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Rama v Key to Australia Pty Ltd[2024] QCAT 401

Rama v Key to Australia Pty Ltd[2024] QCAT 401

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Rama v Key to Australia Pty Ltd & Anor [2024] QCAT 401

PARTIES:

Pritesh Rama

(applicant)

Nayna Rama

(applicant)

v

KEY TO AUSTRALIA (deregistered)

(first respondent)

graham mark scarrott (a bankrupt)

(second respondent)

APPLICATION NO/S:

OCL064-21

MATTER TYPE:

Other civil dispute matters

DELIVERED ON:

20 September 2024

HEARING DATES:

13 June 2023 and 7 March 2024

HEARD AT:

Brisbane

DECISION OF:

Member Poteri

ORDERS:

  1. Pursuant to s 105 of the Agents Financial Administration Act 2014 (Qld), the claim is allowed and the amount of $74,135.04 should be paid to the Applicant from the Claim Fund at the expiration of the appeal period as outlined in s 143 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
  2. The First Respondent and Second Respondent are jointly and severally liable for the losses of the Applicant.
  3. Pursuant to ss 105(3) and 116(3) of the Agents Financial Administration Act 2014 (Qld), the First Respondent and the Second Respondent are jointly and severally liable to reimburse the Claim Fund in the amount of $74,135.04.

CATCHWORDS:

