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Prestige & Rich Pty Ltd v McGregor QDC 151
DISTRICT COURT OF QUEENSLAND
Prestige & Rich Pty Ltd v McGregor  QDC 151
PRESTIGE & RICH PTY LTD
JANEY ELLEN MCGREGOR OF THE OFFICE OF FAIR TRADING
75 of 2019
Appeal pursuant to section 222 of the Justices Act 1886 (Qld)
Magistrates Court at Holland Park
20 August 2019
31 May and 16 August 2019
MAGISTRATES – APPEAL AND REVIEW – QUEENSLAND – APPEAL – appeal against conviction – appeal against penalty – appeal against costs order – where appellant was convicted of offence under s 28(2)(a) Agents Financial Administration Act 2014 – interpretation of Division 5 Agents Financial Administration Act 2014 – where agent gave notice under s 26(2) Agents Financial Administration Act 2014 – where agent subsequently had written notice under s 27(2)(a) Agents Financial Administration Act 2014 – whether agent required to immediately pay amount pursuant to s 28(2)(a) or authorised to retain the funds and subsequently pay out pursuant to s 26(3) – whether the appellant was denied procedural fairness – whether the fine was manifestly excessive – whether the Magistrate erred in the quantum of the costs order –
Agents Financial Administration Act 2014 (Qld) ss 21, 22, 25, 26, 27, 28
Justices Act 1886 (Qld) ss 157, 158B, 222, 223, 226, 232A
Justices Regulation 2014 (Qld) s 19, sch 2
Richard Hong, general manager of the appellant, with leave
Dominic Robinson for the respondent
Office of Fair Trading for the respondent
- On 18 December 2018 the Appellant was convicted of an offence under s 28(2)(a) of the Agents Financial Administration Act 2014 (“the Act”). It was fined $5,000.00 and ordered to pay costs of $2,223.75. It appeals against conviction, penalty and the quantum of the costs order.
- The appeal is pursuant to s 222 of the Justices Act 1886. By reason of s 223, the appeal is by way of rehearing on the evidence given in the proceeding at first instance unless leave is given to adduce new evidence. The central issue in the appeal against conviction however, concerns the operation of the provisions of Division 5 of the Act.
- The Appellant is a licenced real estate agent which was trading under the name Stephanie To Realty. In February 2016, it was engaged by Hetalben Patel and Milan Patel (collectively referred to as “the vendor”) to sell a property in Sunnybank (“the property”). Mr Hong (“Hong”) is the general manager of the Appellant.
- A contract dated 11 March 2016 (“the contract”) was executed for the sale of the property to Jian Jien Li (“the purchaser”). The contract was executed, apparently on the purchaser’s behalf, by his son, Qiang Li. The contract was subject to a condition as to finance and nominated the Appellant as the deposit holder. Both the deposit and finance dates were 14 days after contract. The deposit of $24,500.00 was paid into the Appellant’s trust account on 21 March 2016. The contract provided that the buyer was entitled to the deposit if the contract was terminated without default by the buyer.
- The transaction, the subject of the contract, did not proceed to settlement. Rather, the purchaser purported to terminate pursuant to the finance clause. The vendor ultimately accepted that the contract was terminated on that basis. There was ultimately no dispute between the parties to the transaction that the purchaser was entitled to the return of the deposit, being the whole of the deposit. On that basis, the Appellant would not have been entitled to deduct, from the deposit, anything for a commission and, it would seem, would not have been entitled to a commission as between it and the vendor (although that issue does not arise for determination in this proceeding). The vendor requested the Appellant to release the deposit to the purchaser, as the purchaser had requested, but the Appellant did not do so.
- The Appellant asserted that it was entitled to retain the money until paying it to the vendor, notwithstanding the requests (including from the vendor) for the deposit to be paid to the purchaser. Further, it claimed the right to deduct commission, in the sum of $20,000.00, from the amount, leaving only $4,500.00 for the vendor. It wrote to the vendor on 3 June 2016 enclosing a cheque for $4,500.00 on the basis that it represented the deposit less the commission of $20,000.00. That was followed by a tax invoice of 6 June 2016 for the commission. The commission was claimed on the basis that, rather than being terminated on the basis stated by the parties, the contract was instead terminated by the mutual agreement of the vendor and purchaser or in circumstances where the deposit was liable to be forfeited.
- The vendor did receive a cheque for $4,500.00, but it appears that it was not directly from the money held in trust. The parties were content for this court to proceed on the basis that the whole of the deposit was part of the $28,722.00 transferred from the Appellant’s trust account to its general account on 3 June 2016. A cheque for $4,500.00 in favour of the vendor was then drawn on the Appellant’s general account. It is unnecessary to dwell on what ultimately occurred in terms of payment however, since it is the Appellant’s failure, at an earlier point in time, to have immediately paid the deposit monies to the purchaser, which founds the alleged offence.
- The management of money in a licensee’s trust account is regulated by the Act. Section 21 provides that an amount paid to a trust account must be kept in the account until it is paid out under the Act. The amount may be paid out only in a way permitted under the Act.
