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Perkins v Key to Australia Pty Ltd[2024] QCAT 608

Perkins v Key to Australia Pty Ltd[2024] QCAT 608

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Perkins v Key to Australia Pty Ltd & Anor [2024] QCAT 608

PARTIES:

Anthony John Perkins

(applicant)

v

KEY TO AUSTRALIA Pty Ltd (deregistered)

(first respondent)

graham mark scarrott (a bankrupt)

(second respondent)

APPLICATION NO/S:

OCL065-21

MATTER TYPE:

Other civil dispute matters

DELIVERED ON:

20 December 2024

HEARING DATES:

16 June 2023; 7 March 2024; 21 June 2024; 8 August 2024; 1 October 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 $158,298 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 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 $158,298.

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

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 & Anor [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] CCT PC020 – 06

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 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 (‘Supplementary Document Bundle’). 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 in September 2019 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 and is not corroborated.
  9. [9]
    The claimants were ordinary everyday New Zealanders (except for one Australian claim) who trusted Scarrott. 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 April 2019. No applications were lodged with the Council to subdivide any other lots.
  13. [13]
    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.
  14. [14]
    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.
  15. [15]
    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.
  16. [16]
    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.
  17. [17]
    Ironically some of the claimants, including Perkins, had the resources to complete the purchase of a lot and retain the lot and have seen a substantial increase in the value of their lot and thus they have not suffered a financial loss.

REASONS FOR DECISION

PERKINS AND CLAIM

  1. [18]
    The Applicant, Anthony John Perkins (‘Perkins’) was at all relevant times a resident of New Zealand.
  2. [19]
    Pursuant to s 82 of the AAFA, Perkins lodged a claim (‘Claim’) on 3 September 2020 against the Claim Fund which is administered by OFT. The Claim was made within the time stipulated in s 85 of AFAA.
  3. [20]
    Pursuant to s 95 of the AFAA the claim was referred (Referral) to the Tribunal on 31 August 2021 for determination.
  4. [21]
    All the other claims made by the other New Zealand claimants have been determined. However, Perkins’s claim has taken a substantial time to determine. The reason for this delay has been the way that Perkins has presented his evidence to substantiate the Claim. I advised Perkins that he must provide a full reconciliation of his financial dealings with Scarrott/Key, when and how those funds were transferred, full details of the purchase and sale of any land and each item on the reconciliation must be supported by documentary evidence. Accordingly, I have had great difficulty in reconciling his figures.
  5. [22]
    The reasons why this is may be the case are:
    1. Perkins says that the whole Scarrott saga has caused great distress to Perkins and his family. He says that he now suffers from depression because of his losses and his marriage has been affected. This is unfortunate and understandable.
    2. Perkins has used corporate entities, such as Anaton Nelson Limited and Anaton GC Pty Ltd (‘Anaton GC’) to undertake some of the business with Scarrott and he used Anaton GC to purchase land at Pimpama. In this case it was lot 334 Pimpama (‘Land’). Anaton subsequently sold the Land for a net profit.
    3. It should also be noted that Perkins has used Anaton and Anaton Nelson Limited borrow funds and to pay funds to Key and other expenses/costs regarding the purchase and sale of the Land.
    4. Perkins accepts that the net profit that Anaton made from the resale of the Landshould be taken into account in the determination of the Claim and the assessment of any financial loss.
    5. Some of the funds transferred to Scarrott/Key and JMV Law were facilitated by third parties through loans arranged by Perkins (Anaton) and/or Scarrott.
    6. There were numerous money transfers from various parties in New Zealand to various parties in Queensland and these transfers occurred some years ago.

LEGISLATION

  1. [23]
    For reference I outline the relevant legislative provisions of the AFAA and Property Occupations Act 2014 (Qld) (‘POA’):
    1. Ss 6, 8, 21, 22, 33, 77, 80, 82, 84, 85, 95, 105, 113 and 116 of the AFAA.
    2. Ss 12, 26, 97, 115, 154, 155, 206, 207, 208, 209, and 212 of the POA.

REFERRAL

  1. [24]
    OFT has raised several issues that should be considered by the Tribunal in submissions dated 6 July 2022 and filed in the Tribunal on 6 July 2022.
  2. [25]
    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 Perkins entered the arrangements.
    4. Section 85 of AFAA requires a claim to be lodged within the earlier of:
      1. (i)
        1 year after the Applicant became aware that he suffered financial loss; or
      1. (ii)
        3 years after the happening of the event that caused the Applicant to suffer loss.
    5. 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.
    6. Whether the funds transferred to Key for development services are monies entrusted to the Respondents.
    7. Whether failure of the Respondents to refund monies to Perkins as promised is a false representation about property or a breach of an agreed contractual provision.
    8. 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. One of these issues relates to the ability of Key to subdivide the Land and/or whether Perkins would not be required to pay for the balance of the purchase price of the Land to the Vendor. Another issue relates to Scarrott/Key holding monies in trust for Perkins. That is Scarrott always advised Perkins that the monies would be held in a trust account administered by Key or JMV Law.