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

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

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

Planning Act 2016 (Qld), s 43

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

Airstrike Industrial Pty Ltd v Robertson [2014] QCATA 43

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

Goodchild v Ferrantino [2007] QCCTPAMD 2

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]
    I have the consent of all the claimants to refer to the evidence and details of each of the various claims in considering the individual claims.
  3. [3]
    The consideration of the claims should be viewed as a whole because all of the claims refer to the proposed purchase of some 20 lots at Pimpama. The lots were the subject of put and call option agreements (‘P&C’) with Eagle Street Finance Pty Ltd, Leda (‘Vendor’).
  4. [4]
    In all Scarrott and Key were paid the total of approximately $2,380,000 by the claimants. Scarrott paid approximately $603,000 to the Vendor for deposits under the P&Cs. Approximately $72,000 was paid to The Gold Coast City Council (‘Council’) for application fees and approximately $33,000 was paid to the town planners, Zone Planning Group (‘ZPG’). The Tribunal has not been informed of any other amounts that Scarrott may have paid to other consultants or contractors.
  5. [5]
    Scarrott and Key had at their disposal approximately $1,690,000. It is not clear to me how Scarrott and Key used these funds. However, most of these funds were used without the implied or express authority of the claimants on personal expenses, company expenses and keeping the whole scheme going. That is the funds were dishonestly used by Scarrott and Key.
  6. [6]
    Scarrott and Key were charged and convicted of breaches of the Australian Consumer Law (‘ACL’) regarding their marketing of land at Pimpama. There were 18 complainants. Scarrott and Key pleaded guilty to the charges. Scarrott participated in voluntary records of interview with officers of the Office of Fair Trading (‘OFT’) in 2020. The admissions were summarised and read to the Court during the criminal proceedings. The admissions are set out in Annexure 3 attached to the Form 4 – Complaint in the Supplementary Document Bundle filed by OFT on 17 March 2023. In summary, the admissions show:
    1. Scarrott and Key fraudulently converted approximately between $1,600,000 and $1,700,000 to their own accounts or to pay another person.
    2. Scarrott forged ANZ finance approval letters to buy time.
    3. Scarrott started marketing the lots in May 2018.
    4. Scarrott had no assurances from the Council that it would approve the subdivision of the lots. This was confirmed by advice from ZPG dated 23 April 2019.
    5. Scarrott arranged for ZPG to lodge six applications with the Council on 26 August 2019. Post lodgement of the applications, Scarrott had meetings with the Council officers from September 2019 onwards where the officers raised 12 concerns with the applications and that the applications may have to be amended. Notwithstanding this advice Scarrott continued to market lots at Pimpama.
    6. The complainants’ funds were paid into the bank account known as the Key to Australia Pty Ltd trust account ATF Scarrott Family Trust. Scarrott told the complainants that he and Key were licenced agents, and this bank account was a “trust account”.
    7. The returns that Scarrott was promising to the complainants were based on imagined figures rather than evidence based.
    8. Scarrott and Key’s trading losses per month were between $75,000 and $120,000. This is the reason why he was signing up new investors and trying to expedite the process. Scarrott was running out of time.
    9. Scarrott estimated that he only spent on average approximately $4,100 of each complainant’s funds in prosecuting the subdivision approval for the lots.
  7. [7]
    The Tribunal has no investigation powers. These powers are exercised by the Chief Executive of OFT under the AFAA.
  8. [8]
    The consideration of each claim was difficult and complicated because Scarrott and Key did not appear at the hearing. Scarrott did provide an unsworn statement which is very general in nature, self-serving and is not corroborated.
  9. [9]
    The claimants were ordinary everyday New Zealanders who trusted Scarrott. Generally, I found the claimants to be entirely credible and honest. Also, I found them to be extremely courteous and at times somewhat embarrassed by the way they were convinced by Scarrott to trust him.
  10. [10]
    In almost all cases there is no question that Scarrott did not provide the claimants with full details of his proposal. That is, he did not inform them of the possible shortcomings, disadvantages, and obstacles to overcome. He almost invariably told the claimants about the expected profit and gave them certainty.
  11. [11]
    Scarrott’s plan was for the parties to enter P&Cs with the Vendor and pay a deposit to secure the purchase of a lot (or lots). Other monies were paid to Scarrott by the claimants so that Scarrott could obtain approval from the Council to subdivide the lot into three individual lots and obtain approval to erect three townhouses on the individual subdivided lots.
  12. [12]
    Scarrott arranged for ZPG to lodge applications with the Council to subdivide lots 280, 281, 282, 333, 334 and 335 in August 2019. No applications were lodged with the Council to subdivide any other lots.
  13. [13]
    Scarrott received formal advice from ZPG in April 2019. Scarrott must have discussed his proposals and plans with Council officers and/or ZPG prior to April 2019 because he mentioned the six lots (i.e. lots 280, 281, 282, 333, 334 and 334) to claimants P&B Crozier in Tribunal file OCL071-21 and he advised the Croziers that “the project is ready to start immediately” and that he had purchased lot 333 personally.
  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 Applicants, Pritesh Rama and Nayna Rama (‘the Ramas’) were at all relevant times residents 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 October 2016 and 2018, Scarrott communicated with the Ramas regarding their investment property at Lot 68 Japoon Street, North Lakes, Queensland.
  5. [23]
    In or around February 2019, the Ramas met with Scarrott to discuss a real estate scheme in the Pimpama Village development. Certain representations are alleged to have been made by Scarrott at this first meeting:
    1. A substantial profit could be made by investing in a real estate scheme regarding land which the Council had preapproved for subdivision at Pimpama, Queensland.
    2. An initial investment of $114,200 was required from the Ramas. Using this investment, the Respondents would subdivide the lot into three subdivided lots and on-sell them.
    3. The Ramas would make a 225% return on their investment in approximately six months.
  6. [24]
    It was noted in an email dated 7 February 2019 that a deposit of $28,600 would be payable. Scarrott also said in his email ‘If by whatever reason the balance of the funds is not achieved then the deposit is paid back in full.’ See page 9 of the Document Bundle (Document Bundle) attached to the Referral filed 30 August 2021.
  7. [25]
    In April 2019, the Ramas committed to the purchase of lot 333 Pimpama Village (‘the Land’) based on the representations made by Scarrott by signing a P&C with the Vendor. The P&C was dated 19 April 2019. See page 163 of the Document Bundle. The purchase price of the Land under the P&C was $286,000. The deposit of $28,600 was paid to the Vendor.
  8. [26]
    On 1 April 2019 the Ramas paid $30,000 into the bank account of Key as part of the arrangement to purchase the Land. On 29 April 2019 the Ramas paid a further amount of $33,000 into the Bank account of Key.
  9. [27]
    On or around 10 May 2019, Scarrott promised to pay the remainder of the lot 68 rebate ($13,000) towards lot 333.
  10. [28]
    In September 2019, Scarrott informed the Ramas that the value of lot 333 was increasing and they would need to complete their purchase to take advantage of the current price. Scarrott said that other investors were taking advantage of this increase, so the Ramas agreed to do so as well.
  11. [29]
    To complete the purchase of the Land, it was necessary for the Ramas to provide an amount of $135,000 using their own funds and a loan of approximately $143,000 arranged by Scarrott. See pages 353 and 354 of the Document Bundle.
  12. [30]
    On 9 October 2019 the Ramas purchased the Land using their own resources.
  13. [31]
    Between September 2019 and June 2020, the Ramas communicated with Scarrott at various times to obtain updates from Scarrott regarding the approval of the progress of the development application with the Council. During this period Scarrott was playing a delaying game by offering to assist the Ramas with the loan for the purchase of the Land. See paragraphs 43 to 47 of the statement of Pritish Rama dated 31 October 2020 (P Rama’s Statement) (see pages 123 to 128 of the Document Bundle) where the issue of delaying the settlement of the loan is discussed.
  14. [32]
    Up to June 2020 Scarrott was advising the Ramas that he was dealing with the Council regarding the approval of the subdivision of the Land. Scarrott advised the Ramas that the Council had not approved the subdivision but that he had a plan B in place to secure the Ramas’ funds and return a profit. See page 386 of the Document Bundle.
  15. [33]
    In the end this loan was not settled by Scarrott or Key and the Ramas were forced to sell the Land to minimise their losses.
  16. [34]
    On 5 June 2020 the Ramas received advice from JMV Law that they believed Scarrott had been using his clients’ funds illegally and all the clients’ funds had been dissipated fraudulently by Scarrott.