- Section 22 deals with permitted drawings from a trust account. Section 22(3) permits drawings, including for the payment of a transaction fee (including a commission), after a transaction is finalised. Section 22(4) provides that, if a dispute about the transaction fund arises, the transaction is not taken to be finalised until the agent is authorised to pay out the transaction fund under Division 5. A transaction fund means an amount held in an agent’s trust account for a transaction.
- Division 5 of the Act is composed of ss 25 to 28 and deals with payments from trust accounts if a dispute arises or is likely to arise. Section 25 of the Act provides as follows:
“25 Application of div 5
- (1)This division applies if—
- (a)an agent holds a transaction fund for a transaction under section 22; and
- (b)before the transaction fund is paid out under section 22, the agent becomes aware of a dispute, or considers a dispute may arise, between the parties to the transaction about entitlement to the transaction fund or part of the fund (the amount in dispute).
- (2)In this section—
party, to the transaction, does not include an entity acting for a party to the transaction.”
- It was common ground that Division 5 applied in this case. The Appellant was holding a transaction fund (the deposit) under s 22 and, before the fund was paid out, considered that a dispute had or may arise between the parties about the entitlement to the deposit. The Appellant was charged with an offence under s 28 of the Act and relies upon s 26. Those sections fall within Division 5. To understand the argument it is necessary to say more about the facts.
- On 21 March 2016, the purchaser’s solicitor sought an extension of time for, amongst other things, finance. On 23 March 2016, the same solicitors put forward a proposal which would have seen the purchaser’s son substituted for the purchaser and a waiver of the finance condition. Nothing appears to have come of that.
- By a facsimile dated 24 March 2016, sent to the solicitor for the vendor and copied to the Appellant, the solicitor for the purchaser advised that finance had been declined, that they had been instructed to terminate the contract and asked that the Appellant be authorised to refund the deposit to the purchaser directly.
- Having been authorised, by the vendor, to seek a copy of the letter declining finance, the Appellant sent an email of 29 March 2016 to the purchaser’s solicitor drawing attention to that part of the finance clause which required the buyer to take all reasonable steps to obtain approval and asking that a copy of all documents relevant to the finance application be supplied by 5pm on 31 March 2016.
- There were a number of communications on 31 March 2016. At 6.47am, the vendor sent a message to the Appellant requesting that the matter settle as soon as possible and asking that the deposit be released. It was also said that the vendor’s solicitor would be advised to email an acceptance of contract termination. At 10.57am Hong, sent an email to the vendor advising that the purchaser may not have good grounds to terminate in reliance upon the finance clause and strongly suggesting that the vendor clarify the matter with solicitors. The vendor sent an email to the Appellant advising that, after checking with their solicitor, a decision had been made to send an email accepting the termination. Somewhat confusingly that message bears a time of 9.31am, which is earlier than the Appellant’s email of 10.57am. An acceptance of termination was not communicated on that day.
- At 12.02pm the Appellant sent an email which expressed a concern that the vendor and purchaser may have reached “side agreements”.
- At 12.55pm, the vendor sent an email to Hong and the purchaser’s solicitor referring to the request for evidence of a decline of finance and requesting the matter be resolved before 5pm that day. At 2.46pm, the purchaser’s solicitor sent a reply, copied to Hong, attaching a decline letter and asking for confirmation of termination and refund of the deposit as a matter of urgency. The attached decline letter bore a 2013 date. At 4.14pm the vendor replied (copied to Hong) questioning the date of the decline letter.
- The Appellant then sent an email addressed to the vendor, the purchaser’s son and the purchaser’s solicitor. The document was signed and bore the handwritten time and date of 5.30pm on 31 March 2016. It purported to be a notice under s 26 of the Act. It stated, amongst other things, that: “in the result, the Seller has not authorised a release of the deposit as requested by the Buyer. A dispute on release of the deposit between the vendor and the purchaser has arisen or may arise.”
- The vendor was nominated as the party which the Appellant considered was entitled to the amount in dispute on the basis that the purchaser had failed to demonstrate that all reasonable steps had been taken to obtain finance. It gave the necessary notification pursuant to s 26 of the Act that it would be authorised to pay the amount in dispute on or after the stated date of 1 June 2016 unless certain things, as provided for in s 26, occurred.
- Subsequently, any dispute between the parties to the transaction in relation to the deposit monies came to an end. By a facsimile of 13 April 2016 from the vendor’s solicitor but copied to the Appellant, the vendor confirmed that the contract was terminated and instructed the Appellant to release the deposit to the purchaser. By an email of the same date, the vendor terminated the Appellant’s appointment as agent for the sale of the property.
- When the Appellant did not do as it had been instructed, the purchaser, on 13 May 2016, commenced a Supreme Court proceeding against the Appellant seeking declarations and other orders. That proceeding was dismissed on 3 June 2016. The reasons of P. Lyons J disclose that the Appellant’s right to withhold the deposit from the purchaser was not adjudicated on. Rather, the Court exercised its discretion to refuse relief at least partly on the basis that the Applicant ought to have brought proceedings in the Magistrates Court. The reasons also record the Appellant’s suspicion that the subject transaction was terminated so that another could be entered into so as to deprive the Appellant of its commission.
