1. The Tribunal finds proven the grounds for taking action set out in paragraphs 1, 2 and 3 of the applicant's application for the holding of an inquiry, namely that the respondent has breached:
   1. Section 29B(2) of the Estate Agents Act 1980 (Vic) (the Act),
   2. Section 64 of the Act, and
   3. Regulation 13 of the Estate Agents (Professional Conduct) Regulations 2008 (the regulations).

1. Under section 28A(1)(a) of the Act, the respondent, Mr Clynton Mark Roberts, is reprimanded.
2. Under section 28A(1)(d), the estate agent's licence held by the respondent is suspended for a period of six months commencing on 12 November 2015.
3. Under section 28A(1)(b) of the Act the respondent is required , within six months of the date of this order to undertake, or retake as the case may be, two units of study approved by the applicant in the areas of how to establish and manage an agency; and identify legal and ethical requirements.
4. Under section 28A(1)(b) of the Act, the respondent is required forthwith to close any and all trust accounts in the name of Harlgate Pty Ltd.

1. In this case, the Director of Consumer Affairs Victoria has applied to the Tribunal for an inquiry into the conduct of a licensed estate agent, Mr Clynton Mark Roberts.
2. The inquiry relates to Mr Roberts' failure to ensure that trust account audit reports were prepared and lodged for eight of the ten financial years between 2005 and 2014.
3. Mr Roberts has held an estate agent's licence since 26 August 1991. For all the relevant years he was director and Officer in Effective Control (OIEC) of Harlgate Pty Ltd (Harlgate).
4. Harlgate held a corporate estate agent's licence from 30 October 1989 until 16 November 2014. In mid-2013, Mr Roberts sold the real estate sales and property management business operated by Harlgate. Harlgate's licence was cancelled on 16 November 2014 because the company was de-registered on that date. Mr Roberts has continued to operate as a real estate agent in a reduced capacity conducting business with developers and other clients. He also has his own business as a property developer. He no longer employs any staff, nor does he operate a rental trust account. All his rent rolls have been sold.
5. At the hearing, Mr Roberts through his counsel agreed that he failed to comply with a number of important obligations under the Estate Agents Act 1980 (the Act). In particular, he agrees he breached :
   • Section 29B(2)(d), (e) and (f) of the Act by failing to have the business' trust accounts audited and copies of the audit reports lodged with Consumer Affairs Victoria (CAV). As OIEC Mr Roberts had the obligation to take reasonable steps to ensure that Harlgate complied with the Act, establish procedures designed to ensure that the business was conducted in accordance with the law, and monitor the conduct of the business in a manner that will ensure as far as practicable that those procedures are complied with.
   • Section 64 of the Act, which is a failure of Harlgate to cause its trust accounts to be audited within three months after 30 June in each of the relevant years and lodge the audit reports shortly afterwards with the Director. As director of Harlgate, Mr Roberts is responsible for the failure of Harlgate to comply with its obligations.
   • Regulation 13 of the Estate Agents (Professional Conduct) Regulations 2008 (the Regulations) in that he failed to exercise due skill, care and diligence in performing his functions as an estate agent, and engaged in conduct that is unprofessional.
6. The Director set out the grounds for taking action in the application to the Tribunal. Mr Roberts agreed with the matters alleged save that he disagreed that he had knowingly authorised Harlgate's contraventions, rather he said there was a complete absence of attention on his part to the administration of the business because of personal circumstances which I discuss below.
7. On the basis of Mr Roberts' admissions, I found the grounds for taking action proven, subject to the finding that Mr Roberts breached section 64 of the Act in that as Director he is responsible for Harlgate's failure to have its trust accounts audited and lodged within the time required, rather than that it was a deliberate contravention.
8. Both parties then made submissions about the determinations to be made under section 28A of the Act.
9. The solicitor for the Director asked that the Tribunal suspend Mr Roberts' licence until he lodges all outstanding audit reports. Counsel for Mr Roberts submitted that Mr Roberts should be given a short period of time, six weeks from the hearing date, in which to comply with his obligations, failing which he would accept that his licence be suspended. Both agreed that a reprimand was appropriate and also that Mr Roberts complete two units of CPD.
10. When the Director filed the application to the Tribunal, in January 2015, eight audit reports were outstanding for the financial years ending 30 June 2005, 2006, 2009, 2010, 2011, 2012, 2013 and 2014.
11. As at the hearing date of 29 July 2015, Mr Roberts had been able to lodge four out of the eight outstanding audit reports. The four reports for the years 20005, 2006, 2009 and 2010 remained outstanding.
12. Mr Roberts said at the hearing that he expected that his auditors would be able to finalise the audit reports for 2009 and 2010 by 26 August 2015. His auditors advised him that they would need to seek advice from the relevant authorities about how to proceed with the audit reports for 2005 and 2006. Mr Roberts said that the records for those years had been destroyed in a fire at a property in 2011.
13. There was some delay in finalising these reasons and before doing so I requested information from the parties as to whether all outstanding audit reports had now been lodged. The parties advised that they have now been lodged.
14. The question is what determinations under section 28A of the Act are appropriate.

