Consumer Affairs Victoria v Hoare (No 2)(Review and Regulation) [2015] VCAT 1077

1. Under section 28A(1)(a) of the Estate Agents Act 1980 (Vic), the respondent is reprimanded.

1. Under section 28A(1)(f) of the Estate Agents Act 1980 (Vic), the respondent is declared to be ineligible to hold an estate agent's licence or be an agent's representative before 12 October 2024.

1. Dr E Lanyon, the Acting Director of Consumer Affairs Victoria (CAV) made an application to the tribunal for an inquiry to be held into the conduct of Mr Scott Hoare. That application was made under section 25 of the Estate Agents Act 1980 (Vic) (Estate Agents Act).
2. The application alleged that during the period July to September 2013, Mr Hoare breached the Estate Agents Act and the Estate Agents (Professional Conduct) Regulations 2008 (Vic) by: failing to pay $5,090 into trust; causing a deficiency of $37,490, in the relevant trust account without satisfactory explanation; fraudulently converting to his own use trust monies; not acting fairly and honestly in the performance of his functions as an estate agent; and engaging in conduct that was unprofessional or detrimental to the reputation of the estate agency industry. While as at the end of June 2014, the trust account showed a negative balance of $13,750.36, it was restored to balance in or about early July 2014.
3. On 25 February 2015 there was a hearing under section 25 of the Estate Agents Act. At that time, Mr Hoare was not working as an estate agent as his licence had been suspended on 13 October 2014.
4. On 8 April 2015, I made determinations under section 25(1) of the Estate Agents Act. The reasons for decision set out in detail the events which led to the inquiry and how I came to make determinations.[1]
5. I determined that Mr Hoare:
   1. Had contravened and failed to comply with the requirements of the Estate Agents Act and the Estate Agents (Professional Conduct) Regulations 2008 (Vic) (section 25(1)(a)); and
   2. Was not of good character or otherwise a fit and proper person to hold an estate agent's licence (section 25(1)(b)); and
   3. Had been guilty of conduct which renders him unfit to be a licensed estate agent (section 25(1)(c)).
6. The Estate Agents Act next requires that determinations be made under section 28A. Under that section the tribunal has the power to make a range of orders including: reprimanding the person; cancelling an existing licence and disqualifying the person from re-applying for a specified period or permanently; and/or imposing a penalty.
7. Having made determinations about Mr Hoare's conduct under section 25 of the Estate Agents Act, I considered it appropriate to allow time for the parties to make submissions about final orders under section 28A with knowledge of the determinations I had made. Accordingly, I made orders for the parties to file and serve submissions and for the matter to be listed for further hearing.
8. CAV filed submissions in accordance with my orders, but none were filed by Mr Hoare. A further hearing was held on 17 June 2015.
9. I record that, part way through the 17 June 2015 hearing, Mr Hoare expressed concern about legal advice he had previously received and said he wanted to seek further advice. I understood him to be applying for an adjournment. CAV objected to an adjournment where Mr Hoare had received sufficient notice of the hearing and so had the opportunity to seek legal advice earlier. I stood the matter down so Mr Hoare could consider his position, speak with his mother who was present and contact anyone else he wished. When the hearing resumed, Mr Hoare confirmed he had been given adequate time to consider his position and said he was not seeking an adjournment. He confirmed to me that he understood the hearing would proceed and I would make a final decision based on what he and CAV said.

Submissions on determinations under section 28A

1. After receiving my decision of 8 April 2015, CAV was notified that Mr Hoare's licence had been automatically cancelled after he failed to pay the required annual licence fee and he failed to provide an accompanying statement.[2] As a consequence, CAV could no longer seek a determination that his suspended licence be cancelled and that Mr Hoare be permanently disqualified from applying for another. CAV instead sought an order under section 28A(1)(f) of the Estate Agents Act. That section says that, after conducting an inquiry under section 25, the tribunal may:

(f) declare any person to be ineligible to hold a licence or to be an agent's representative either permanently or temporarily

1. In its written submissions, CAV maintained the position that Mr Hoare should be reprimanded and asked that a fine of the maximum amount of $5,000 be imposed. During the course of the hearing, CAV said that, if the tribunal should decide to declare Mr Hoare to be ineligible to hold a licence or be an agent's representative permanently or for a period of 10 or more years, it would not press the application for the imposition of the fine.
2. Mr Hoare's position was that he accepted that a reprimand under section 28A(1)(a) was appropriate. He said that he understood that there needed to be a period of time where he ought to be ineligible to hold a licence or be an agent's representative but he wished it not to be permanent.