- On the same day that the Supreme Court proceeding was dismissed, the Appellant sent an email to the parties advising that the “amount of $24,500.00 is now released to the Seller. A cheque has been sent to the seller by registered post.” As has been observed, it would appear that the whole of the deposit was paid out of the trust account into the Appellant’s general account and a cheque for $4,500.00 was then drawn in favour of the vendor from the Appellant’s general account.
- Division 5 of the Act provides for the amount in dispute to be dealt with in different ways, depending on the circumstances. Sections 27 and 28 provide for two of those ways as follows:
“27 Dealing with amount in dispute if not dealt with under s 26
- (1)This section applies if the amount in dispute is not dealt with under section 26.
- (2)The agent must not pay out the amount in dispute unless the agent receives written notice—
- (a)from all parties to the transaction stating the person who is entitled to the amount; or
- (b)a proceeding has been started to decide who is entitled to the amount.
Maximum penalty—200 penalty units or 2 years imprisonment.
28 Where amount in dispute must be paid if person is entitled under s 27 or proceeding is started
- (1)This section applies if a person is entitled to the amount in dispute under section 27(2)(a) or a proceeding to decide entitlement to the amount started.
- (2)The agent must pay the amount in dispute immediately—
- (a)if notice under section 27(2)(a) is received—to the person stated to be entitled to the amount or in accordance with the person’s direction; or
- (b)if a proceeding disputing entitlement to the amount is started—to the court in which the proceeding was started.
Maximum penalty—200 penalty units or 2 years imprisonment.”
- Sections 27 and 28 are both offence provisions. Section 27 restrains the agent from paying out the amount in dispute unless relevant written notice is received. Section 28 compels the agent to pay the amount in dispute immediately in accordance with sub-sections 2(a) or 2(b), as the case may be. Section 27(2)(b) has a nexus with s 28(2)(b). Where a proceeding of that kind is started, the agent, upon receiving written notice of it, is no longer restrained from paying out the amount in dispute, but rather must immediately pay it into court pursuant to s 28(2)(b).
- In this case, there was a Supreme Court proceeding brought by the purchaser against the Appellant, but the parties to this proceeding approached the matter on the basis that a proceeding, for the purposes of the provisions, must be between the parties to the transaction. It is unnecessary for me to dwell on that because the proceeding post-dated the requests for the deposit to be paid to the purchaser which form the basis of the complaint in this matter. A complaint under s 28(2)(b) was not pursued.
- The Appellant was convicted of an offence under s 28(2)(a). That potentially applies where notice under s 27(2)(a) is received by the agent. In that event, the agent must pay the amount in dispute immediately to the person stated to be entitled to the amount or in accordance with that person’s direction. It will be noted that the obligation of the agent to pay does not depend upon the person demonstrating to the agent’s satisfaction that the person is entitled. It is enough that the parties state the person who is entitled. Division 5 is about an amount in dispute as between the parties to the transaction, not as between those parties on the one hand and the agent on the other.
- Written notice under s 27(2)(a) must be from all parties to the transaction. It is not necessary that the notice be constituted by a single document. In this case, the only parties to the transaction were the vendor and the purchaser. Prior to paying out the amount in dispute the Appellant had the following written communications from the parties:
- (i)the facsimile of 24 March 2016, from the purchaser’s solicitor to the vendor’s solicitor, but copied to the Appellant, purporting to terminate the contract on the basis that finance had been declined and asking that the Appellant be authorised to refund the deposit directly to their client;
- (ii)the email of 31 March 2016 from the purchaser’s solicitor to the vendor, and copied to the Appellant, attaching a letter of decline of finance and seeking confirmation of termination and refund to their client as a matter of urgency; and
- (iii)the facsimile of 13 April 2016 from the vendor’s solicitor to the purchaser’s solicitor, and copied to the Appellant, accepting that the contract was terminated pursuant to the finance clause and instructing the Appellant to release the deposit monies to the purchaser.
- Once the facsimile of 13 April 2016 had been received, the Appellant must have known, from the above written communications sent to it, that any dispute between the parties was at an end. In particular, it had written notice from each of the parties to the contract to the effect that the contract had been duly terminated and that the deposit should be released to the purchaser. The Appellant was not only asked to pay the deposit to the purchaser but was on notice of the basis on which the purchaser was entitled to it. The Appellant had notice for the purposes of s 27(2)(a).
- The Appellant did not suggest that the written communications it received from the parties left it in any doubt as to who was identified, by them, as being entitled to the amount in dispute or how it was being asked to deal with the funds held in its trust account. Rather, it drew attention to s 27(1) which states that the section only applies if the amount in dispute is not dealt with under s 26 which provides another process for the payment of an amount in dispute. The Appellant submitted that it dealt with the money under s 26 and so s 27 did not apply and it could not be convicted of an offence under s 28(2)(a). The proper operation of ss 26 and 27 falls for consideration.