1. In deciding the appropriate determinations, the Tribunal directs its consideration to the protection of the public and the maintenance of public confidence in, and the professional standards of, the regulated industry.[1]
2. The purpose of determinations is protective, not punitive, although, as observed by Maxwell P in Quinn v Law Institute of Victoria Limited:[2]

The available sanctions are, by their nature, punitive, and the objectives of specific and general deterrence - which serve the protection of the public - depend on the sanctions having punitive effect.

1. Although the above observations were made in the context of legal profession disciplinary proceedings, similar observations were made by Murphy J in Mario Inglese and Anor v Estate Agents Board and Anor:[3]

If an estate agent is to be disqualified, the purpose which the Tribunal should have in mind is not punishment of the individual (though it may appear to be a punishment to him) but the importance of protecting the public and the necessity to maintain standards in the conduct of an estate agents' business.

There is no doubt that the Act has these considerations in mind as its primary purpose, and the Tribunal imposing a "penalty" for "serious breaches" (as it is found) of the rules of professional conduct, must bear in mind the purpose of the Act when determining what penalty is appropriate.

1. In the context of protecting the public and maintaining professional standards, and public confidence in those standards, the Tribunal assesses the need for specific deterrence (deterring the individual from repeating the conduct) and general deterrence (deterring others in the industry from offending in a similar way, by signalling that to do so will attract consequences).
2. As a general observation, a breach of the requirement to have prepared and to lodge trust account audit reports is a serious matter. As observed by Jenkins J in Director of Consumer Affairs Victoria v Marshall:[4]

This Tribunal has consistently reinforced the fundamental importance of strict compliance with the Act and Regulations, particularly where a licence authorises the receipt of trust monies. Breaches of the kind committed in this case, as acknowledged by the respondent, prevent a proper monitoring of statutory compliance and identification of possible trust account deficiencies or defalcations.

1. The legislation requires estate agents' trust accounts to be audited. The obligation to complete and lodge trust account audit reports within a short period after the close of each financial year means that the regulator has the ability to quickly identify and take action in respect of issues of concern before further damage or harm is done.
2. The role and the responsibilities of an OIEC are at the centre of the regulatory regime. As Senior Member Proctor observed in Director of Consumer Affairs v Stewart:[5]

The role of OIEC is created in the Act as an essential element of the protection of the public. If the OIEC fails in that role, the public is at risk. That failure can take the form of a person not in fact being in effective control, even if the person acts honestly.

1. In determining the appropriate orders, the Tribunal will take into account other cases that may involve similar conduct but every case is different. Aggravating factors may be present or absent; the duration of the offending may be short-lived or long term; the contraventions may be motivated by dishonesty or occasioned through lack of care; the licensee may perfectly understand their obligations but choose to ignore them or may be ignorant of their obligations. Finally, the licensee's personal circumstances at the time of the contravention may be relevant as a mitigating factor for the Tribunal to consider.

