for Wainui 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. [107]
    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 Wainui’s express authority. Wainui did not give evidence that the management fee of $44,000, noted in the development proposal (see page 26 of the Referral’s Document Bundle), had been mentioned or discussed in any meeting with Scarrott. The only evidence provided about Key’s fees by Wainui was his reference to the reduction of $10,000 which means in these proceedings the management fee is $34,000 (see paragraph 35 above).
  3. [108]
    There may be some question whether Scarrott was to receive the management fee up front or when the subdivided lots were sold. In some of the other claims, the applicants could provide evidence that the $44,000 management fees were to be paid either upfront or after the scheme had concluded. However, Wainui was unable to provide evidence on this at the Tribunal Hearing. Because of the uncertainty it is arguable that Scarrott was entitled to any surplus monies held by him to pay for the management fee or part thereof.
  4. [109]
    Wainui could not provide evidence that the issue of a trust account or a real estate agent’s trust account was discussed with Scarrott. Therefore, the status of the Key bank account is unclear.
  5. [110]
    No actual applications were lodged by Scarrott or ZPG to obtain approval to subdivide lot 392. Therefore, Scarrott had at his disposal $25,000. It seems to me that Key/Scarrott may not have fraudulently converted any monies provided by Wainui. As, $30,400 was paid pursuant to the deposit of the P&C and Scarrott/Key may have been entitled to the $25,000 for ‘management fees’ (see page 26 of the Referral’s Document Bundle).
  6. [111]
    It is difficult to determine the full details of the express and implied authority that Scarrott was to hold the monies on behalf of Wainui for the payment of expenses to progress the Council applications from the conversations and correspondence between Wainui 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.
  7. [112]
    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 Key/Scarrott have not breached s 82(1)(a) and (b) of the AFAA.
  8. [113]
    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.
  9. [114]
    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.
  10. [115]
    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’.
  11. [116]
    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.
  12. [117]
    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.
  13. [118]
    On balance Scarrott has not contravened ss 21, 22 and 82(1)(a) and (b) of the AFAA.
  14. [119]
    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.
  15. [120]
    The provisions of ss 206, 207, 208 and 209 do not apply to the facts and circumstances of the Claim.
  16. [121]
    The facts and circumstances of the Claim that relate to Scarrott making false and misleading representations about a scheme that induced Wainui 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. [122]
    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. [123]
    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. [124]
    In essence objects of both pieces of legislation are to provide for a system of licencing agents and to protect consumers.
  4. [125]
    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. [126]
    On the balance of probabilities, in their dealings with Wainui regarding lot 392, I find as follows:
    1. Key and Scarrott have complied with ss 21, 22, 82(1)(a) and 82(1)(b) of the AFAA.
    2. Key and Scarrott have contravened s 82(1)(g) of the AFAA.
    3. 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.
    4. 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.
    5. Wainui lodged a valid claim pursuant to s 82 of the AFAA.
    6. Wainui has suffered a financial loss.
    7. Key and Scarrott are responsible for the financial losses of Wainui.
    8. Wainui cannot claim any capital losses and interest. See s 113(5) of the AFAA.
    9. 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).
    10. Wainui has made a claim for $55,400 for monies paid to the Respondents. I allow this claim. Wainui 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.
    11. Therefore, I allow the amount of $55,400 for Wainui’s claim.
    12. Scarrott and Key are jointly and severally responsible for Wainui’s financial losses.
    13. 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 $55,400.

Footnotes

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

Close

Editorial Notes

  • Published Case Name:

    Wainui v Key to Australia Pty Ltd & Anor

  • Shortened Case Name:

    Wainui v Key to Australia Pty Ltd

  • MNC:

    [2024] QCAT 288

  • Court:

    QCAT

  • Judge(s):

    Member Poteri

  • Date:

    18 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
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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