- Section 26 provides as follows:
“(1) This section applies if the agent considers that a party to the transaction is entitled to the amount in dispute.
- (2)The agent may give all parties to the transaction a written notice to the following effect—
- (a)the agent considers that a stated party is entitled to the amount in dispute;
- (b)the agent is authorities, under this Act, to pay the amount in dispute to the stated party on or after a stated date (at least 60 days after the notice is given), unless—
- (i)a proceeding disputing the stated party’s entitlement to the amount in dispute is started and the agent is advised of the start of the proceeding; or
- (ii)all parties to the transaction authorise payment of the amount to the stated party before the stated date.
- (3)The agent may pay the amount in dispute to the stated person if—
- (a)after the stated date, the agent is unaware of the start of a proceeding claiming an entitlement to the amount; or
- (b)on or before the stated date, the agent receives written notice under subsection (2)(b)(ii) authorising payment of the amount to the stated party.
- (4)the agent is not liable civilly or under an administrative process in relation to the payment of the amount in dispute to the stated party as provided under this section if it is subsequently found that the stated party was not entitled to the amount.
- (5)To remove any doubt, it is declared that this section—
(a) provides a process for the payment of an amount in dispute; and
- (b)does not decide legal entitlement to the amount or prevent a person legally entitled to the amount recovering it from the person to whom it was paid.
- (6)Nothing in this section requires the agent to give notice under subsection (2) if the agent decides to retain the amount in dispute until payment of the amount is authorised by all parties to the transaction or entitlement to the amount is decided by a court.”
- Section 26 is not an offence provision. It provides a process for the agent to make payment of the amount in dispute to the party the agent considers is entitled to it. An agent holding an amount in dispute has a discretion as to whether to commence the process by service of a notice under s 26(2). It is not obliged to do so (s 26(6)). Further, the agent has a discretion under s 26(3) as to whether to pay once the agent becomes entitled to do so. Whilst the agent is protected if payment is made pursuant to the provision (s 26(4)), the process does not decide the legal entitlement to the amount. A person, legally entitled to the amount, may still recover from the person to whom it was paid. The acting Magistrate recorded that it was not disputed that a notice was given under s 26(2).
- The Appellant contended that, on 31 March 2016, it made decisions under ss 25 and 26 that it considered that a dispute may arise in relation to the deposit and that the vendor was entitled to the amount in dispute. It further argued that, having made those decisions, pursuant to statutory provisions, on 31 March 2016, and the validity of those not having been impugned, they stood and prevailed over contrary instructions from the parties to pay the purchaser. It contended that, by the date of the alleged offence, it was functus officio and unable to revisit or remake its decision. Further, it was submitted that, having commenced the process by giving notice under s 26(2), it subsequently became authorised, by s 26(3) to pay the money as it did, because s 26(3)(a) was satisfied. It submitted that such authority should not be read as subject to any further constraint, not expressed in that provision. It also contended that, in any event, it had not been established that the contract had been validly terminated or that the purchaser was entitled to a refund of the deposit.
- Section 26 does not permit the agent to adjudicate on the rights of the parties to the transaction. Rather, it permits the agent to give a notice which states the agent’s opinion and informs the parties of what the agent may do, unless certain things occur. The Appellant was not bound by its notice to pay the amount in dispute to the vendor in accordance with the view it held on 31 March 2016. At most, the notice may have enlivened a discretion to do so. An agent may exercise the discretion afforded by s 26(3) not to pay and would presumably consider any relevant change of circumstances since it gave a notice.
- The veracity of the purchaser’s claim to have terminated the contract pursuant to the finance clause and to be entitled to a refund of the deposit is not to point in determining how the money ought to have been paid. The issue of relevance concerns whether the Appellant was bound by s 28(2)(a) to have paid the amount in dispute to the purchaser immediately upon receiving notice under s 27(2)(a), or whether it was entitled to rely on the steps it took under s 26 as excluding the operation of s 27 and authorising it to retain the amount until paying it to the vendor as the stated person in the s 26(2) notice.
- Despite s 26(2) relating to the content of the notice, it was referred to both in the reasons for judgment and in the Respondent’s outline of argument as if it was the provision which permits payment of the amount in dispute. That confuses the roles of sub-sections (2) and (3). The Acting Magistrate said:
“…the defendant was compelled by section 26(2)(b) to wait at least 60 days from March 31 2016 – the date of the notice – unless either (i) or (ii) apply.
On the evidence, it is clear that all parties had not authorised payment [indistinct] and the parties did not commence a proceeding disputing the stated party’s entitlement to the amount. Section 26 does not allow for the defendant to pay the money to the seller”
- Similarly, in the Respondent’s outline of argument, it was said:
“27 Section 26(2)(b) required the Appellant as agent to wait at least 60 days (from 31 March 2016) before paying the money to the seller, unless:
i. a proceeding disputing the stated party’s entitlement to the amount in dispute was started and the Appellant as agent was advised of the start of the proceeding. Section 25(2) prohibits the agent from being a stated party. No relevant proceeding between the parties disputing the seller’s entitlement to the transaction fund (as the stated party on the notice) ever commenced; or
ii. all parties to the transaction authorise payment to the stated party before the 60 day period has expired. The parties never authorised payment to the seller.