Application of the guiding principles in this case

1. There is much common ground in the submissions, which are discussed in more detail below. The Director does not allege that Mr Roberts acted dishonestly. Other than these proceedings, Mr Roberts has no history of disciplinary matters and the Director has not received any complaints about Mr Roberts' conduct in the relevant years. The Director does not dispute the personal circumstances set out in Mr Roberts' witness statements. The Director remains concerned, however, that Mr Roberts did not take any action on his own initiative until the Director engaged with him in 2014.
2. I set out first the evidence about Mr Roberts' personal circumstances and then turn to the submissions made and my consideration.

1. Mr Roberts first worked in the real estate industry in 1983, aged 19. In 1989 he purchased a branch office of an established estate agency group in Balwyn and opened a second branch office in Glen Iris.
2. Mr Roberts and his wife married in 1992. Their first son was born in 1998, their second son in 2001. In 2003, their third child, a daughter, died in childbirth due, Mr Roberts says, to medical negligence. In the same year, their first son was diagnosed with an arachnoid cyst in the webbing part of his brain, which assumes one quarter of the frontal lobe, is inoperable, and has the potential effect that any sudden significant movement could result in brain damage. He suffers side-effects which require ongoing medical attention.
3. In his witness statement, Mr Roberts said that the combination of both tragedies significantly impacted on his life and health and also on his wife, resulting in the breakdown of their marriage. They separated for three years - 2005 to 2008. Mr Roberts says that this in turn affected his focus on his work and he left all administrative compliance to staff and, in particular, to his book-keeper.
4. Mr Roberts and his wife reconciled in 2008.
5. He described a number of other events that occurred in the period following the reconciliation:
   • They decided to build a new house in East Malvern but had issues with the builder. After three years the house was not complete and the budget had doubled. They took proceedings at VCAT in 2010, but discovered after twenty days of hearing that the builder had gone into liquidation. The liquidator appealed to the Supreme Court. That appeal is still unresolved and Mr Roberts says that he has incurred costs of over $500,000 which it appears he cannot recover.
   • In 2011, one of Mr Roberts' properties in East Malvern was, he says, burgled, ransacked and firebombed. He says the property was not insured and he suffered a loss of over $300,000. He says he is still in the process of slowly rebuilding the property.
   • In 2012, Mr Roberts' father passed away, which he describes as a huge loss to the whole family.

1. In July 2013, Mr Roberts sold the estate agency business due, he said, to personal family stress and medical issues. When Consumer Affairs Victoria (CAV) began engaging with him in 2014, Mr Roberts in turn engaged a new accountant to begin finalising the outstanding audit reports. He said that part of the delay in finalising the audits was due to difficulties he has experienced in gaining access to relevant documentation, files and records held by the purchaser of the business. He also says that the records for the business for the years 2005 and 2006 were lost in the 2011 fire.

1. In her reasons for taking action, the Director alleged that Mr Roberts had contravened or failed to comply with the Act and Regulations; is not of good character or otherwise a fit and proper person to hold a licence; and has been guilty of conduct as an estate agent which renders him unfit to hold a licence.
2. Counsel for Mr Roberts submitted that although Mr Roberts has contravened the Act, he is nevertheless of good character and a fit and proper person to hold a licence.
3. Counsel submitted that Mr Roberts is honest and hardworking, a man of integrity who has not let anyone down and that this conduct should be seen as an aberration in an otherwise unblemished career and against a background of extraordinary and prolonged personal difficulties.
4. Counsel submitted that appropriate determinations were:
   • That Mr Roberts be reprimanded;
   • That he be ordered to complete two units of CPD training -how to establish and maintain an agency; and identifying ethical and legal requirements - within 6 months; and
   • That Mr Roberts give an undertaking that, to the best of his ability and his auditors, all audits be completed within 6 weeks - and accept that if they are not there be a self-executing order that he be suspended from trading as an estate agent.
5. In her submissions the solicitor for the Director said that there was not a lot of difference in the ingredients of the determinations the Director sought, only in the way a suspension should come into effect. The Director sought that a suspension be imposed until the outstanding audit reports were completed and lodged. The Director's concern is that without a suspension there is little incentive to complete the reports.
6. The Director also sought an order that Mr Roberts close the two trust accounts in the name of Harlgate.
7. The parties made different submissions about the importance of general deterrence.
8. Counsel for Mr Roberts submitted that general deterrence does not apply and it would be clear to anyone listening to the recording of the hearing that this was an extraordinary period in Mr Roberts' life.
9. The solicitor for the Director submitted that general deterrence was relevant - this was significant non-compliance with a fundamental obligation. The solicitor submitted there were similarities with the case of Director of Consumer Affairs v Redford, [6] a case concerning a conveyancer who had failed to comply with obligations to have trust accounts audited, despite warnings and despite proceedings taken by the Director. In that case, Senior Member Davis, at paragraph 14, took into account Ms Redford's depression and anxiety illness but regarded the offences as serious and continuing.