LEGISLATION

  1. [35]
    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. [36]
    Pursuant to s 82 of the AFAA, the Ramas lodged a claim (‘Claim’) on 13 July 2020 against the Claim Fund which is administered by OFT. The Claim was made within the time stipulated in s 85 of the AFAA.
  2. [37]
    Pursuant to s 95 of the AFAA the Claim was referred (‘the Referral’) to the Tribunal on 30 August 2021 for determination.

REFERRAL

  1. [38]
    In the Referral OFT has raised several issues that should be considered by the Tribunal.
  2. [39]
    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 the Ramas entered the arrangements.
    4. A claim may be made under s 82 of the AFAA if the claimant suffers financial loss because of a contravention of ss 21 and 22 of the AFAA. Section 82(1)(a) and (b) of the AFAA relate to payment of monies or permitted drawings from a trust account.
    5. The Ramas say that on 11 February 2019, they paid $28,600 by a credit card payment to Key as a deposit to pay to the Vendor. In April 2019, the Ramas paid a further $66,000 into the trust account of Key. These monies were to be distributed by payment of $28,600 for the deposit to the Vendor for securing the Land and the balance to prosecute the scheme. JMV Law, the Ramas’ solicitors, confirmed that Scarrott had remitted this deposit to the Vendor in accordance with the agreement.
    6. Section 82(1)(g) of the AFAA states that a claimant may make a claim if there has been a contravention of s 212 of the POA by a relevant person. Section 212 of the POA provides that in making a sale of real property, the relevant person must not make representations to someone that are false or misleading. This issue relates to the ability of Key to subdivide the Land.

EVIDENCE

THE RAMAS

  1. [40]
    I found the Ramas to be open and honest when giving evidence and I accept their evidence. They provided oral evidence to the Tribunal on 13 June 2023 and 8 July 2024. The Ramas have also provided further documentary evidence pursuant to Directions of the Tribunal dated 8 July 2024 and 22 August 2024
  2. [41]
    P Rama’s Statement also annexes other relevant material.
  3. [42]
    The Ramas also provided further details of their dealings with Scarrott in correspondence between the Ramas and OFT in November 2020. See pages 388 to 391 of the Referral.
  4. [43]
    The Ramas also provided further information and details to the Tribunal on 14 November 2023, 10 July 2024 and 28 August 2024 pursuant to directions of the Tribunal.
  5. [44]
    From the evidence, material and information:
    1. The Ramas first had dealings with Scarrott in 2016 regarding an investment property at Jappon Street, North Lakes. The Ramas purchased this property through Key. Key also managed this property as rental agents.
    2. Scarrott had built a trusting relationship with the Ramas since their dealings with him from 2016.
    3. In February 2019 Scarrott contacted the Ramas about an investment opportunity at Pimpama Village. Scarrott advised the Ramas that the scheme involved selling affordable residential properties to first home buyers by subdividing one lot into three separate lots.
    4. On 9 February 2019 Scarrott advised the Ramas by email that if for whatever reason the balance of the funds is not achieved then the deposit would be paid back in full.
    5. Scarrott advised the Ramas that six lots would be all be approved by the Council to be subdivided into three townhouse residences.
    6. The Ramas were assured by Scarrott that the subdivision approval by the Council would not be a problem and the whole process of purchase of the Land, subdivision and sale of the subdivided lots would be achieved in a matter of months. Scarrott assured the Ramas that they would not have to purchase the Land, and he assured the Ramas that Council approval for subdivision of the Land would not be a problem and the sale of the subdivided lots would cover the purchase price of the Land and there would be a substantial return on their investment.
    7. Scarrott assured the Ramas that for an initial investment of $114,200 they could secure a lot at Pimpama which could be subdivided into three subdivided lots and these subdivided lots on-sold for a return of 225%. See the Development Proposal which was provided to the Ramas by Scarrott which is on page 393 of the Document Bundle. The $114,500 would cover the deposit to secure the purchase of the Land and the balance for the fees and costs to enable Key to prosecute the subdivision of the Land.
    8. The Ramas decided to proceed with Scarrott’s proposal and executed an expression of interest which is on page 394 of the Document Bundle and returned this document back to Scarrott.
    9. Scarrott always assured the Ramas that any monies paid to Key would be held in a real estate agent’s trust account and distributed in accordance with agreed arrangements.
    10. Consequently, the Ramas entered into a P&C with the Vendor to purchase the Land which is dated 10 April 2019. The purchase price under the P&C was $286,000 with a deposit of $28,600 payable. This deposit was paid by Key to the Vendor. A copy of the P&C is on pages 163 to 349 of the Referral.
    11. On page 398 to 400 of the Referral is a letter from JMV Law, lawyers for the Ramas, outlining the timelines and other details of the P&C. The details include a call option date of 120 days from 8 August 2019.
    12. There was still a prima facie legal obligation under the P&C for the Ramas to complete the P&C if called upon by the Vendor.
    13. Before the Ramas committed to the proposal by Scarrott, they were assured by Scarrott that they would not have to complete the P&C because the Land would be subdivided, improvements would be erected on the subdivided lots and then the subdivided lots would be sold before the Ramas were called upon to complete the P&C.
    14. This proposal changed in or about August 2019 when Scarrott advised the Ramas that the price of the Land was increasing and that they should purchase the Land as a matter of priority at the current price. Scarrott advised the Ramas that he would arrange for the cancellation of the P&C and a new contract would be drawn up. See paragraphs 36 to 41 of P Rama’s Statement.
    15. Pursuant to the new proposal referred to above the Ramas were advised that Scarrott had arranged finance for the new purchase. P Rama says in his Statement that the Ramas only used some of the finance and they provided $135,000 towards the purchase of the Land. The figures for the purchase of the Land were outlined in a letter from JMV Law dated 24 September 2019. See pages 353 and 363 of the Document Bundle.
    16. The purchase of the Land was completed on 4 October 2019. See the figures required for the settlement in a letter from JMV Law dated 24 September 2019. See pages 357 and 358 of the Document Bundle.
    17. The other funds provided to Key by the Ramas were to be used to prosecute the development application to the Council and the subdivision, and the sale of the subdivided lots.
    18. After the purchase Scarrott offered to assist the Ramas with the payment of the interest on their borrowing but this did not eventuate. Further the financier was calling for finalisation of the loan.
    19. P Rama says in paragraphs 48 to 52 of his Statement that Scarrott had assured him that the development approval from the Council would occur by June 2020. He later learned that in fact the development application was refused in June 2020.
    20. On 5 June 2020 the Ramas were advised by JMV Law that they believed that Scarrott had been using clients’ funds illegally.
    21. Because of the financial pressures regarding the financing of the purchase of the Land the Ramas sold the Land with the settlement taking place on 9 October 2020. See letter from JMV Law prepared on 8 October 2020 and supplied to the Tribunal by the Ramas on 5 August 2024.