EVIDENCE

PERKINS

  1. [26]
    I found Perkins to be open and honest when giving evidence oral evidence. However, I have had to reconstruct what I believe is the most reasonable chronology and outline of the interactions between Perkins (and his corporate entities), Scarrott/Key and JMV Law. I have also had to attempt to reconcile the transfer of funds from Perkins (and his corporate entities and financiers) to Scarrott/Key or JMV Law.
  2. [27]
    I refer to my previous comments about Perkins. I do not agree with all of Perkins’s assertions about the money transfers, who made them, when they were made and who were the beneficiaries of the transfers.
  3. [28]
    Perkins provided a statement (‘Perkins’s Statement’) to OFT dated 29 October 2020 which is exhibited on pages 10 to 15 of the Referral. This statement also exhibits other relevant material. Perkins also gave evidence at the various hearings by Teams and remote conferencing.
  4. [29]
    Perkins met with Scarrott in 2017 in New Zealand to explore the opportunity of purchasing a property in Australia. Perkins was introduced to Key through radio advertising and attended a seminar sponsored by Key. Scarrott outlined investment opportunities in Australia.
  5. [30]
    In 2017 Perkins says that he paid 2 deposits of $1,000 to secure the purchase of rental properties at lot 928 Arrowsmith Crescent, Ormeau Ridge (‘Ormeau’) and lot 102 Opal Lane, Pimpama (‘Opal’). The only evidence that has been produced by Perkins regarding an expression of interest is a copy of an expression of interest signed Perkins and dated 13 December 2018. The property referred to in this expression of interest is the Land (lot 334) and the purchase price is $286,000. Therefore, I cannot allow Perkins’s claim for this amount of $2,000.
  6. [31]
    Between 20 December 2017 and 13 November 2018 Perkins says that he transferred or arranged for the transfer of the following sums:
    1. 21 December 2017: $114,300. Perkins says that these funds were paid into the Key Bank account held with the CBA. See exhibit AJP1 to Perkins’s Statement. In fact, exhibit AJP1 is a copy of a bank remittance from SBS Bank showing a transfer of $113,360.20 to the Key bank account. There was also $1,000 paid to Key regarding the expression of interest for the Land dated 13 December 2018. The total paid from these transactions is say $114,300.
    2. 15 June 2018: $78,875. This transfer was made by Anaton Nelson Limited. See exhibit AJP2 to Perkins’s Statement. This document shows a payment of $NZ86,719 (i.e. $A78,875) made on 12 June 2018 from Maia Financial to Anaton Nelson Limited on 12 June 2018. In an email from Perkins to the Tribunal dated 18 October 2024 Perkins has produced copies of a Business Account summary from the ANZ Bank for Anaton Nelson Pty Ltd which shows a transfer to Key on 15 June 2018 of say $78,875 (i.e. $NZ 86,719.08).
    3. 12 November 2018: $155,887. This is a letter from Young Hunter Lawyers in New Zealand advising of a loan advance to Anaton Nelson Limited and the transfer of these monies (and the charging of other costs) to JMV Davis Law. The actual amount transferred was $155,871.44 ($155,871).
  7. [32]
    Scarrott always assured Perkins that any monies transferred to Key/Scarrott would be held in a trust account or in the trust account of JMV Law.
  8. [33]
    The purchase of the rental properties did not proceed but Scarrott/Key did not return the funds to Perkins but convinced Perkins that Key would retain these monies under their control.
  9. [34]
    In or around May 2018 Scarrott communicated with Perkins regarding another opportunity whereby Scarrott had identified six lots that could be subdivided, and affordable housing could be built, and these subdivided lots could be sold to first homebuyers. Scarrott advised Perkins that this was a straightforward process with Council approval to subdivide a mere formality and the building process to take a few months. Scarrott sent Perkins projected costings and a feasibility study in May 2018. See page 20 of the Referral.
  10. [35]
    In November 2018 Perkins flew to the Gold Coast to meet with Scarrott and inspect the land at Pimpama and he was personally assured by Scarrott that his monies were safe and were being held in a trust account. He also confirmed that the projected profits from the scheme of purchasing and subdividing the Land was realistic and achievable.
  11. [36]
    The scheme involved Perkins purchasing the Land for $286,000 with half the purchase price to be financed by Vendor’s finance on competitive terms. Scarrott advised Perkins that he would not have to contribute more funds other than the monies held by Key (i.e. $114,300) and Scarrott would cover all the project costs. Perkins approved Scarrott using his existing funds held in trust for the purchase of the Land.
  12. [37]
    Scarrott advised Perkins that this investment was “gilt edged” and that he had pre-approval from the Council to subdivide the Land. Scarrott explained that the Council approval was a mere formality and that the subdivided lots could be on-sold to pay all purchasing costs and achieve a profit. Scarrott also advised Perkins that he should purchase the Land now as the price of the Land was expected to be increased by the Vendor.
  13. [38]
    There was some evidence given by Perkins that he executed a P&C and that changed to a normal contract later. There is no documentary evidence before me regarding the P&C. In any event this is not a significant issue.
  14. [39]
    Accordingly based on the representations Scarrott made, Perkins arranged for Anaton GC to purchase the Land from the Vendor for $286,000. This was achieved with Vendor’s finance of $143,000.
  15. [40]
    In hearings Perkins gave evidence that Scarrott initially advised him that he would not have to contribute any further funds, other than his initial payment of $114,300 and Vendor’s finance of $143,000. See email from Scarrott to Perkins dated 19 August 2019. This changed and Scarrott convinced Perkins to borrow other funds from New Zealand to complete the purchase. Perkins arranged finance of $155,871 to complete the purchase.
  16. [41]
    It should be noted that the loan details are contained in a letter from Young Hunter Lawyers, New Zealand to Anaton Nelson Limited dated 12 November 2019. Exhibit AJP3 to Perkins’s Statement.
  17. [42]
    Details of the settlement figures and financing figures for the purchase of the Land on 13 November 2019 are contained in a letter from JMV Law. A copy of this letter outlining the settlement figures and details of contributions made by Perkins and other parties was only provided to the Tribunal recently.
  18. [43]
    The details of the purchase of the Land are:

Purchase Price

$286,000

Less deposit held by Vendor

$28,600

Adjustments

Plus

$222.36

Less

$138.12

Plus default interest

$5,898.73

Plus additional legal costs

$660

Total

$264,042.97.

  1. [44]
    The letter from JMV Law shows that the purchase price of $264,042.97 was paid by Perkins with the Anaton Nelson Limited loan from New Zealand $155,871 and Vendor finance of $143,000. That is a total of $264,042.97. At settlement Perkins had to pay other costs outlined in the letter. They are:

JMV Law

$1,800

Search, sundry fees and GST

$829.38

Stamp Duty

$8,559.83

Agent’s fee

$107.25

Lender’s fee

$5,284.80

Total

$16,581.26.

  1. [45]
    The net amount available to Perkins after the purchase of the Land was an amount of $18,247.21. This amount was paid to Perkins (or his related entities) and should be considered in determining final orders.
  2. [46]
    Between November 2018 and most of 2019 Perkins was given various reasons why the subdivision of the Land had been delayed. Scarrott kept assuring Perkins that Council approval to subdivide was not a problem and it would be approved in a “couple of weeks”. Even in May 2020 Scarrott was assuring Perkins that the Council approval would be forthcoming and there was no cause for concern.
  3. [47]
    In June 2020 Perkins was informed that the Council was not going to approve the subdivision. Even at this stage Scarrott was still trying to convince Perkins that the project was still on track. He advised Perkins that all funds could be accounted for, and the project was “not dead”.
  4. [48]
    In June 2020 Ms Sharney Rowe of JMV Law informed Perkins that she believed Scarrott had been using clients’ funds illegally and the funds were all gone.
  5. [49]
    Perkins says that holding the Land was costly in terms of interest and other costs, so he decided to sell the Land. This sale was completed on 13 September 2021. Perkins has supplied a copy of the settlement letter from JMV Law. The figures are:

Sale price

$360,000

Less deposit

$36,000

Plus adjustments

$204.34

Total

$324,204.34.

  1. [50]
    Available to Perkins from the sale was $324,204.34. Out of these funds JMV Law paid $693.91 to the Council, JMV fees $1,035.85 and another fee of $117.92. Therefore a net amount of $322,356.66 was available to Perkins (Anaton GC). It seems that Perkins must have paid out the Vendor’s loan and his New Zealand loan because none of the funds available at settlement were used to pay out these loans.
  2. [51]
    Perkins also says that he made other payments after he purchased the Land. They are:
    1. Default interest $7,388.34 to the Vendor on 26 June 2020. See exhibit AJP11 of Perkins’s Statement.
    2. Council and water charges of $2,161,08. See paragraph 42 of Perkins’s Statement.
    3. Default interest to the Vendor on $10,486.68 on 5 October 2020. See exhibit AJP13 of Perkins’s Statement.
    4. $7,920.00 commission to Natgroup on 14 September 2021 for the sale of the Land.
  3. [52]
    At the hearings I raised the issue of the deposit of $36,000 that was paid to the selling agent, Ormeau Real Estate Pty Ltd T/A Natgroup, and how this amount should be considered in the calculation of the Claim. Given that the commission of $7,920 has been included in the above expenses, the total of $36,000 should be considered in calculating the financial loss of Perkins.