28 In the circumstances, section 26 did not apply to the transaction fund (deposit) at any time.”
- Those conclusions appear to proceed on a mistaken interpretation of s 26(2) and (3). Subsection (2)(b)(i) requires the parties to be told that the agent is authorised to pay the stated party on or after the stated date unless a proceeding of the kind referred to is started and the agent is advised accordingly. Similarly, subsection (3)(a) provides that the agent may pay the amount in dispute to the stated person if, after the stated date, the agent is unaware of a proceeding of the kind described. The acceptance, both in the reasons for judgment and in the Respondent’s outline, that no relevant proceeding had commenced partially supports, rather than detracts, from the contention that the authority to pay was enlivened. Counsel for the Respondent ultimately conceded such error in the course of the resumed hearing of this appeal.
- In the course of oral argument it was submitted, for the Respondent, that a proceeding with which the provision is concerned is one which had started but of which the agent is unaware rather than, as here, a circumstance where no relevant proceeding was commenced. I do not accept that. Unless enquiry is made, the agent who is unaware of any proceeding would not know whether that is because there is no such proceeding or because the agent has not been advised of a proceeding which has been instituted. There is no indication that the provisions seek to put the agent to such an enquiry. Rather, when sub-sections 2(b)(i) and 3(a) are read together, it is evident that the agent will be relevantly ‘unaware’ for the purposes of sub-section 3(a) unless a proceeding is both started and the agent is advised of that, as is contemplated in (2)(b)(i). The agent will be relevantly unaware if either no such proceeding is started or a proceeding has been started that the agent has not been advised of.
- It was initially submitted, for the Respondent, that the authority to pay the stated person under s 26(3)(a) did not arise because there ceased to be an ‘amount in dispute’. In that regard, the agent had received, prior to the stated date, a copy of the facsimile from the vendor’s solicitor which must have disabused it of any notion that any dispute between the parties persisted. It was argued that s 26 could not thereafter be relied upon.
- The expression ‘amount in dispute’ is defined in s 25(1)(b) and is a touchstone of the application of Division 5, as each of ss 26, 27 and 28 refer to the amount in dispute. There was, in this case, an amount in dispute as defined because, before the fund was paid out under s 22, the agent considered that a dispute had arisen or may arise between the parties about the entitlement to the deposit. Division 5 then makes provision as to how payment of that amount may or must thereafter be made. For that purpose, Division 5 continues to refer to the amount as the ‘amount in dispute’, even where the parties have reached agreement as to whom the amount is to be paid (ss 26(3)(b), 27(2)(a) and 28(2)(a)). The offence of which the Appellant was convicted was of failing to pay the ‘amount in dispute’ in accordance with s 28(2)(a) immediately upon receiving notice, under s 27(2)(a), which in turn reflects an agreement between the parties to the transaction. If the Respondent’s initial submissions were correct then, upon agreement being reached, there would be no scope for the operation of Division 5 as a whole. I do not accept that construction. On the resumed hearing of the appeal, Counsel for the Respondent accepted that the amount remains the ‘amount in dispute’ for the purposes of the provisions of Division 5 relating to how the amount may or must be paid out.
- It was also submitted, for the Respondent, that the amount in dispute was not, in any event, duly dealt with under s 26 because, although s 26(3) may authorise payment to the stated person (the vendor), here the Appellant deducted $20,000.00 to pay its claim to a commission. Division 5 is concerned with payments made in the context of disputes between the parties to a transaction which, in this case, were the vendor and the purchaser. The Appellant was not a party. The notice under s 26 can only nominate a party to the transaction as being the one the agent considers to be entitled to the amount in dispute. Here the notice nominated the vendor. Section 26(3) could, if engaged, only authorise payment to the vendor.
- Section 22 of the Act deals with permitted drawings from trust accounts. It authorises certain drawings after a transaction is finalised. Where there is a dispute about the transaction fund, the transaction is not taken to be finalised until the agent is authorised to pay out the transaction fund under Division 5 (s 22(4)). Once that point is reached however, the agent may draw an amount from the transaction fund, to pay to the person entitled thereto, an amount equal to the difference between the balance of the transaction fund and the total of the agent’s transaction fee and any outstanding transaction expense (s 22(3)) and may, after doing so, draw the agent’s transaction fee from the transaction fund. If the transaction was finalised by the Appellant having been authorised to pay out the fund under s 26 (and assuming the Appellant had a right to a transaction fee), then as Counsel for the Respondent seemed to acknowledge on the resumed hearing of the appeal, the provisions of s 22 provide a basis to contend that it would have been legitimate for the Appellant to draw its transaction fee. Further, the terms of the appointment of the agent contained provisions authorising the deposit holder to pay commission upon the entitlement arising. What the Appellant actually did would however, still be irregular because rather than draw $4,500.00 from the transaction fund to pay the vendor and then $20.000.00 for its commission, it drew the whole of the transaction fund for itself and then paid $4,500.00 to the vendor from its general account. It is unnecessary however to dwell upon this because, for the reasons which follow, what was ultimately done is beside the point.