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 other New Zealand purchasers.
  2. [46]
    Further, I refer to the admissions made by Scarrott in interviews regarding Scarrott’s dealings between 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 499 to 505 of the Document Bundle attached to the Referral.
  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 note from paragraphs 49 and 50 of P Rama’s Statement that Scarrott advised the Ramas by way of a letter dated 12 June 2020 (pages 386 and 387 of the Document Bundle)  that the development application for the Land had not been approved but that he had a “plan B” which was to build duplexes and these would be sold whereby the Rams’ funds would be returned to them with a profit and the loans would be paid out. Plan B did not eventuate.
  6. [52]
    On 5 June the Ramas were advised by JMV Law that they believed that Scarrott had been using clients’ funds illegally and all the funds were gone. Further JMV Law requested Scarrott to provide details and copies of the records of the Ramas’ transactions with Key. Scarrott did not provide any of this requested information and the Ramas had no further communication with Scarrott after this time.
  7. [53]
    I make the following findings in relation to Scarrott and Key:
    1. The Respondents appear to have never formally acted for or represented the Vendor. The Respondents did not have any authority from the Vendor to negotiate with any buyers of the Vendor’s land at Pimpama on behalf of the Vendor. See the comments relating to the “Developer” of annexure 3 of the supplementary bundle of documents filed with OFT’s submissions filed in the Tribunal on 17 March 2023.
    2. 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.
    3. Scarrott had been marketing residential housing lots in the Gold Coast region and at Pimpama prior to 2018.
    4. All funds were paid into the business account of Key to Australia Pty Ltd ATF Scarrott Family Trust. Scarrott informed clients that this was a “trust account”. The Ramas always believed and Scarrott gave them the impression that their funds were being paid into a real estate agent’s trust account and held in this trust account pending payment of the deposit under the P&C and payment of the expenses to facilitate the subdivision of the Land.
    5. Scarrott arranged for ZPG to lodge a development application relating to lots 280, 281, 282, 333, 334 and 335 at Pimpama with the Council on 26 August 2019. See letter from ZPG to Gold Coast Mayor Tom Tate dated 23 April 2020 on page 516 to 523 of the Document Bundle attached to the Referral.
    6. Scarrott would have had discussions with officers of the Council and/or ZPG regarding his plans and proposals for the six lots (i.e. lots 280, 281, 282, 333, 334 and 335) prior to receiving the formal advice from ZPG on 23 April 2019. Scarrott mentions the six lots in an email dated 22 March 2019 to claimants P&B Crozier in Tribunal file OCL071–21.
    7. Scarrott admitted that he had meetings with Council officers from September 2019 onwards where the officers raised 12 concerns with the applications and advised Scarrott that the applications may have to be amended.
    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. In the criminal prosecution of Scarrott there were approximately 18 affected parties.
    10. Scarrott admitted to forging letters from the ANZ bank to buy time.
    11. Scarrott attempted to obtain finance with Latrobe Financial Ltd, but the valuations of the land fell short of the valuations required by the financier.
    12. Scarrott always described himself as a sales consultant or a licensed real estate agent not as a development consultant.
    13. Scarrott received advice from ZPG that the subdivision approval process with the Council would take three to four months. This process took much longer than expected and eventually the Council rejected Scarrott’s application. David Ransom (‘Ransom’), a director of ZPG, describes the response from Council as a “refusal”.
    14. He advised some claimants that once the six applications lodged by ZPG in August 2019 were approved by Council then the applications to Council for the rest of the lots would be approved “as of right” by Council without any delay or problems. This is contrary to the advice from Ransom of ZPG.
    15. 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 the New Zealand investors. This was not practical.
    16. 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.
    17. 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.
    18. Ultimately, the Council process took too long, Council rejected the applications, bank lending requirements became tighter, introduction of a foreign buyer’s surcharge was introduced into New Zealand, the COVID pandemic struck, and New Zealand banking institutions’ actions were delayed.

