COMMISSIONER FOR FAIR TRADING v YES REAL ESTATE ACT PTY LTD (Occupational Discipline) [2019] ACAT 103

Catchwords: OCCUPATIONAL DISCIPLINE - consent orders - failure of agent to provide audits of trust account - public reprimand - fine - requirement for training of director of licensed agent

Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 65, 66

Agents Act 2003 ss 41, 42, 115

Cases cited: Nursing and Midwifery Board of Australia v Izzard [2016] ACAT 68

1. Pursuant to s66(2)(a) of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) the Respondent is publically reprimanded.
2. Pursuant to s66(2)(a) of the ACAT Act, the Respondent is to ensure that a director of the Respondent, within three months of the date of the Tribunal's order, completes to the satisfaction of the Commissioner the following real estate industry training courses, which are to be designed for the Australian Capital Territory's legislative environment, and are not to count towards the Respondent's continuing professional development requirement:
   • (a) Establish and Manage Agency Trust Accounts;
   • (b) Minimising Agency and Consumer Risk;
   • (c) Maintaining Business Records; and
   • (d) Apply Knowledge of State or Territory Legislative and Regulatory Framework to complete Agency Work.

The Respondent must provide evidence of satisfactory completion of these courses to the Commissioner via email to agentcompliance@act.gov.au within 14 days of completing each course.

1. Pursuant to s(66)(2)(d) of the ACAT Act, within 14 days of the date of this order the Respondent must provide to the Commissioner via email to agentcompliance@act.gov.au a copy of its updated policies and procedure for record keeping, trust accounting, and the preparation and provision of annual trust statements to the Commissioner as required by the Agents Act, including information in relation to its record and bookkeeping practices.
2. Pursuant to s66(2)(d) of the ACAT Act, within three months of the date of these orders the Respondent is required to provide the Commissioner annual trust audit statements for the financial years ending 2012 - 2018.
3. Pursuant to s66(2)(h) of the ACAT Act, the Respondent is required to pay to the applicant the sum of $4,500 within three months of the date of these orders.
4. The hearing listed on 5 September 2019 is vacated.

1. In these proceedings the Commissioner for Fair Trading (the Commissioner) sought orders for occupational discipline against Yes Real Estate ACT Pty Ltd (the respondent), a licensed agent, for failing to submit audit reports within the statutory timeframe for the financial years ending 2013-2018.
2. The application for disciplinary action was filed on 9 May 2019. The parties participated in mediation on 9 July and 16 August 2019, and then continued their discussions outside the tribunal process. On 30 August 2019, the parties advised that they had reached an agreement and that proposed consent orders and a statement of agreed facts would be filed shortly, and on 2 September 2019, the proposed consent orders and a statement of agreed facts were filed.
3. In short, the parties agreed that the respondent did not provide the Commissioner with an audit report for the financial years ending 2013-2018 as required by the Agents Act 2003 (Agents Act).
4. The parties further agreed that the respondent's conduct in these respects constituted grounds for occupational discipline pursuant to section 41 of the Agents Act.
5. In Nursing and Midwifery Board of Australia v Izzard [2016] ACAT 68[1] I set out the legal framework within which the tribunal operates when considering whether to make orders by consent in an occupational discipline matter, and the way the tribunal approaches such an application for consent orders. In accordance with the usual practice, the parties appeared before the Tribunal on 2 September 2019 to seek the proposed orders. This gave the Tribunal the opportunity to review the proposed orders and satisfy itself that the orders were both within power and appropriate. At the conclusion of that hearing I made the proposed orders, and now publish my reasons.

1. The respondent is and was, at all relevant times, a licensed agent under the Agents Act.
2. Pursuant to section 115 of the Agents Act, the respondent was required to give to the Commissioner a report of its audited trust accounts (audit report) for financial years ending 2013-2018. It did not do so.
3. Anthony Richard Mewton took over control of the respondent on 29 September 2016 as sole director. Prior to that date he was not a shareholder or director of the respondent. At the time of the change of control, four years of audit reports were outstanding.
4. Whilst after 29 September 2016 Mr Mewton was responsible for the control and management of the respondent, he suffered difficulties in ensuring the respondent met its obligations because:
   • (a) the data required to provide full accounts to the auditor were not readily available to him in the short term; and
   • (b) at the time he was charged with the responsibility of providing audited accounts, he was undergoing matrimonial proceedings which distracted him from the expeditious production of appropriate audited accounts.
5. The abovementioned factors have resulted in Mr Mewton in his capacity of sole director of the respondent being subject to financial stress.
6. As at 2 September 2019 all of the audit reports from 2013-2018 remained outstanding.

The Tribunal's power to make the proposed consent orders

1. Section 41 of the Agents Act sets out the grounds for occupational discipline in relation to a licensed agent. Failure to audit records is a failure to comply with the Agents Act, and thus grounds for occupational discipline.
2. Section 42 of the Agents Act provides that an application for occupational discipline may be made to the Tribunal where the Commissioner on reasonable grounds considered that a ground for occupational discipline exists.
3. Section 65(2) of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) permits the Tribunal to make an order for occupational discipline against the subject person if satisfied that a ground for occupational discipline exists.
4. Section 65 of the ACAT Act sets out the factors the Tribunal should consider when making orders for occupational discipline, and section 66 sets out the orders that may be made.
5. The facts as agreed clearly constituted grounds for occupational discipline. Thus it was open to the Tribunal to make orders for occupational discipline, and section 66 provides the power to make orders in the terms proposed by the parties.

1. In making the orders, I considered the factors set out in section 65(3) of the ACAT Act. I noted that the respondent has not been the subject of disciplinary proceedings previously, and that the change in control of the respondent was one step taken to attempt to address the continuing contraventions.
2. The parties submitted that the factors outlined at paragraphs 8-10 above also constituted mitigating factors. I considered those matters to be relevant, if not mitigating, in determining that the proposed orders were appropriate.
3. The fine imposed is of an appropriate amount, and serves as a deterrent both to the respondent and to agents more generally.
4. The Tribunal is satisfied that the respondent should ensure that a director complete the suggested training courses. This education will address the main cause of the contraventions, and will ensure that there are no future failures. The requirement to update the Commissioner on the respondent's policies and procedures for record keeping will also ensure that necessary steps and safeguards are put in place to prevent similar failures in the future.
5. Finally, I considered that it was appropriate to reprimand the respondent for its failure to comply with auditing requirements. A reprimand expresses to the respondent, and to licensed agents generally, the Tribunal's disapproval of this conduct.
6. A licensed agent's annual audit of accounts, and the provision of those audit reports to the Commissioner, is not a mere technical requirement. It is an important obligation designed to protect the public who entrust an agent with their money. All licensed agents should be aware of their responsibility to meet this requirement. The respondent is taken to have been aware of, and should have taken steps to prevent, the increased risk to members of the public during the period that the accounts were not audited.
7. The Tribunal accepts the submission that under new control the respondent appreciates the importance of providing annual audit reports, and with the benefit of the steps required by these orders, there should be prompt provision of the outstanding reports and no future contraventions of these requirements by the respondent.