- When the matter was first argued there was a deal of attention given to the position at the time the money was said to have been paid out on 3 June 2016. The relevant enquiry however, is as to the position at an earlier time, namely 14 April 2016, when it is alleged that the offence was committed. If, at that stage, s 27 had been rendered inapplicable by reason of ss 27(1) and 26, then there was no effective notice of the kind described in s 27(2)(a) and no offence under s 28(2)(a). It would then not matter whether the Appellant had ultimately gone on properly to deal with the deposit under s 26. Conversely, if, as at the date of the alleged offence, s 27 applied then, on the facts, an offence was committed notwithstanding that the Appellant might later have purported to pay out pursuant to s 26(3).
- Section 27 only applies if the amount in dispute ‘is not dealt with’ under s 26. The amount in dispute is defined in s 25 and relates to the transaction fund or part thereof. The process provided for in s 26 consists of giving a notice under s 26(2) and exercising a discretion to pay the stated person under s 26(3). The service of the notice informs the parties to the transaction of the opinion of the agent as to who is entitled to the transaction fund or part thereof (the amount in dispute) and advises of the authority which the agent will have to pay the amount to the stated person, either before or after the stated date, depending upon certain things. It does not, however, deal with the transaction fund or the part thereof constituting the amount in dispute. Nothing happens to the fund upon, or by reason of, service of the notice. In short it puts the parties to the transaction on notice as to the authority the agent may come to have to deal with the amount in dispute depending on certain things, but service of the notice does not itself involve dealing with that fund of money The amount in dispute remains, at that time, ‘not dealt with’ under s 26 for the purposes of s 27(1).
- At the time notice is given under s 26(2) it is unknown whether the fund will ultimately be dealt with by payment under s 26(3), as the agent may thereafter become aware of a proceeding of the kind referred to in s 26(3)(a). Whether the amount is subsequently dealt with by payment is also subject to the exercise of a then future discretion. Further, it is unknown whether the funds will be actually dealt with in accordance with the terms of s 26(3). The operation of s 27 is not obviated merely by the potential which may exist at the time of giving the s 26(2) notice for the amount in dispute to be dealt with at a future time pursuant to s 26(3).
- The Appellant submitted that the manifest intention of s 26 is that once the agent has issued a notice, the seller and the buyer has 60 days written notice to commence proceedings between themselves. On the Appellant’s approach, the only way that a party can prevent the agent from paying out to the stated person after the stated date is by starting proceedings, of the kind referred to in s 26(3)(a), by the stated date and giving the agent notice thereof. Accordingly, in this case, had the parties been and remained in dispute after the service of the s 26(2) notice, such that they were not in a position to give notice under s 27(2)(a), the purchaser could have prevented the Appellant from paying out to the vendor by commencing proceedings against the vendor and giving the Appellant notice of that. The Appellant acknowledged that, in such circumstances, it would not have paid out to the vendor, but would have been obliged to pay the money into the court pursuant to s 28(2)(b).
- The Appellant also acknowledged, that, on its approach, in the absence of litigation between the parties of the kind described in s 26(3)(a), they could not have prevented it from paying out to the vendor. However, since the parties to the transaction were, after the service of the s 26(2) notice, in agreement as to the purchaser’s entitlement to the deposit, there was no controversy between them about which to litigate.
- It would be odd if the agent was prevented from paying out to the stated person because of an unresolved controversy about the entitlement to the amount, the subject of litigation between the parties to the transaction and was required to pay the amount into court pending determination, but not where any such controversy has ended with an accord between the parties as to entitlement without the need for recourse to litigation. The court would not readily interpret the provisions to produce such an outcome or impute such an intention to the legislature.
- Section 26(6) provides that the agent is not required to give a notice under s 26(2) if it decides to retain the amount until payment is authorised by all parties or entitlement to the amount is decided by a court. Section 26 provides an opportunity for the agent who is holding an amount in dispute to pay the amount out to the person stated in a s 26(2) notice rather than having to wait until, relevantly, payment is otherwise authorised or indeed required, by all the parties to the transaction. The section also protects the agent who takes that opportunity. Whilst the provisions do not expressly deal with the situation in which an agent receives notice under s 27(2)(a) after giving a s 26(2) notice, but while still holding the amount, it is, in my view, neither the purpose or effect of the provisions to authorise the agent to deal with the amount in dispute by paying out to the person stated in a s 26(2) notice in the face of notice already received from all the parties to the transaction, in accordance with s 27(2)(a), stating a different person as the one entitled to the amount. The amount in dispute is not dealt with under s 26 at the time.
- In my view the effect of the provisions is relevantly that:
- (i)s 27 applies unless the amount in dispute is dealt with under s 26;
- (ii)giving a notice under s 26(2) does not mean that the transaction fund or part therefore constituting the amount in dispute is dealt with;
- (iii)the amount in dispute is not dealt with under s 26 until the discretion to pay the amount pursuant to s 26(3) is exercised;
- (iv)s 27 does not apply if payment has been made pursuant to s 26(3); and
- (v)once notice is received under s 27(2)(a) prior to the amount in dispute being dealt with under s 26:
- the obligation under s 28(2)(a) applies and
- s 26 has no more work to do.
