Director Consumer Affairs Victoria v Shaba (Revised Reasons) (Review and Regulation) [2014] VCAT 815

1. Pursuant to s28A(1)(f) of the Estate Agents Act 1980(the Act) , the Tribunal declares that the respondent is ineligible to hold a licence until 9 July 2022.

1. Pursuant to s28A(1)(a) of the Act, the Tribunal reprimands the respondent.

1. The Director of Consumer Affairs makes application in this case for orders in relation to the respondent, Mr Afif Shaba.
2. Mr Shaba was licensed as an estate agent from 19 January 2001 until 20 February 2014. Since July 2007, Mr Shaba has also been the sole director, secretary, and officer in effective control of Northern Real Estate Pty Limited, (NRE) which itself was licensed as an estate agent
3. The Director's application for an inquiry, under section 25 of the Act, follows an investigation by Consumer Affairs Victoria inspectors in 2012 and 2013 after receiving complaints that NRE had failed to pass on amounts owing to landlords of rent paid by tenants.
4. Mr Shaba substantially cooperated with the investigation. He volunteered to the inspectors that he began drawing on monies in trust to pay business expenses in March 2012 after the business of NRE had a severe slow down in 2011 and 2012, and after he had exhausted all his personal funds.
5. It was not in dispute that at one point the trust account had a deficiency of around $50,000.
6. By November 2012 when the inspectors first visited NRE, Mr Shaba had reduced the deficiency to around $15,000. He undertook to the inspectors that he would pay back the remainder of the deficiency, get his accounts audited, sell the business and cease trading as an estate agent. The business sold in 2013. NRE's licence was cancelled in March 2013.
7. Mr Shaba wrote a letter of explanation dated 3 December 2013 in which he expressed his deep remorse at the 'regretful mistake' he made of using trust monies to pay business expenses. In that letter he said that all outstanding monies had been repaid from the sale of the business.
8. At the hearing on 23 May 2014, the solicitor for the Director relied upon the affidavits of the two inspectors, Stephen Baker and Saul Dullard.
9. Mr Shaba did not contest their evidence and I made findings that:
   • Mr Shaba breached section 59(1)(b) of the Act in that from about January 2012 to November 2012, NRE breached section 59(1)(b) in that it was an estate agent and did not retain about $50,000 received as a stakeholder or in trust in its trust account until paid to the person entitled thereto; and at the relevant time Mr Shaba was an officer of NRE and knowingly authorised the contravention;[1]
   • Mr Shaba breached section 91(1)(a)(i) of the Act in that from about January 2012 to November 2012, NRE breached section 91(1)(a)(i) of the Act in that it was an estate agent and fraudulently converted to its own use about $50,000 which had been received by it on behalf of others in the capacity of estate agent, and at the relevant time Mr Shaba was an officer of NRE and knowingly authorised the contravention;
   • Mr Shaba is not of good character or otherwise a fit and proper person to hold a licence; and
   • Mr Shaba has been guilty of conduct as an estate agent which renders him unfit to hold a licence
10. The solicitor for the Director made submissions about the appropriate determination. Mr Shaba made a number of submissions. He referred to having been depressed, and having sought counselling to assist him but as at the date of hearing had not filed any character references, or any medical or other relevant evidence. In the event, I adjourned the hearing to give Mr Shaba the opportunity to obtain further material addressing these issues, and to seek advice and/or representation.
11. Mr Shaba did not file any further material, did not appear at the resumed hearing and did not seek an adjournment beforehand or otherwise communicate with the Tribunal or the Director. The balance of the hearing therefore proceeded in his absence.

1. After conducting enquiry under s.25 of the Act, the Tribunal, if it considers appropriate may, by order, do any one or more of the following under s.28A of the Act.
   • (a) Reprimand the person
   • (b) Require the person to comply within or for a specified time with a requirement specified by the Tribunal
   • (c) Cancel any licence held by the person and disqualify the person either permanently or for a specified period from holding a licence;
   • (d) Suspend any licence held by the person for a specified period not exceeding one year
   • (e) Impose any condition or limitation on any licence held by the person
   • (f) Declare any person to be ineligible to hold a licence or to be an agent's representative either permanently or temporarily
   • (g) Require the person to enter into an undertaking to perform or not to perform certain tasks to be specified in the undertaking.
2. In addition to the above powers, the Tribunal determines that the person has contravened or failed to comply with the Act or the Regulations, it may impose a penalty not exceeding $5,000 on the person and specify when the penalty must be paid (under s.28A(2)).