ADMISSIONS BY SCARROTT

  1. [53]
    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, deposits, Key’s expenses and paying other New Zealand purchasers. Other New Zealand claimants have corroborated Wilson’s evidence that Scarrott made admissions to them that he was using claimants’ funds without consent.
  2. [54]
    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 of the Supplementary Document Bundle.
  3. [55]
    However, Scarrott does make some comments on some of the questions raised by Mr Gough of OFT in an email to Scarrott dated 12 July 2021. His comments are underlined and appear on page 93 of the Referral. Scarrott appears to raise some of the questions that I have regarding the Claim. He says:
    1. The two $1,000 deposits for the expressions of interest for the Opal and Ormeau properties were never paid to Key.
    2. Scarrott accepts that the initial funding for Ormeau of $114,300 was used for the initial funding for the purchase of the Land.
    3. The $78,875 funding was for a deposit for the purchase of a unit at Bela Apartments.
  4. [56]
    I am of the view that generally Scarrott’s admissions and statements are self-serving. However, his comments on the issues raised in the previous paragraph appear to be accurate regarding the first two points. Regarding point (c) above, Perkins has provided copies of an ANZ bank statement for Anaton Nelson Limited for the month of June 2018. The bank statement shows that $NZ86,719.08 (i.e. $78,875) was transferred to Key’s bank account on 15 June 2018.

SCARROTT AND KEY

  1. [57]
    Scarrott did not attend the hearings to give evidence. He provided an unsworn statement (‘Scarrott’s Statement’) (pages 85 to 94 of the Supplementary Document Bundle).
  2. [58]
    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. [59]
    Details of Scarrott’s activities are outlined on page 1 to 26 in the Supplementary Document Bundle. 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. [60]
    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. [61]
    I make the following findings in relation to Scarrott and Key:
    1. The Respondents and the Vendor appear to have no formal arrangements for any of the Respondents to market the Vendor’s land at Pimpama.
    2. The Respondents appear to have never formally acted for or represented the Vendor. The Respondents did not have any authority from the Vendor to negotiate with any buyers of the Vendor’s land at Pimpama on behalf of the Vendor. See the comments relating to the “Developer” of annexure 3 of the Supplementary Documentary Bundle.
    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 trustee for the Scarrott Family Trust. Scarrott informed clients that this was a “trust account”.
    6. Perkins always believed and Scarrott gave him the impression that his funds were being paid into a real estate agent’s or a solicitor’s trust account and held in this trust account.
    7. These funds also include the payment for the deposit under the purchase contract and payment of the expenses to facilitate the subdivision of the Land. This is accepted by all parties.
    8. 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 Tom Tate dated 23 April 2020 – page 105 to 112 of the Referral.
    9. Scarrott admitted that he had meetings with Council officers in September 2019 where the officers raised 12 concerns with the applications and advised Scarrott that the applications may have to be amended.
    10. 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.
    11. In the criminal prosecution of Scarrott there were approximately 18 affected parties.
    12. Scarrott admitted to forging letters from the ANZ bank to buy time.
    13. Scarrott attempted to obtain finance with Latrobe Financial Ltd, but the valuations of the land fell short of the valuations required by the financier.
    14. Scarrott always described himself as a sales consultant or a licensed real estate agent not as a development consultant.
    15. Scarrott 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 it.
    16. He advised some claimants that once the six applications were approved by Council then the applications to Council for the rest of the lots would be approved “as of right” by Council without any delay or problems. This is contrary to the advice from Ransom of ZPG.
    17. At one stage Scarrott approached the Vendor for Vendor finance to complete the contracts. The Vendor would agree to providing 50% Vendor finance with the balance to be provided from the funds to come from New Zealand. This was not practical in most cases. The facts in these proceedings show that Perkins was induced into participating in the 50% Vendor finance and purchasing the Land (lot 334).
    18. Admissions were made by Scarrott that he expended the funds by paying for the deposits of various New Zealand investors for the purchase of the land under other P&Cs, Key’s expenses, expenses relating to the Council application process and personal expenses.
    19. Scarrott admitted that Key’s business was running at losses of between $75,000 and $120,000 per month. He was desperate for further sales so investors would provide him with funds to keep the scheme going. That is buying time.
    20. Ultimately the Council process took too long, Council rejected/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. [62]
    David Ransom (‘Ransom’) is a director of ZPG who are urban and regional planners.
  2. [63]
    Ransom has provided a sworn statement executed on 24 August 2020 which is on pages 95 to 235 of the 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. [64]
    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, pages 98 to 104 of the Document Bundle.
  4. [65]
    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 106 of the Referral.
  5. [66]
    In the letter from ZPG to Key dated 23 April 2019 the Land is noted as being one of the lots where development applications were proposed to be lodged by ZPG.
  6. [67]
    Scarrott says that it was proposed to lodge six development applications with the Council for the six lots, including lot 334, referred to in Ransom’s letter to Scarrott dated 23 April 2019. This was the case because Scarrott wanted to save costs as 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.
  7. [68]
    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 98 of the Referral.
  8. [69]
    I note the advice, in particular paragraph 3, given to Key and Scarrott in the letter, in particular paragraph 3, from ZPG dated 23 April 2019 (page 99 of the 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. [70]
    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. [71]
    Ransom says that ZPG has no knowledge of the details of Scarrott’s New Zealand sales scheme.
  3. [72]
    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 588 of 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. [73]
    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. [74]
    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. [75]
    In Freehold the court held that the activities occurred in Queensland. However, the court at page 425 stated:

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 **426 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. [76]
    The matter of Goodchild v Ferrantino [2007] CCT PC020 – 06 (‘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 all the activities occurred in Queensland then 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 for 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. [77]
    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. [78]
    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. Perkins and his related entities paid monies into the bank account of Key which is situated in Queensland.
    5. There was communication between Perkins (in New Zealand) and JMV Law and Scarrott (in Queensland) prior to Perkins/ his related entities executing documentation and transferring funds to Key for the possible purchase of another property and the purchase of the Land. Further Perkins communicated with Scarrott/Key and JMV Law in Queensland after the transfer of funds and committing to the purchase of the Land.
    6. Perkins travelled to the Gold Coast in November 2018 and met with Scarrott where he discussed the issue of the retention of his funds and the scheme to purchase the Land.
  4. [79]
    By taking the above facts into account I find that the activities of Scarrott/Key took place predominantly in Queensland. I find that he 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. [80]
    OFT have outlined a number of “representations” made by Scarrott/Key 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. [81]
    Representations 1, 2, 3, 4 and 5 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 configured into smaller lots.
    2. Representation 2 – The Respondents planned to reconfigure this land into three smaller lots and on-sell them to generate substantial profit for investors.
    3. Representation 3 – The Respondents had placed a hold on six Pimpama Village land parcels and it would be “a very straightforward proposition” for GC Council to give their approval within a few months.
    4. Representation 4 – The Applicant could participate in this scheme by:
      1. (i)
        Purchasing one of the six reserved Pimpama Village land parcels for $286,000 known as Proposed Lot 334 Pimpama Village (Lot 334);
      1. (ii)
        Financing half of the purchase price with Vendor finance the Respondents had or would arrange;
      1. (iii)
        Investing an initial sum sufficient to cover the deposit payable for the land parcel and its reconfiguration.
    5. Representation 5 – Perkins would not need to contribute any further funds because the Respondents would meet all further expenses, such as the Vendor finance costs, until the smaller lots were sold.
  3. [82]
    There is sufficient evidence to find that, prima facie, Representations 1, 2, 3, 4 and 5 are true. However, Scarrott was not telling the full story when he was selling the scheme and Land to Perkins. When these representations were made leading up to Perkins committing to the purchase of the Land in 2019 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 setbacks relaxation 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.
  4. [83]
    Perkins gave oral evidence that Scarrott advised him and gave him the impression that the Council approval to subdivide the Land was just a formality and a certainty to be approved. Scarrott did not inform or disclose to Perkins the concerns Council officers expressed to Scarrott that the applications may have to be amended.
  5. [84]
    In April 2019 Scarrott had the benefit of Ransom’s formal advice and he had a meeting with Council officers in September 2019 where the officers raised 12 concerns with the applications and stated 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, not just a case of paperwork and approval may be difficult to achieve. None of this information was disclosed to Perkins.
  6. [85]
    Scarrott was using every trick (i.e. not disclosing any obstacles to be resolved in the approval process) at his disposal to have Perkins commit to the purchase. Initially Scarrott informed Perkins that he could purchase the Land with 50% Vendor finance and he would not have to contribute any other funds apart from committing the $114,300 which Perkins had previously deposited in the Key bank account for another purchase. This changed and Scarrott convinced Perkins to fund the balance of the purchase of the Land with funds that Perkins sourced from New Zealand.
  7. [86]
    Scarrott had informed Perkins that he had undertaken this type of subdivision and sale in the past and he had significant experience in this type of development. There is no evidence that this is the case.
  8. [87]
    The feasibility study and projected returns, which are exhibit AJP5 of Perkins’s Statement, are on page 20 of the Referral. They disclose 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 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 Perkins.
  9. [88]
    I interpret Scarrott’s comment that Council approval was a mere formality as Scarrott’s guarantee that the Council application process to subdivide the Land would proceed smoothly and was certain to be approved or was already approved (with requested relaxations) and there were no time imperatives involved. Scarrott gave Perkins the impression that everything would sail through smoothly and that sales of the subdivided lots would happen easily, and the proceeds of these sales would cover the initial purchase price, less the deposit and other costs, of the Land and produce a return for Perkins.
  10. [89]
    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.
  11. [90]
    Accordingly, I find that Representations 1, 2, 3, 4 and 5 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. He failed to disclose the advice that he had received from Ransom.
  12. [91]
    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 043. 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”.
  13. [92]
    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 Perkins would not have committed to the purchase of the Land and transfer of funds to Key. Therefore, I find Representations 1, 2, 3, 4 and 5 were false or misleading.
  14. [93]
    For Scarrott to bring the scheme to fruition would have required the Council to approve the applications to subdivide the Land, 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.
  15. [94]
    In summary I find that Scarrott/Key made the following representations to Perkins to induce him to enter into the P&C which were false and/or misleading:
    1. The proposal to subdivide the Land into three lots with approved plans to build townhouses was a formality and not difficult for Council.
    2. The funds paid by Perkins to Key would be paid into a trust account.
    3. When Perkins committed to the purchase of the Land, he agreed that the funds held in the Key account (i e $114,300 plus $78,875) could be used to pay the deposit and the other expenses to prosecute the subdivision of the Land.
    4. Initially Scarrott represented to Perkins that he could purchase the Land with a contribution of $114,300 plus 50% Vendor finance and Scarrott would take care of the rest of the costs. This changed and Scarrott convinced Perkins to arrange funding from New Zealand to pay for the balance of the purchase price of the Land.
    5. The Council approval would only take a matter of weeks or months and then the subdivided lots could be sold quickly to repay for the purchase price of the Land, and all subdivision costs and return a profit to Perkins.
  16. [95]
    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.
  17. [96]
    A general observation of Perkins 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 Perkins and the other claimants asked for updates.