DAVID RANSOM AND ZONE PLANNING GROUP

  1. [54]
    David Ransom is a director of ZPG who are urban and regional planners.
  2. [55]
    Ransom has provided a sworn statement executed on 24 August 2020 which is on pages 505 to 646 of the Document Bundle attached to the Referral. Ransom has an Urban and Town Planning degree from the University of New England. Annexed to this statement are a fee proposal, terms of engagement and some attached correspondence with the Council.
  3. [56]
    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, and pages 509 to 515 of the Document Bundle attached to the Referral.
  4. [57]
    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. 
  5. [58]
    A development application to reconfigure or subdivide the Land with development plans was prepared by ZPG and lodged with the Council on 26 August 2019.
  6. [59]
    ZPG arranged to lodge applications for development approval for lots 280, 281, 282, 333, 334 and 335. There were many other lots at Pimpama which Scarrott arranged to be sold to other New Zealand investors. No applications for development approval were lodged for these other lots. Scarrott says that this was the case because he wanted to save costs and ZPG advised him that once the initial applications for the six lots 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.
  7. [60]
    The planning scheme that applies to the Land and the properties that were purchased by other New Zealand purchasers at Pimpama is the Gold Coast 2016 City Plan VS – page 509 of the Document Bundle attached to the Referral.
  8. [61]
    I note the advice, in particular paragraph 3, given to Key and Scarrott in the letter from ZPG dated 23 April 2019 (page 510 of the Document Bundle attached to the Referral). That is:

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

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

  1. [62]
    From Ransom’s statement he says that the Council assessment took much longer than anticipated and ultimately the application was refused by the Council on 11 June 2020. According to Ransom this delay and refusal/approval with conditions was “completely wrong”.
  2. [63]
    Ransom says that ZPG has no knowledge of the details of Scarrott’s New Zealand sales scheme.
  3. [64]
    The Tribunal called Ransom to give oral evidence on 7 March 2024. His evidence was:
    1. “Preapproval” refers to preliminary approval in s 43 of the Planning Act 2016 (Qld). The preliminary approval refers to the approval in the material change of use (‘MCU’) Council reference MCU201500641 for Pimpama Village development area approved by the Council on 14 November 2016. (See page 509 of the Document Bundle attached to the Referral).
    2. Lots 280, 281, 282, 333, 334 and 335 are part of the Pimpama Village development area.
    3. If an owner intends to subdivide a lot and build on the subdivided lot in the Pimpama Village development area and the proposed subdivision and buildings do not strictly comply with the Pimpama Village Planning Scheme (as contained in MCU201500641) then an application to the Council to seek relaxation of the conditions under the preliminary approval is required.
    4. This is what occurred in respect to the applications to Council for lots 280, 281, 282, 333, 334 and 335. There was no preliminary approval (‘pre-approval’) for these lots or any of the other lots in Pimpama being marketed by Scarrott.
    5. The applications to Council are usually straightforward because they do not require advertising and no third party has rights to object.
    6. Ransom never had a pre-lodgement meeting or any discussions with any Council officers before the actual application was lodged.
    7. Ransom was confident that the applications would succeed as there were similar developments at Southport and Varsity Lakes on the Gold Coast where the Council approved the developments with relaxed setbacks and parking requirements.
    8. Ransom acknowledged that there is no certainty of outcomes when making such applications with Council.
    9. Ransom also acknowledged that if the subdivision of any other lots at Pimpama was required then further applications to Council were required to be lodged and assessed by Council. There is no “as of right” procedure available whereby the other lots would be automatically approved (with relaxed setbacks and parking) if the applications for lots 280, 281, 282, 333, 334 and 335 were approved. Ransom denied giving any “as of right” advice to Scarrott.
    10. Ransom did discuss other consultants and contractors with Scarrott but he had no direct dealings with these consultants and contractors and he is not aware how much Scarrott paid them.
    11. He provided payment details to the Tribunal after giving evidence. ZPG were paid a total of $33,000 by Scarrott.