1. In her application, the Director sought orders that Mr Shaba be permanently disqualified from holding a licence, and pay a penalty of $5,000.
2. Mr Shaba did not oppose disqualification as an estate agent but asked to be able to continue to work as an agent's representative because the work is all he knows. He said that as an employee he would not be under the same pressure and would not have the same responsibilities. He said that he has been receiving counselling, is not working and is living with his parents, as his marriage has broken up.
3. It is well established that in imposing disciplinary penalties, the Tribunal's role is protective not punitive. Orders are made so that the public may be protected, professional standards maintained and the reputation of the particular profession protected.[2] General deterrence - the deterrence of others from engaging in the same conduct by an understanding that adverse consequences will follow - is relevant when considering how the public will best be protected.
4. In this case, Mr Shaba's conduct strikes at the heart of the obligation of trust an estate agent owes to those whose money he or she receives. It is, and ought to be, fundamental that monies held in trust are never to be treated as funds available to be used by the agent for his or her own purposes.
5. Whatever Mr Shaba's intentions, he converted to his own use funds that had been paid by tenants in the reasonable expectation that they would be paid to the landlord, and funds that the landlords reasonably expected would be paid to them promptly.
6. I note that the Act provides in section 91 that the fraudulent conversion of trust monies is an indictable offence with a maximum penalty of 10 years imprisonment. It is, clearly, a serious matter and general deterrence is an important factor in this case.
7. In Acting Director of Consumer Affairs Victoria v Moularas[3] Senior Member Davis considered the appropriate determination in respect of an agents' representative who had misappropriated $14,753 being rent monies and bond monies paid to him in cash over a five-week period. Mr Moularas confessed his misappropriation to his employer at the end of that period, which the Senior Member took into account. Senior Member Davis observed, at [21]:

In this particular instance, the offence which the respondent has committed is of a very serious nature. Honesty is something that the community is entitled to expect in relation to an estate agent and their representatives.... It is important that the person be treated severely so that others will not follow the bad example that has been set by the respondent.

1. In Moularas, the Senior Member noted that it appeared to be the respondent's first offence and declined to ban him permanently but decided that a ban of seven years was appropriate.
2. Like Mr Moularas, Mr Shaba has no prior disciplinary findings against him. Unlike Mr Moularas, Mr Shaba was the sole director and officer in effective control of the agency, and therefore in a position of greater responsibility and accountability. While the exact amount of the deficiency in this case was not able to be established - the Director relies on Mr Shaba's own estimate that it reached $50,000 at one point - it was a substantial amount of money on any view.
3. Although Mr Shaba emphasised that he did not use any of the money for personal purposes, he quite properly did not seek to minimise the wrongdoing on that account.
4. I have considered whether a permanent disqualification is warranted. Taking into account that this is Mr Shaba's first offence, my view is that a reprimand and ban of eight years is appropriate. In the circumstances, which include Mr Shaba's impecuniosity, and the fact that he will not be able to work as an estate agent for a significant time, I decline to order a fine.
5. As noted above, Mr Shaba expressed the wish to be able to work as an agents' representative. In the application, the Director did not seek a specific order prohibiting Mr Shaba from doing so, but it is not appropriate to make any provision for Mr Shaba to do so. As pointed out by the solicitor for the Director at the hearing on 7 July, section 44 of the Act prohibits an estate agent from employing in any capacity in connexion with his business any person who is for the time being disqualified under the Act from holding a licence or who because of his conduct or reputation is not a fit and proper person to be employed in an estate agency.

[1] By operation of section 143 of the Fair Trading Act 1999 and section 195 of the Australian Consumer Law and Fair Trading Act 2012

[2] See Ha v Pharmacy Board of Victoria [2002] VSC 322, at [92] - [94]; Acting Director of Consumer Affairs Victoria v Moularas [2014] VCAT 474 at [16] - [20] and the cases referred to; Acting Director of Consumer Affairs Victoria v Cohen [2014] VCAT 220

[3] [2014] VCAT 474