CLAIM AGAINST FUND

  1. [97]
    To succeed in his claim Perkins must satisfy the provisions of s 82 of the AFAA. The provisions that may apply to the 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. [98]
    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. [99]
    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: he was acting as a property developer or giving advice as a property developer.
  4. [100]
    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. (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. [101]
    I find that the activities that Scarrott was undertaking for Perkins 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. [102]
    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 only some of the monies paid to Scarrott and Key were disbursed in accordance with the parties’ understanding of how the scheme was to operate. The deposit of $28,600 paid to the Vendor for the purchase of the Land was certainly paid in accordance with Perkins’s express authority. Perkins gave evidence that the management fee $30,000 noted in the development proposal (page 20 of the Referral) was not mentioned or discussed with Scarrott. Scarrott did advise Perkins that he would take care of all costs until the subdivided lots were sold. There may be some question whether Scarrott was to receive the management fee up front or when the subdivided lots were sold. However, the other funds, $164,571 (i.e. $114,300 less $28,600 plus $78,871) should only have been used to prosecute the application to the Council to subdivide the Land and improve the subdivided lots.
  3. [103]
    Scarrott did engage ZPG and other consultants to prepare plans and lodge applications for six lots, including the Land. Therefore, any of these costs must be amortised over the six lots. Ransom gave evidence that ZPG’s fee was $33,000 so the share for the Land was $5,500. Even if one was to assume that the other costs were $300,000 then the share for Perkins was $50,000. An estimate of the total payable for the prosecution of subdivision of the Land was $30,000 plus $5,500 plus $50,000 being a total of $88,500. This amount is much less than the funds (i.e. $164,571) that Perkins assumed were available or should have been available to him. These funds should have been retained by Key in the Key bank account which Scarrott always advised Perkins was a trust account.
  4. [104]
    I note that Scarrott gave the impression to Perkins that his funds would be held in a trust account. It is difficult to determine the full details of the express and implied authority that Scarrott was to hold the monies on behalf of Perkins for the payment of expenses to progress the Council applications from the conversations and correspondence between Perkins and Scarrott/Key. These events occurred some years ago. Also, the details of payments to other consultants and contractors (if any) have not been produced to the Tribunal to ascertain how much was paid to these parties. Notwithstanding this lack of clarity, I find that there was an express/implied authority that Scarrott was to hold Perkins’s funds in trust and only disburse the funds for the deposit for the purchase of the Land, possibly the management fee and to prosecute the Council applications to subdivide the Land, not for other expenses. Therefore, I find that Scarrott/Key have breached s 82(1)(a) and (b) of the AFAA.
  5. [105]
    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 and his admissions that he was dishonest and acting without authority in his dealing and disbursement of money held by him.
  6. [106]
    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.
  7. [107]
    In s 80 of the AFAA is the definition of “relevant person”. At all relevant time Scarrott was a relevant person because he was an “agent”.