JURISDICTION

  1. [65]
    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. [66]
    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. [67]
    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. [68]
    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. [69]
    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. [70]
    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. The Ramas paid monies into the bank account of Key which is situated in Queensland.
    5. There was communication between Ramas and Scarrott (in Queensland) prior to the execution of the P&C and the payment of monies to Key by the Ramas in 2019. Further, the Ramas communicated with Scarrott, Key and JMV Law at various times after execution of the P&C.
  4. [71]
    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. [72]
    OFT have outlined a number of “representations” made by the Respondents to the Ramas from around February 2019 to October 2019 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. [73]
    There is sufficient evidence for me to find that there were representations made by Scarrott to induce the Ramas to pay funds into the bank of Key for purchase and subdivision of the Land which were false and/or misleading. They are:
    1. That the approval of the Council for the subdivision or reconfiguration of the Land was a mere formality.  Scarrott advised the Ramas that he had identified this opportunity before other investors and there was an opportunity for investors to purchase the Land, arrange for the Council, develop the subdivided lots and on-sell the subdivided lots for a profit and provide a return to investors. Scarrott mentioned “pre-approval” to the Ramas. However, Scarrott was not telling the full story when he was selling the Land to the Ramas. When this representation was made Scarrott must have known about the full details of his plans regarding the proposed subdivision of the Land, plans to seek on-street parking and setback relaxations from the Council and that any such application was subject to Council processes. This was never disclosed to the Ramas.
    2. When Scarrott first contacted the Ramas about the purchase of the Land in February 2019 it is my view that he must have known about the necessity to obtain formal approval from the Council to reconfigure the Land and that the Council would have to approve relaxations in boundary setbacks, site cover and on street parking. This is outlined in the letter from ZPG to Scarrott dated 23 April 2024. I am of the view that Scarrott must have discussed these issues and his plans with Ransom of ZPG before Scarrott received the formal advice from ZPG on 23 April 2019. In any event the process of execution of the P&C and transfer of the funds from the Ramas to Key went on until May 2019. None of the issues with the Council approval were ever disclosed to the Ramas in this period of time.
    3. In February 2019 Scarrott advised the Ramas that if the whatever reason the funds are not achieved then their deposit will be refunded in full. If this meant that the Vendor would refund the deposit to the Ramas then this is not correct from a contract law perspective, The conditions of the P&C did not allow for this scenario. Further if Scarrott/Key were making this representation then there is ample evidence that they did not have the resources or borrowing potential to refund these monies to the Ramas.
    4. The Ramas were never advised by Scarrott about the issue of the “pre-approval”. That is the pre-approval only applied to the Pimpama Village Development area as a whole and not to the Land.
    5. All funds paid by the Ramas would be paid into an agent’s trust account and held there until disbursement. This is untrue and the Key account was a normal trading account for Key and not a regulated trust account.
    6. The Ramas were persuaded by Scarrott in or about August 2019 that they should cancel the P&C and enter into a normal contract to purchase the Land. This representation was untrue, and the Ramas had until June 2020 to complete the P&C. The new arrangement required the Ramas to borrow funds and use $135,000 of their own funds to complete the purchase of the Land in October 2020. In the meantime, Scarrott had the other funds totalling approximately $66,000 at his disposal. Some of these funds may have been used to prosecute the subdivision of the Land. However, all the correspondence from Scarrott to the Ramas up to June 2020 was misleading and not telling the true story of the status of the development application for the Land. Scarrott knew from discussions with Council officers in September 2019 that the development application for the Land was in trouble and there were 12 issues of concern for the Council and the application may have had to be amended. This was never disclosed to the Ramas. Scarrott always gave the impression in communications that any issues could be resolved. Even when the application was formally refused by the Council Scarrott was advising the Ramas that he had a “plan B”. See letter from Scarrott to the Ramas dated 12 June 2020. See pages 492 to 493 of the Document Bundle.
    7. Representations were made to the Ramas that the MCU approvals for Land would be approved by the Council and the development of subdivided lots could be achieved around June 2020. This is why the P&C was timed to be completed by June 2020 and that is why the Ramas were convinced to cancel the P&C and purchase the Land in October 2019. The purchase was undertaken with loans which were short term loans. That is why the Ramas were forced to sell the Land to minimise their losses. This is evident from the correspondence between the Ramas and Scarrott up to June 2020.
    8. It is evident from the evidence of the Ramas that they had full trust in Scarrott because of their previous good dealings with Scarrott.  Unfortunately, this trust was misguided as Scarrott was using every illegal and misleading trick in his dealings with the Ramas and the other New Zealand claimants to buy time.
  3. [74]
    In the negotiations the Respondents’ representations were in essence that the Council application process to subdivide the Land would proceed smoothly and was certain to be approved or was already approved and there were no time imperatives involved. Scarrott assured the buyers 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.
  4. [75]
    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. [76]
    Accordingly, I find that when Scarrott was making the above representations to the Ramas he was purposely being vague, and he failed to properly explain or disclose the underlying issues and problems involved. He gave them the impression that time was not an issue when plainly it was a real problem for Scarrott.
  6. [77]
    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 misrepresentation by a 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. [78]
    If Scarrott had fully explained and been truthful about the processes required for Council approval and that the whole scheme very much depended on timing, then it is probable that the Ramas would not have committed to the purchase of the Land and transfer of funds to Key. Therefore, I find the above representations were false and/or misleading.
  2. [79]
    Scarrott always gave the Ramas the impression that everything was in place to undertake the subdivision. The Ramas formed the impression that there would be no problems, and everything was ready to go. There were no approvals in place, the “pre-approval” only related to the Pimpama Village development area and not the Land, there was no certainty that the Council would approve the application with the requested relaxations and the success of the proposal depended on timing.
  3. [80]
    For Scarrott to bring the scheme to fruition would have required the Council to approve the application to subdivide Land, and if necessary, build townhouses on the subdivided lots. There was really no prospect of this happening in the timeframe promised by Scarrott (i.e. circa mid to late 2020) because of the time that would have been required to achieve these milestones.
  4. [81]
    Further, what corroborates the false, misleading and deceptive behaviour of Scarrott in the making of the above representations is deceptive/untrue information from Scarrott after the Ramas completed the purchase of the Land in October 2019 or the lack of communications. See also the admissions made by Scarrott to officers of OFT in 2020 and the material read to the Court in Scarrott’s and Key’s criminal proceedings where guilty pleas were entered by Scarrott and Key.
    1. Scarrott used the various claimants’ funds fraudulently and made failed attempts to obtain bridging finance from ANZ and Latrobe Financial. Scarrott has admitted that Key’s business was running at a monthly loss of between $75,000 and $120,000 per month and he was forging ANZ bank approval letters to buy time. There was no possibility of Scarrott or Key being able to honour their refund commitment unless they fraudulently converted other investors’ funds.
    2. 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. [82]
    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.