- Accordingly, in this case, the notice given pursuant to s 26(2) did not avoid the application of s 27(2)(a). The obligation to make payment under s 28(2)(a) arose and the Appellant committed the offence by failing to immediately make payment to the purchaser.
- The Appellant had some other arguments. It submitted that there had been dishonest or illegal acts on behalf of the purchaser from which he should not be allowed to benefit and that public policy considerations intruded in relation to false or misleading information being given in a complaint to the Office of Fair Trading. This relates to the identity of the purchaser and the authority of the person who executed the contract. The contract was executed by the purchaser’s son. There was some evidence before the Acting Magistrate of his having authority to do so, but the Appellant complains that no power of attorney was produced. Why that should affect the current proceeding was never made clear. The Appellant submitted that the purchaser should not profit from his misdeeds, but neither the purchaser or his son are parties to this proceeding. As to the matters complained of, the parties to the contract appear to have accepted that they were bound by it and the Appellant accepted its position as deposit holder, received the deposit into its trust account and contends that it dealt with it in accordance with the Act. The relevant offence relates to the Appellant’s conduct with respect to a transaction fund (the deposit) for the relevant transaction. The Appellant did not suggest that there was no transaction or that he was not holding a transaction fund or was not subject to the provisions of the Act or Division 5 in particular.
- The Appellant also claimed that it was denied procedural fairness. In this regard it complained that the Acting Magistrate did not give written reasons. There was no obligation to do so. The Appellant has been able to ventilate all matters of relevance to the appeal.
- Attention was also drawn to the fact that a letter of complaint from the purchaser’s solicitor to the Office of Fair Trading referred to a superseded version of the Act. That does not establish a lack of procedural fairness in this proceeding.
- There was a complaint that the complainant had not investigated the veracity of the decline of finance letter. That may reflect the Appellant’s reluctance to accept the position of the parties or to acknowledge that the relevant provisions are concerned with disputes between the parties to the transaction about a transaction fund rather than a dispute as between them and the Appellant which may have consequences for the Appellant’s right to a commission (which is not an issue in the subject proceeding), but it does not establish a lack of procedural fairness or that the Appellant was otherwise wrongly convicted.
- There was also a complaint that s 96(2) of the Act has not been followed. That section relates to claims made against the claims fund and not to proceedings of this kind.
- The appeal against conviction is dismissed.
- The Appellant also appeals against sentence on the basis that the fine of $5,000.00 was manifestly excessive.
- The maximum penalty for an offence under s 28 is 200 penalty units or 2 years imprisonment. The Appellant claimed that “the Magistrate mentioned that the fine would be around $1,000.00” prior to the plea. The transcript reveals however, that the Appellant was in fact informed of the maximum penalty before entering its plea. The fine of $5,000.00 imposed in this case was substantial, but a fraction of the maximum penalty.
- In arriving at the penalty the Acting Magistrate rightly took into account the fact that trust account breaches are treated seriously by the courts and that breaches of the strict statutory regimes regarding the disbursements of trust account monies can erode public confidence in agents. He also, rightly, took into account the lack of any remorse for the offending behaviour. Deterrence and denunciation were considered to be relevant sentencing purposes.
- It was submitted, for the Appellant, that this was not a case of moral turpitude, but rather a case where any offence was born of a misunderstanding of the effect of the statutory provisions. It was also pointed out that an earlier infringement notice for the same offence had only imposed a penalty of $942.00.
- The reference to the infringement notice does not greatly assist. The Appellant chose to take the matter to court. The notice was then withdrawn and the subject proceeding was commenced by complaint and summons. The court was not bound to determine the sentence by reference to the earlier infringement notice.
- The Appellant was co-operative which is a matter in its favour. On the other hand, the amount of money, the subject of the offence, is not insignificant.
- The claim that, in effect, the offence was one of honest mistake about the effect of the statutory provisions, must be viewed in context. As the Acting Magistrate observed, the Appellant’s conduct was contrary to the request of both parties to the transaction, made via their solicitors. Indeed, the Appellant asserted that the vendor was entitled to the deposit even though the vendor gave instructions to the contrary. The entity which stood to immediately benefit from the Appellant’s actions was, at least substantially, the Appellant itself, as it used the opportunity to take the deposit money, or at least the bulk of it, for itself on the basis of an asserted entitlement to commission, rather than to pay it to the purchaser as it was required to do.
- Having rejected the express wishes of the parties to the transaction and instead, dealt with the money by taking it, or most of it, for itself. The Appellant steadfastly maintained an entitlement to have done so, but, as the Acting Magistrate pointed out, did not suggest that it was acting on the basis of any advice as to its position. It does not have a strong claim to leniency.
- There was no particular error exposed in the sentencing remarks. The fine imposed, whilst substantial, is not, in my view, manifestly excessive in the circumstances. The penalty is one that I would adopt. The appeal against penalty is dismissed.