COMPLIANCE

  1. [108]
    Perkins was given the impression by Scarrott that the funds that he transmitted to Key were to be paid into a trust account. The international money transfer dated 21 December 2017 (page 15 of the Referral) refers to the payment “Key to Australia”. It is not necessary for me to establish if Scarrott/Key established a trust account under Part 2 of the AFAA.
  2. [109]
    It is sufficient for me to say that Perkins paid the funds to Key.
  3. [110]
    It is noted that Scarrott was not charged with or convicted of any contravention of the AFAA or POA. He was charged with and pleaded guilty of a contravention of the ACL.
  4. [111]
    Scarrott and Key pleaded guilty to breaches of the ACL. Scarrott’s admissions that he used investors’ funds dishonestly and fraudulently were outlined to the Court in these proceedings.
  5. [112]
    On balance Scarrott has contravened ss 21, 22 and 82(1)(a) and (b) of the AFAA.
  6. [113]
    Sections 154 and 155 of the POA refer to disclosure of a beneficial interest. These provisions do not apply to the facts and circumstances of the Claim.
  7. [114]
    The provisions of ss 206, 207, 208 and 209 do not apply to the facts and circumstances of the Claim.
  8. [115]
    The facts and circumstances of the Claim that relate to Scarrott making false and misleading representations about a scheme that induced Perkins to commit funds to Key and 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. [116]
    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. [117]
    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 undesirable practices associated with the promotion of residential property.
  3. [118]
    In essence the objects of both pieces of legislation are to provide for a system of licencing agents and to protect consumers.
  4. [119]
    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, any such inconsistencies and ambiguities should be exercised in the claimant’s favour.

FINDINGS

  1. [120]
    On the balance of probabilities, in their dealings with Perkins regarding the possible purchase of properties in Queensland and the purchase of 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. Perkins lodged a valid claim pursuant to s 82 of the AFAA.
    5. Perkins has suffered a financial loss.
    6. Key and Scarrott are responsible for the financial losses of Perkins.
    7. Perkins cannot claim any capital losses and interest. See s 113(5) of the AFAA.
    8. The limit for any claim is $200,000. See s 113(4) of the AFAA and regulation 25 of the Agents Financial Regulation 2014 (Qld).
    9. Perkins eventually used Anaton GC to purchase and sell the Land. Perkins has agreed that any net gain made by his corporate entities from the purchase and sale of the Land can be used and taken into account in determining the financial loss in the Claim.

CALCULATION OF FINANCIAL LOSS

  1. [121]
    Perkins has made a claim for $223,664.73. I do not agree with the way Perkins has calculated his financial loss and his reconciliation of financial loss. Further, Perkins has not disclosed:
    1. Details of the credit Perkins received from JMV Law after the purchase of the Land; and
    2. The balance of the deposit of $36,000 that Perkins would have received from his selling agents, Natgroup, after the agents deducted their commission.
  2. [122]
    Perkins has made a claim for $6,500 for his costs to travel to Queensland to meet Scarrott and inspect some land. No details of this trip or invoices have been provided by Perkins. I do not know if this trip included any other activities not associated with the Land. Accordingly, I do not allow this claim.
  3. [123]
    Perkins (Anaton GC) has made a claim for interest of $NZ14,424 for interest paid on the loan of $155,871. See FE Investments bank statement for transactions of Anaton Nelson Limited for June 2018. I allow this claim in the amount of say $13,700.
  4. [124]
    The figures that I used in the calculations were obtained from the settlement advice letters in November 2019 (purchase) and September 2021 (sale).
  5. [125]
    I calculate the financial loss as follows:
  1. 1:
    Amounts paid into Key Account:

$114,300 December 2017

$114,300

$78,875 June 2018

$78,875

Total

$193,175.