CLAIM AGAINST FUND

  1. [83]
    To succeed in their claim the Ramas must satisfy the provisions of s 82 of the AFAA. The provisions that may apply to the Ramas’ claim are ss 82(1)(a), (b) and (g). In s 80 there is a definition of “relevant person”. At all relevant times Scarrott was an “agent”.
  2. [84]
    What is an “agent”? The relevant sections are ss 8, 33, 41 and 80 of the AFAA. Pursuant to these provisions Scarrott was an “agent” regarding the relevant provisions of the AFAA.
  3. [85]
    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. [86]
    Section 26 of 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. [87]
    I find that the activities that Scarrott was undertaking for all the parties that have made claims against the Claim Fund fall squarely into the activities that are outlined in ss 26(1)(a) and (c) of the POA.

TRUST MONIES

  1. [88]
    Has Scarrott complied with ss 82(1)(a) and (b) of the AFAA? Notwithstanding the issue of any false and misleading representations made by Scarrott, I am of the view that some of the monies paid to Scarrott and Key were disbursed in accordance with the parties’ understanding of how the scheme was to operate. The deposit of $28,600 for the deposit under the P&C was certainly paid in accordance with the Ramas’ express authority.
  2. [89]
    A feasibility study was provided to the Ramas by Scarrott. See page 393 of the Document Bundle. In the feasibility study there is a reference to a management fee to Key of $33,000, legal costs of $2,000 and MCU plans/development approval costs of $22,000. In this claim Scarrott arranged for a development application (including plans) to be lodged with the Council. Therefore, it is probable that there was express or implied authority for Scarrott to use the Ramas’ funds for these purposes.
  3. [90]
    Further there was no evidence adduced in these proceedings that Scarrott/Key would only be entitled to be paid their management fee when the scheme had been completed   or the sales of the subdivided lots had been sold. This issue was never discussed between Scarrott and the Ramas. Therefore, it is probable that Scarrott/Key have transferred these funds with implied authority.
  4. [91]
    The Ramas transferred a total of $91,600 into Key’s bank account. After the payment of the deposit of $28,600, Scarrott had at his disposal the sum of $63,000. $57,000 was probably transferred with the Ramas’ express or implied authority. This leaves the sum of $5,000 which was probably transferred without the express or implied authority of the Ramas.
  5. [92]
    Therefore, I find that Scarrott/Key have breached ss 82(1)(a) and (b) of the AFAA.

REBATE

  1. [93]
    The Ramas are also claiming the sum of $13,000 relating to a rebate that Scarrott/Key owed to the Ramas from their purchase of lot 68 Japoon Street, North Lakes. This is a debt owed by Scarrott/Key to the Ramas. The Ramas probably have a claim to these monies under the general law.
  2. [94]
    The reason that the Ramas are claiming these monies is because Scarrott/Key promised to pay these monies as part of their initial contribution of $114,000.
  3. [95]
    There is no evidence before the Tribunal that Scarrott/Key ever contributed these monies to the scheme or to Key’s bank account. I suspect that this was another promise made by Scarrott to induce the Ramas to contribute funds and commit to the purchase of the Land.
  4. [96]
    To make a claim under the provisions of the AFAA the Ramas must demonstrate that they have suffered a loss in relation to their commitment to the purchase of the Land. Unfortunately for the Ramas there is no evidence that this promise was fulfilled by Scarrott/Key and Scarrott/Key paid this rebate into the Key bank account.
  5. [97]
    The promise and the debt arose by way of a letter from Scarrott to P Rama dated 18 October 2016. A claim made under provisions of the AFAA must be made in accordance with the time limits set out in s 85 of AFAA. I hereby set out s 85 of AFAA:
  1. 85
    General time limit for making claims
  1. (1)
    This section applies to a claim against the fund other than a claim because of, or arising out of, a marketeering contravention relating to the purchase of a non-investment residential property.
  1. (2)
    A person may make the claim against the fund for financial loss for the happening of an event only if the person makes the claim within the earlier of the following—
  1. (a)
    1 year after the person becomes aware that the person has suffered the loss;
  1. (b)
    3 years after the happening of the event.
  1. (3)
    However, if the person starts a proceeding in a court to recover the person’s financial loss within the time permitted to make a claim under subsection (2), the person may make the claim within 3 months after the proceeding in the court ends.
  1. (4)
    Subsection (3) does not limit the time allowed under subsection (2) to make a claim.
  1. (5)
    In this section—
  1. court includes QCAT.
  1. [98]
    A claim under the AFAA for this rebate must be made by 2019 at the latest. Therefore, I cannot approve this claim.