1. In the reasons for decision dated 8 April 2015, I referred to Mr Hoare's evidence about the events which led to the proceeding and his understanding of them. It is not necessary to restate those matters.
2. During the substantive hearing, on the question of future work as a licensed estate agent or an agent's representative, Mr Hoare told me that:
   • He believed he would be of good character. He had financial pressures because of the business but would not have them again because he would not be running a business. He would like to be an estate agent's representative or be a licensed agent. Mr Hoare would like to work with his mother in her estate agency business. He would have no access to a trust account in her business; and
   • He understood he had breached his obligations. He said he had co-operated before and since CAV was involved. He was trying to rectify the situation. He accepted that he had a period of stress and that he had not been of good character. He said he had changed: he has acknowledged what happened, paid the deficiencies back and realised there were system problems. He has not tried to hide what has happened from the small rural community in which he lives. In future, there would be strict guidelines to make sure it could not happen again.
3. At the hearing on 17 June 2015, Mr Hoare told me that he understood the gravity of the whole situation and knew it was totally wrong. He had acknowledged that to CAV and tried to resolve it by restoring money to the trust account and obtaining the assistance of a mentor. He again talked about struggling in July to September 2013 and conceded that, at that time, he was not a fit and proper person to be licensed as an estate agent. He noted that prior to July 2013 he had been an agent's representative for seven years and for the first three years when he was a licensed estate agent he had a good record.
4. Mr Hoare acknowledged that the fact he was struggling did not make what he did right. When he realised he was in a 'hole', he did not know what to do. He sought help and, when CAV became involved, he cooperated fully. He described himself as very remorseful for his actions. He understood that what he had done could have led to jeopardising staff, landlords and vendors and understood he had used landlords' and vendors' funds.
5. Mr Hoare reminded me he has a young family he wishes to support. He said he continues to receive help and support from a mentor, not only in relation to work but also in general in his life.
6. As to his evidence before me in February, he said he was probably then still deluding himself. He said he did not know how to handle giving evidence.
7. At the time of the recent hearing, Mr Hoare was not working and planned sooner rather than later to get some employment.
8. When asked if he was now a fit and proper person to hold an estate agent's licence or be an agent's representative, his response was that he knew he would not run a business again but he thought he would be a good agent's representative listing and selling houses. In future he might be able to hold a licence but he would not want to put himself in that position again soon.
9. Ms Reed, Mr Hoare's mother and a licensed estate agent, was present at both hearings and spoke at the second. She said her son was a decent person, that he had 'screwed up' and that no one was harder on him than her. She explained that his management skills were not sufficient but noted that his clients had stood by him and continued to do so. She said that for 38 of his 39 years her son had not put a foot wrong but had six months off-track. I understood from Ms Reed's statements and from Mr Hoare's evidence on both occasions that, in the future, Mr Hoare was likely to work in his mother's estate agency businesses in some capacity.
10. Ms Spee, representing CAV, noted that there was no evidence of support from clients or others before the tribunal nor any references in writing or offered in person. She expressed concern that Mr Hoare had continued to fail to accept personal responsibility for what he had done, instead making comments like 'we are fixing it up'. In her submission, Mr Hoare had still failed to give a satisfactory explanation for the use of others' funds.

Orders under section 28A of the Estate Agents Act

1. CAV made submissions, which I accept, about the nature of disciplinary orders under the Estate Agents Act. In summary, the tribunal's powers to make disciplinary orders are primarily protective, even though they may have a punitive effect on the particular agent. When considering whether a person should continue to work as a licensed estate agent, there are two matters raised which focus on the public interest: the protection of the public and the necessity of maintaining standards in the conduct of the profession. A very high standard of care, compliance and honesty is required for estate agents. The tribunal is to have regard to specific deterrence and general deterrence. In respect of the latter, the tribunal should consider the effect its orders will have on agents' understanding as to the requirements and the standards expected, to prevent others from engaging in similar misconduct in the future. Agents who do not deal with trust funds and monies according to the law need to know that serious consequences for their participation in the industry should follow. Another matter to take into account is the agent's level of insight into the conduct in issue.[3]

1. I am satisfied that it is appropriate that Mr Hoare be reprimanded under section 28A(1)(a) of the Estate Agents Act. A reprimand is not a trivial determination and has the potential for serious adverse implications.[4] It tells the public and other estate agents that the standards expected have not been met and that the agent has been censured.

1. I consider it appropriate that Mr Hoare be declared ineligible to hold an estate agent's licence or work as an agent's representative for a period of time to deter him from engaging in any similar conduct again and to demonstrate to other estate agents and the community more generally that conduct of this kind is very serious. That order is appropriate having regard to the seriousness of the breaches committed by Mr Hoare and my determinations that he is not a fit and proper person to hold a licence and is guilty of conduct which renders him unfit to hold a licence. I acknowledge that Mr Hoare has agreed that a period of time where he cannot work in the industry is appropriate.
2. I will make a declaration that Mr Hoare is ineligible to hold an estate agent's licence or be an agent's representative.