Key did pay the deposit of $28,600 to the Vendor out of monies held in the Key bank account. Therefore, the amount that should have been available to Perkins from the Key bank account was $164,575.

  1. 2:
    Costs and figures re purchase of the Land by Anaton GC:

Purchase price

$286,000

Less deposit by Key

$28,600

Total

$257,400

This purchase price was paid and facilitated by way the 50% Vendor loan of $143,000 and the loan arranged in New Zealand by Perkins of $155,871 and paid into the trust account of JMV Law.

Plus:

Fees and adjustments

$84.24

Fees – JMV Law

$1,800

Outlays – JMV Law

$616.07

GST – JMV Law fees

$213.31

Default interest

$5,898.73

Additional legal costs

$660

Stamp duty

$8,559.83

Agent’s fee

$107.25

Lender’s fee

$5,284.80

Total

$23,224.23 (say $23,224).

For the purchase of the Land Perkins required

$257,400

Plus miscellaneous expenses as above

$23,224

Less Vendor finance

$143,000

Total required at settlement to purchase the Land

$137,624

JMV Law had available an amount of $155,871 in trust to complete the purchase of the Land and pay all costs and adjustments. The amount of $155,871 was transferred to the JMV Law trust account by way of a loan obtained in New Zealand by Perkins. Therefore, an amount of $18,247.21 (say $18,247) was paid by JMV Law to Perkins (Anaton GC).

  1. 3:
    Sale of the Land by Anaton GC

As mentioned, the New Zealand loan ($155,871) and the Vendor finance ($143,000) were paid out by Perkins (Anaton GC) because there was no mention of these loans or any payouts for these loans in the settlement figures outlined in the letter from JMV Law to Perkins (Anaton GC) dated 8 October 2021.

The net amount received by Anaton GC was $322,356.66 (say $322,357). This sum is a net amount after payment of rates, JMV Law fees and a PEXA fee.

  1. 4:
    Other holding costs of the Land

Default interest to the Vendor

$7,388.34

Default interest to the Vendor

$10,486.68

Rates and water charges

$2,161.08

Natgroup’s commission for the sale of the Land

Young & Hunter, Lawyers in New Zealand estimated fees loan from FE Investments loan for $155,871

$7,920

$1,200

Total of holding costs

$29,156.10 (say $29,156).

  1. 5:
    Final calculation of amount available from proceeds of sale.

Net Proceeds sale of the Land

$322,357

Less above other holding costs

Sub Total

$29,156

$293,201

Plus deposit paid by Natgroup after sale of Land - commission of $7,920 has already been accounted for above in the other holding costs

$36,000

Plus credit from LMV Law after the purchase of the Land

$18,247

Sub total

$347,448

Less interest on loan – FE Investments $155,871

$13,700

Less amounts paid to Key on 15 June 2018.

$78,875

Less $114,300 paid to Key on 21 December 2017

$114,300

Sub total

$140,573

  1. 6:
    Net Financial Loss

Payout of loan Anaton Nelson Limited to JMV Law $155,871 plus Vendor loan $143,000

$298,871

Less proceeds of sale

$140,573

Final figure

$158,298

  1. [126]
    I cannot award any interest on the claim pursuant to s 113 of the AFAA. I allow the Claim in the amount of $158,298 under the provisions of the AFAA. Perkins has not provided sufficient evidence to substantiate any loss of opportunity and other financial losses.
  2. [127]
    Scarrott and Key are jointly and severally responsible for Perkins’s financial losses.
  3. [128]
    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 $158,298.
Close

Editorial Notes

  • Published Case Name:

    Perkins v Key to Australia Pty Ltd & Anor

  • Shortened Case Name:

    Perkins v Key to Australia Pty Ltd

  • MNC:

    [2024] QCAT 608

  • Court:

    QCAT

  • Judge(s):

    Member Poteri

  • Date:

    20 Dec 2024

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Airstrike Industrial Pty Ltd v Robertson [2014] QCATA 43
2 citations
Jump To
Cite 1 - [2014] QCATA 43
Cite 2 - [2014] QCATA 43
Dunn v Chief Executive, Department of Justice and Attorney General [2012] QCAT 476
1 citation
Jump To
Cite 1 - [2012] QCAT 476
Freehold Land Investments Ltd v Queensland Estates Pty Ltd (1970) 123 C.L.R 418
2 citations
Jump To
Cite 1 - (1970) 123 C.L.R 418
Cite 2 - (1970) 123 C.L.R 418
Goodchild v Ferrantino [2007] CCT PC 20
2 citations
Jump To
Cite 1 - [2007] CCT PC 20
Cite 2 - [2007] CCT PC 20

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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