- The Appellant also took issue with the quantum of the costs order in relation to legal professional work. That was partly on the basis that the complainant was represented by an ‘in-house’ lawyer, but that does not disqualify the successful complainant from a costs order.
- The discretion to order costs is conferred by s 157 of the Justices Act 1886 and the quantum is subject to s 158B, which directs attention to the scale of costs prescribed by regulation. Section 19 of the Justices Regulation 2014, directs attention to schedule 2, which limits the allowed amount for legal professional work up to and including day one of the hearing up to $1,500.00 and for each day thereafter up to $875.00. In this case the first day of the hearing was 6 November 2018. The matter was then adjourned to 18 November 2018 when the Acting Magistrate gave his decision in relation to conviction and went on to hear the parties regarding antecedents and penalty before imposing penalty. The hearing was therefore over 2 days. The Acting Magistrate had a discretion to allow up to $2,375.00 for professional work. He allowed $2,000.00. It was open for him to do so and I would not interfere with that order. The appeal against the costs order is dismissed.
- Section 226 of the Justices Act 1886 confers, on the court, a discretion to order costs of the appeal. Section 232A directs attention to the quantum of costs prescribed by regulation. Section 19 of the Justices Regulation 2014 again directs attention to schedule 2 which, for legal professional work, allows an increase of 20% in the amount set out in the schedule. The appeal was heard over 2 part days. The second day was at the court’s invitation to address matters which were not addressed, or adequately addressed, on the first day. In those circumstances, I do not consider that the Respondent should recover the maximum allowance for 2 days. I will allow $1,800.00 being the equivalent of the maximum allowance for 1 day. I will also allow $1,487.00 for disbursements. I therefore order the Appellant to pay the Respondent’s costs in the amount of $3,287.00 to be paid within 28 days to the Registrar to be paid to the respondent.
 Exhibit 8.
 Exhibit 6.
 Exhibits 23 and 24.
 Exhibit 8 cl 2.4(1)(b).
 See tax invoice in Exhibit 2M and Exhibit 8 cl 5.1.
 Exhibits 2N and 24.
 16/08/19 T1-89.
 s 22(6) defines a transaction fee to mean fees, charges and commission payable for the performance of an agent’s activities for a transaction.
 s 22(6).
 Exhibit 2A.
 Exhibit 2B.
 Exhibit 2C.
 Exhibit 2D.
 Exhibit 2E.
 Exhibit 10.
 Exhibit 11.
 Exhibit 12.
 Exhibit 12.
 Exhibit 2F.
 Exhibit 2G.
 Exhibit 2H.
 Exhibit 2I.
 Exhibit 5.
 Exhibit 13.
 Exhibit 2L.
 Exhibit 2M.
 The wording of s 27(a) may be contrasted with s 26(2) which refers to a written notice.
 Exhibit 2C.
 Exhibit 2G.
 Exhibit 15.
 Namely, that the contract had been terminated pursuant to the finance clause, rather than due to any default by the purchaser.
 Indicated by the word ‘may’.
 16/08/19 T1-23, 24.
 16/08/19 T1-29.
 See definition of ‘amount in dispute’ in s 25.
 See definition of ‘party’ in s 25.
 s 26(2).
 Exhibit 8 cl 6.
 16/08/19 T1-33.
 Exhibit 8 cl 6.
 The agent ‘may’ pay.
 Here there was at least a degree of irregularity for the reasons given.
 16/08/19 T1-25.
 The stated date must be at least 60 days after the notice is given.
 16/08/19 T1-40, 41.
 16/08/19 T1-43.
 Exhibit 16.
 Exhibit 17.
 Exhibit 18.
- Published Case Name:
Prestige & Rich Pty Ltd v McGregor
- Shortened Case Name:
Prestige & Rich Pty Ltd v McGregor
 QDC 151
20 Aug 2019
|Event||Citation or File||Date||Notes|
|Primary Judgment||Magistrates Court (No Citation)||18 Dec 2018||Prestige & Rich Pty Ltd convicted of an offence under s 28(2)(a) of the Agents Financial Administration Act 2014 (failure to pay an amount of money to the party entitled to it).|
|Primary Judgment|| QDC 151||20 Aug 2019||Appeal against conviction pursuant to s 222 of the Justices Act 1886 (Qld) dismissed: Rackemann DCJ.|
|QCA Interlocutory Judgment|| QCA 225||22 Oct 2019||Application to stay the orders of the District Court made on 20 August 2019 in BD75/2019 and the orders made in the Magistrates Court at Holland Park on 18 December 2018, in matter number 1859/18, pending determination of the application for leave to appeal; application granted: Morrison JA.|
|Notice of Appeal Filed||File Number: Appeal 236/19||12 Sep 2019||-|
|Appeal Determined (QCA)|| QCA 220||12 Oct 2020||Application for leave to appeal refused: Sofronoff P, Philippides JA and Boddice J.|
|Application for Special Leave (HCA)||File Number: B||02 Nov 2020||-|