1. CAV sought an order that Mr Hoare be declared permanently ineligible to hold an estate agent's licence or be an agent's representative.
2. I was referred to a number of decisions by the parties regarding the appropriate period of ineligibility. I had regard to all of those decisions including Director of Consumer Affairs Victoria v Talia[5] (relied on CAV to support permanent ineligibility) and Director Consumer Affairs Victoria v Shaba[6] (relied on by Mr Hoare to support a period of ineligibility of around eight years).
3. I have noted these decisions but am mindful that, as discussed by Kaye J in Buzzo Holdings Pty Ltd & Anor v Loison,[7]what is required is for me to tailor the period of ineligibility to fulfil the objectives of protecting the public, deterrence, the maintenance of industry standards, and the preservation of community confidence in the industry. As Kaye J put it, each case essentially depends on its own circumstances.[8]
4. In deciding the appropriate period of ineligibility, I have taken into account the fact that, if Mr Hoare wishes to obtain an estate agent's licence in the future, it will be necessary for him to apply to the Business Licensing Authority and satisfy it that he is of good character and a fit and proper person to hold a licence.[9] I have also taken note that, once the period of ineligibility has passed, any licensed estate agent who wishes to employ Mr Hoare, must satisfy him or herself of a number of matters, including that he is fit and proper.[10]
5. I am not satisfied that Mr Hoare ought, for some time, have the privilege of holding an estate agent's licence or being employed as an agent's representative. Such a position allows an income to be earned from the financial decisions of members of the Victorian community who are entitled to depend on estate agents for their professionalism and honesty. With respect I adopt what was said by Senior Member Smithers in Director of Consumer Affairs Victoria v Rounds:

It is important that real estate agents, and the public generally, understand that it is completely unacceptable for a real estate agent who has experienced financial, personal and professional hardships, even if they are not of his or her own making, to utilise trust funds to tide the business over, even for a short period.[11]

1. I emphasise that Mr Hoare not only used funds to support his business but also used them at a casino for gambling and other entertainment purposes during what appeared, from the statement, to be a Queensland holiday.
2. Having observed Mr Hoare at two hearings, it seemed to me he had great trouble expressing himself. He was clearly emotionally affected by the hearing and the prospect of being unable to work in the estate agency industry for a lengthy period. I accept that he is remorseful and expressed some understanding of the significance of what he has done. However, he often referred to 'we' when speaking about what had happened rather than 'I'. That was not just a matter of semantics but it seemed to me to reflect a lack of maturity and acceptance of personal responsibility. As I noted in the first set of reasons,[12] others repaid the funds he had taken from the trust account. I was told nothing of any arrangements to repay the loans they gave him. Mr Hoare seemed to be relying on his mother and others to make things right. He produced no written references and brought no one else to speak about his character and any reformation. This left me with the sense that Mr Hoare has yet to accept the significance of his breaches and wrongdoing.
3. I have concluded that an appropriate period of time for Mr Hoare to be ineligible to hold an estate agent's licence or be an agent's representative is 10 years. That period of time ought to signal to the estate agency industry that misconduct of the kind engaged in by Mr Hoare is not only unacceptable but will lead to very serious consequences. Further, that period of time ought to bring home to Mr Hoare that his conduct was not a series of mistakes somehow justified by his then financial circumstances. He acted in a manner entirely inconsistent with his obligations to his clients, the estate agency industry and the community as a whole. I am not presently satisfied that, in a shorter period of time, Mr Hoare would be ready to work in the industry again responsibly.
4. Accordingly, I will declare that Mr Hoare is ineligible to hold an estate agent's licence or be an agent's representative for a period of 10 years, less the time that has passed since he was suspended on 13 October 2014.

1. As noted earlier, CAV said that it would not press for an order for a financial penalty to be paid under section 28A(2) of the Estate Agents Act if I determine the period of ineligibility to be 10 years or more. Given I have imposed that period of time, I will make no order for the payment of a penalty.

[1] Acting Director Consumer Affairs Victoria v Hoare [2015] VCAT 401.

[2] See sections 23 and 24A of the Estate Agents Act.

[3] See generally, Mario Inglese and M Inglese Pty Ltd and Estate Agents Board, Supreme Court of Victoria, 15 August 1989; Quinn v Law Institute of Victoria Limited [2007] VSCA 122; Director of Consumer Affairs Victoria v Marshall [2013] VCAT 1316, Director of Consumer Affairs Victoria v Talia [2010] VCAT 1107 Director of Consumer Affairs Victoria v Rounds [2013] VCAT 1882; Acting Director of Consumer Affairs v Moularas [2014] VCAT 474.

1. [4] Peeke v Medical Board of Victoria Unreported, Supreme Court of Victoria, 19 January 1993 at p 6 - while this case concerns a medical practitioner, given the responsibility estate agents carry in respect of funds and their responsibility to act honestly, those serious adverse implications equally apply to the estate agency industry.

[5] [2010] VCAT 1107.

[6] [2014] VCAT 815.

[7] [2007] VSC 31.

[9] See section 21 of the Estate Agents Act.

[10] See sections 16, 35 and 44 of the Estate Agents Act.

[11] [2013] VCAT 1882 at paragraph [60].