1. As Counsel for Mr Roberts submitted, the expression 'fit and proper' takes its meaning from its context.
2. In Australian Broadcasting Tribunal v Bond, [7] Toohey and Gaudron JJ observed:

The expression "fit and proper person", standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of "fit and proper" cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to the likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.

1. In Hughes and Vale Pty Ltd v The State of New South Wales (No 2),[8] the High Court observed that the purpose of the words was:

to give the widest scope for judgment and indeed for rejection. 'Fit' (or 'idoneus') with respect to an office is said to involve three things, honesty, knowledge and ability: 'honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it' - Coke. When the question was whether a man was a fit and proper person to hold a licence for the sale of liquor it was considered that it ought not to be confined to an inquiry into his character and that it would be unwise to attempt any definition of the matters which may legitimately be inquired into; each case must depend upon its own circumstances.[9]

1. Referring to the 'three things - honesty, knowledge and ability', I agree that on the evidence Mr Roberts is an honest and hardworking man. I also accept that Mr Roberts knew what he ought to do. The problem is that for an extended period of time he did not, apparently, have the ability to 'execute' his obligations and did neglect them. I also have a difficulty in seeing the contraventions as an aberration in an otherwise unblemished career, as Counsel submitted they should be characterised, because the contraventions continued for almost a decade.
2. As Counsel submitted, Mr Roberts has now changed the way he works. He has sold his business and now acts for select developers and a few select clients. Without the pressure of a busy branch office business, and the responsibilities of an OIEC, he is likely, in my view, to be better able to fulfil his regulatory obligations. If he had been able to complete all outstanding audits by an earlier date, however, I would have more confidence that he will not neglect these important obligation in the future.
3. I accept that there have been a number of personal tragedies and personal difficulties which are unusual in their range and duration.
4. The 2003 death of a child in childbirth and the diagnosis of another child with a serious condition, and the consequent separation with his wife provide an explanation for Mr Roberts "dropping the ball" as far as his business was concerned, for a period of time. But Mr Roberts and his wife had reconciled by 2008.
5. What concerns me and is not, in my view, adequately explained by the events described after 2008, is that there was then an extended period in which Mr Roberts continued to fail to comply with his trust accounting obligations despite being otherwise able to or at least prepared to carry on the business and continue to receive trust moneys.
6. The character references and testimonials provided by Mr Roberts indicate that Mr Roberts has been able to function at a professional level for a number of years in every other aspect of his work as an estate agent.
7. He is, clearly, highly regarded by those who gave references. The references come from former clients, colleagues, and potential competitors. They speak highly of his honesty, ethics and knowledge. One in particular speaks of Mr Roberts' advice and guidance through a number of property dealings over the last five years and says that at all times Mr Roberts had acted professionally.
8. While these references are to his credit, what concerns me is that Mr Roberts' personal difficulties did not apparently prevent him from carrying on his estate agency business at a relatively high level, although I accept that doing so caused strain for him.
9. Mr Roberts was able to lodge audit reports for the financial years ending 30 June 2007 and 2008 at the time. It was not adequately explained why he was able to lodge those reports but not the then outstanding 2005 and 2006 reports. I appreciate that the records for those years were subsequently destroyed by the fire in his property, but that fire occurred in 2011. While the loss of records in the fire explains Mr Roberts' current difficulty in completing the reports, if Mr Roberts had attended to the audit reports for those years at the time he was able to fulfil his obligations for the 2007 and 2008 years, the loss of records in a later fire would not now be a difficulty.
10. Similarly, Mr Roberts explained the delay in finalising the outstanding reports by the difficulty he has had in gaining access to records held by the purchasers of the business. If he had attended to the outstanding audit reports before completing the sale of the business he would not have had that difficulty.
