Director of Consumer Affairs v Worldwide Scope Pty Ltd (Review and Regulation) [2013] VCAT 702

1. Pursuant to s28A(1)(f) the Tribunal declares that the respondent is permanently ineligible to hold an estate agent's licence.

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

1. The Director of Consumer Affairs makes application in this case for orders in relation to the respondent, which holds a corporate estate agent's licence.
2. The application, under s25 of the Estate Agents Act 1980 (the Act), follows an investigation by Consumer Affairs Victoria inspectors in September and October 2011, after a series of complaints by landlords who had engaged the respondent as property manager for their investment properties.

1. The allegations made in this proceeding relate to the period between 2009 and 2011 when the respondent carried on business under the name Century 21 @ Waterview Docklands. The business was a franchise operation.
2. The complaints to Consumer Affairs followed a similar pattern: rental payments were consistently late, or not paid at all; the respondent seemed unable to account for rental payments received; in some cases tenants paid rent at a higher rate than the rent disclosed to the landlord; and bonds paid by tenants had not been lodged with the Residential Tenancies Bond Authority (RTBA).
3. The inspectors found that the respondent's records were sparse and difficult to reconcile, the trust account cheque book had many blank cheque butts; bonds had not been paid to the RTBA; there were outstanding payments owed to clients in excess of $65,000.00; and the trust account had a deficiency of $64,453.78.
4. As at the hearing date, the outstanding payments that have been admitted exceed $100,000.00, additional claims lodged exceed $40,000.00, and there are pending claims in relation to bonds of over $24,000.00.
5. During the period 2009-2011, Mr Syed Ali Abbas was a director, licensed estate agent and the officer in effective control of the estate agency business. Mr Abbas resigned as a director in September 2011 and left Australia in January 2012. He has not returned.
6. The Director has not been able to give notice to Mr Abbas of these proceedings. The registered office and former principal place of business, an address in Docklands, is empty. Documents served at that address have been returned to Consumer Affairs.
7. Related proceedings against Mr Abbas have been struck out with a right of re-instatement. Because Mr Abbas has not yet received notice of these proceedings, the Director does not seek, and the Tribunal will not make any determinations under s25(2) of the Act as to whether Mr Abbas is of good character or is a fit and proper person to hold a licence.
8. The sole director of the respondent as at the date of the application and hearing was Mr Jay Bisset. Mr Bisset attended the hearing, having been served with the application. He established, however, that he had no involvement in the business; did not hold an estate agent's licence; was appointed a director in 2008 at the request of his former father-in-law whose business it was; believed that the business had been sold; had been told by the respondent's then accountant in 2009 that he had been removed as a director; and had never met or known of Mr Abbas. Mr Bisset asked for but was unable to obtain a statutory declaration from the former accountant.
9. The Director made no allegations of any wrongdoing against Mr Bisset. The solicitor for the Director stated that there was no evidence linking Mr Bisset to the operation of the business.
10. I make no adverse findings against Mr Bisset. I accepted Mr Bisset's uncontested evidence to the above effect.
11. Mr Bisset stated that he did not oppose the orders sought. The Director had originally sought a monetary penalty of $5,000.00 under s28A(3) of the Act but withdrew that application after consideration of Mr Bisset's statements and evidence of his financial penalties. While Mr Bisset would not be personally liable for any monetary penalty, there is no doubt that the burden of dealing with the respondent's liability for the penalty would fall on him, which would be inequitable in all the circumstances.

1. The Director alleges that the respondent has breached a number of provisions of the Act; and has breached s406 of the Residential Tenancies Act, which requires bonds to be lodged with the RTBA within 10 days of receipt.
2. The Director relied upon affidavits of Hin Uy Dan and Brett Edward Watson, who were at the relevant time inspectors appointed under s114 of the Fair Trading Act 1999 and, by virtue of that appointment, inspectors for the purpose of the Act.
3. Those affidavits set out the actions taken in the investigation and the matters found. The evidence of the inspectors establishes, and I find, that the respondent has contravened s406 of the Residential Tenancies Act (duty to lodge bond monies with the RTBA) and the following sections of the Act:

Section 63: obligation to keep full and accurate accounting records so as to show the true position of all monies received and required to be dealt with in accordance with s59:

Section 91(1)(b)(ii): obligation to deliver or pay rental monies received and held including monies held in trust.

1. Also in evidence were 15 affidavits made by various landlords who had engaged the respondent as the property manager for their investment properties. The solicitor for the Director indicated that the affidavits filed were a representative sample of the many complaints received.
2. The complaints and concerns set out in the affidavits followed a similar pattern. Each of the affidavits described a most unsatisfactory experience for those landlords, which included late rental payments, repeated promises that rent would be paid on time which were not fulfilled; missing rental payments and bonds not lodged. The financial impact was significant, particularly for landlords who relied on rental payments to meet their mortgage obligations. In some cases, when landlords spoke directly to their tenants, they discovered that the tenant had been paying a higher rent than had been disclosed to them. In all cases, they had been let down.
3. The claims for outstanding payments now exceed $140,000. A large part of those claims have been admitted and paid out the Victorian Property Fund. There are pending claims against the Fund in relation to bonds not lodged, which will crystallise when the relevant tenancies end. These total a further $24,889.66. The blank cheque butts for many of the cheques drawn on the respondent's accounts make it almost impossible to know now where the money has gone.
4. In the circumstances, permanent disqualification of the respondent from holding a licence is appropriate, as is a reprimand. And I will so order.