COMPLIANCE

  1. [99]
    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.
  2. [100]
    In s 80 of the AFAA is the definition of “relevant person”. At all relevant time Scarrott was a relevant person because he was an “agent”.
  3. [101]
    The Ramas were given the impression by Scarrott and Glover that the funds that they transmitted to Key were to be paid into a trust account. The Ramas transferred the sum of $91,600 to the “Key to Australia” bank account in 2019. It is not necessary for me to establish if Scarrott/Key established a trust account under Part 2 of AFAA.
  4. [102]
    I have previously found that Scarrott transferred the sum of $6,000 without implied or express authority.
  5. [103]
    It is sufficient for me to say that the Ramas paid the funds to Key.
  6. [104]
    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.
  7. [105]
    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.
  8. [106]
    On balance, Scarrott has contravened ss 21, 22 and 82(1)(a) and (b) of the AFAA.
  9. [107]
    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.
  10. [108]
    The provisions of ss 206, 207, 208 and 209 do not apply to the facts and circumstances of the Claim.
  11. [109]
    The facts and circumstances of the Claim that relate to Scarrott making false and misleading representations about a scheme that induced the Ramas to commit funds to Key, to enter into the P&C and to purchase the Land 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. [110]
    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. [111]
    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. [112]
    In essence objects of both pieces of legislation are to provide for a system of licencing agents and to protect consumers.
  4. [113]
    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. [114]
    On the balance of probabilities, in their dealings with the Ramas regarding the Land, I find as follows:
    1. Key and Scarrott have not complied with ss 82(1)(a), (b) and (g) of the AFAA.
    2. Key and Scarrott were “relevant persons” and “licenced agents” as contemplated in the provisions of the AFAA and POA, in particular s 80 of the AFAA.
    3. Key and Scarrott were carrying out the activities of real estate agents as outlined in s 26(1)(a) and (c) of the POA. That is facilitating/negotiating the purchase and sale of interests in real property.
    4. The Ramas lodged a valid claim pursuant to s 82 of the AFAA.
    5. The Ramas have suffered a financial loss.
    6. Key and Scarrott are responsible for the financial losses of the Ramas.
    7. The Ramas cannot claim any capital losses and interest. See s 113(5) of the AFAA.
    8. The Ramas have agreed that they will not claim any interest in relation to their borrowings to purchase the Land.
    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).
  1. [115]
    I calculate the Ramas’ losses as follows:

(a)

Ramas to Key in 2019 (see statement of ASB transfer)

- $91,600

(b)

Key paid to Vendor for deposit

$28,600

(c)

Ramas to Key purchase, October 2019 (see Statement ASB)

$135,000

(d)

Ramas to JMV Law loan pay out (ASB transfers)

- $90,000

- $65,100

(e)

Net receipt of proceeds of sale (JMV letter 8/10/20)

$279,164.96

(f)

I note that there were some bank transfer costs in the statement so I will round up these charges to $200.

Therefore, I calculate the total claim at $74,135.04.

  1. [116]
    I have had difficulty reconciling the figures note in P Rama’s statement, the ASB Bank Statement and the reconciliation provided to me on 28 August 2024. In the reconciliation the Ramas are claiming that they transferred $8,500 for stamp duty and $2,680 for lawyer’s fees on 18 October 2024. The Ramas have not provided any proof of these transfers. The ASB bank statements do not show these individual transfers. I suspect that these fees were paid from the $135,000 transferred to JMV Law on 17 October 2014. So I disallow these claims.
  2. [117]
    Scarrott and Key are jointly and severally responsible for the Ramas’ financial losses.
  3. [118]
    Pursuant to section 116(3) of the AFAA, Scarrott and Key are jointly and severally liable to reimburse the Claim Fund in the amount of $74,135.04.

Footnotes

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

Close

Editorial Notes

  • Published Case Name:

    Rama v Key to Australia Pty Ltd & Anor

  • Shortened Case Name:

    Rama v Key to Australia Pty Ltd

  • MNC:

    [2024] QCAT 401

  • Court:

    QCAT

  • Judge(s):

    Poteri

  • Date:

    20 Sep 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
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

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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