11. As the solicitor for the Director submitted, while there is no doubt that Mr Roberts' personal circumstances were difficult, many licensees experience personal difficulties at different times. No-one is immune from adverse events.
12. Where difficult personal circumstances persist however, and if they are impacting on a licensee's ability to comply with his or her legal obligations, then the licensee needs to make some decisions. If they wish to carry on an estate agency business they need to take some action - bring in some assistance, restructure the business, ask for help. This is of particular importance where a licensee holds the position of OIEC or operates a trust account or both.
13. I remain concerned that at some point between 2005, when the contraventions began, and 2014, Mr Roberts did not either ask for help with his responsibilities as OIEC or recognise that he could not continue to avoid his trust accounting obligations. I remain concerned that Mr Roberts did not ensure that all outstanding audit reports were lodged well before the hearing.
14. I agree with the submission on behalf of the Director that general deterrence is relevant in this case, bearing in mind the importance of protecting the public and maintaining professional standards and public confidence in those standards. It is essential that other licensees understand that a failure to comply with fundamental obligations such as this will bring consequences.
15. As submitted by the solicitor for the Director, trust account audit reports have an important role in acting as a red flag to alert CAV to potential issues.
16. While Mr Roberts took action once CAV had made contact with him in late 2014, no licensee should wait until missing trust account audit reports show up on CAV's system. It ought to be clear to any licensee operating a trust account that failure to lodge reports is likely to bring enforcement action at some time. Problems should be addressed well before CAV inspectors make the first call.
17. I have considered the submissions from the parties about when any suspension should commence. The solicitor for the Director asked that the Tribunal suspend Mr Roberts' licence until he lodges all outstanding audit reports. Counsel for Mr Roberts submitted that Mr Roberts should be given a short period of time, six weeks from the hearing date, in which to comply with his obligations, failing which he would accept that his licence be suspended.
18. In my view, neither approach sufficiently meets the need for general deterrence; some period of suspension is warranted in the interests of general deterrence.
19. I take into account that Mr Roberts lodged some of the outstanding reports by the date of hearing and lodged the rest by the date of these orders, which has reduced the period of suspension I have imposed.
20. If the audit reports had remained outstanding, I would have considered making orders such as those in Director of Consumer Affairs Victoria v Marshall. [10] In Marshall, the licensee had failed to ensure that trust account audits reports were lodged for a five year period. None had been lodged at the date of hearing. Mr Marshall's licence was suspended for a period of 12 months, with an order that it be cancelled if he did not lodge the outstanding audit reports by a specified date
21. I take into account that in the trust account audit reports which had been lodged at the date of hearing, no deficiency had been identified, and no deficiency has otherwise been alleged. This is relevant to determining the harm that has been done in this particular case but is less relevant to general deterrence. I also take into account the mitigating factors present in this case, although I repeat the observations made above in relation to those factors.
22. Taking into account those matters together with the need for general deterrence in aid of protecting the public and maintaining professional standards, a period of suspension in this case of six months is appropriate in my view. There will be a four week period before the suspension comes into effect, to allow time for Mr Roberts to organise his business affairs.
23. I agree with the parties that a reprimand is appropriate. As observed by Member French in Acting Director of Consumer Affairs v Cohen, [2014] VCAT 2220 at [9], a reprimand is a serious sanction which operates to provide general and specific deterrence. The proposed order for further education is also appropriate in my view.

[1] Re Collins v Estate Agents Board (1994) 7 VAR 394 [400].

[2] [2007] VSCA 1025, at [30].

[3] Supreme Court of Victoria (1988) no. N327/328, 15 August 1989 at page 22.

[4] [2013] VCAT 1316 at [49].

[5] [2014] VCAT 446

[6] [2014] VCAT 405

[7] [1990] HCA 33 (1990) 170 CLR 321 at page 380

[8] [1955] HCA 28; (1955) 93 CLR 127.

[10] [2013] VCAT 1316.