Director of Consumer Affairs Victoria v Bill Kaye & Co Pty Ltd (Review and Regulation) [2017] VCAT 942

DIRECTOR OF CONSUMER AFFAIRS V BILL KAYE & CO PTY LTD**

1. Between August 2013 and October 2014, the respondent failed to comply with the Regulations by failing to exercise all due skill, care and diligence in performing its functions as an estate agent, in contravention of Regulation 13(1) of Estate Agents (Professional Conduct) Regulations 2008 (the Regulations).
2. In September 2010, and between August 2013 and February 2015, the respondent failed to comply with the Regulations by failing to act fairly and honestly and to the best of its knowledge and ability in the performance of its functions as an estate agent, in contravention of Regulation 11 of the Regulations.
3. In September 2010, and between August 2013 and February 2015, the respondent contravened the Regulations by engaging in conduct that is unprofessional and/or detrimental to the interests of the estate agency industry, in contravention of Regulation 13(2) of the Regulations.
4. Between August 2013 and November 2014, the respondent failed to comply with the Regulations by failing to act in a principal's best interests, in contravention of Regulation 12(1) of the Regulations.

DIRECTOR OF CONSUMER AFFAIRS V VASSILIOS (BILL) KAIMAKAMIS**

1. In September 2010, and between August 2013 and February 2015, in his capacity as the officer in effective control of the company, the respondent failed to comply with the Act by failing to take reasonable steps to ensure that any estate agents, agents' representatives or employees of the company complied with laws relevant to the conduct of the business, in contravention of section 29B(2)(d) of Estate Agents Act 1980 (the Act).
2. In September 2010, and between August 2013 and February 2015 the respondent, in his capacity as the officer in effective control of the company, failed to comply with the Regulations by engaging in conduct that is unprofessional and/or detrimental to the reputation of the estate agency industry, in contravention of Regulation 13(2) of the Regulations.

1. The principal registrar is directed to list Z297/2016 and Z298/2016 for a directions hearing before me for the purpose of making further procedural orders.

1. Mr Vassilios (Bill) Kaimakamis is a licensed estate agent. He is also a director and officer in effective control of Bill Kaye & Co Pty Ltd (Bill Kaye & Co), which holds a corporate estate agent's licence and which trades as City Wide Real Estate (City Wide) in Clayton. His sons Costa, Aki and Phillip Kaimakamis each hold estate agents licences and are officers of Bill Kaye & Co.
2. These proceedings are inquiries under s 25 of the Estate Agents Act 1980 (the Act) into the conduct of Bill Kaye & Co ( Z297 of 2016); and the conduct of Mr Bill Kaimakamis in his capacity as officer in effective control of Bill Kaye & Co ( Z298 of 2016).
3. The purpose of the inquiries is to determine whether the respondent in each case:
   • (a) has contravened or failed to comply with the Act or the regulations made under the Act; and/or
   • (b) is a fit and proper person to hold a licence; and/or
   • (c) has been guilty of conduct as an estate agent which renders it or him unfit to hold a licence.
4. Both proceedings were heard together and the facts are in common. While I have made separate findings in each case and given reasons for those findings, for ease of reference I have included my reasons for the findings in both cases in one document.
5. In each application for inquiry the Director of Consumer Affairs Victoria (the Director) has set out 'Grounds for Taking Action' (grounds), which are alleged contraventions of particular requirements under the Act or the Estate Agents (Professional Conduct) Regulations 2008 (the Regulations); and alleged particulars (factual allegations) under each ground.
6. In broad terms, the proceedings concern four matters:
   • The rental of 21 properties to a single tenant, Mr Vasilios Maikantis,[1] over a 14 month period, what was said and not said to landlords, and agreed deficiencies in the rental records;
   • The inclusion of a condition on 18 signed tenancy agreements to the effect that late payment of rent would render the tenant liable to pay a $110 late payment fee;
   • Failing to give three bonds to the RTBA within the required time; and
   • The circumstances in which a tenancy at 5/9 Joyce Street, Elwood was terminated.
7. Each of the grounds relied on a different combination of those matters. For that reason, while there is considerable overlap in the factual allegations relied upon under different grounds and repetition in the reasons, it has been necessary to consider each ground separately.
8. By the time of the hearing before me, the parties had reached agreement on most of the factual allegations made by the Director; and the Director, with leave, filed amended applications for inquiry withdrawing a number of factual allegations.
9. The Director provided a 'Schedule of Factual Findings' (the applicant's Schedule) which contained the agreed facts together with some additional facts which were not specifically agreed but are based on unchallenged witness statements filed by the Director.
10. With some minor exceptions the agreed facts establish the factual allegations made by the Director. The dispute is about what follows from those facts, namely
    • has the Director established the grounds, which these reasons deal with;
    • have the respondents been guilty of conduct as an estate agent which renders them unfit to hold a licence; and
    • what orders, if any, by way of determinations should I make under s 28A of the Act?[2]
11. For the reasons set out below, I am satisfied that in each case the Director has established grounds for taking action under s 25 of the Act.
12. In summary, I have found that Bill Kaye & Co:
    • (Ground 1) In contravention of r 13(1) of the Regulations, failed to comply with the Regulations by failing to exercise all due skill, care and diligence in performing its functions as an estate agent, in that:
      • Between August 2013 and October 2014, it facilitated the rental of 21 properties of which it was leasing agent and property manager to the same tenant, who was later charged with cultivating and trafficking a commercial quantity of cannabis from the 21 properties, and whose alleged conduct resulted in damage to five of the properties and required the landlord(s) of those properties to arrange, and in some case, pay for repair work to be done;
      • In the same period omitted to notify all landlords of the fact that Mr Maikantis was the tenant of multiple properties and continued to endorse him as a tenant; and
      • The rental files were not maintained in the same or a similar manner as a random sample of 15 other rental files in the office, in that 13 files did not contain a copy of a tenancy application form, 14 did not contain a copy of a bond claim form, nine did not contain a copy of a condition report, 12 did not contain a copy of any bills relating to the property in question, 15 did not contain a copy of any correspondence between the respondent and the landlord(s), and none contained copies of the tenant's financial records.
    • (Ground 2) In contravention of r 11 of the Regulations failed to at all times act fairly and honestly and to the best of its knowledge and ability in the performance of its functions as an agent, in that:
      • On 3 September 2010, and between 2 August 2013 and 12 February 2015, the respondent included, on a total of 18 signed tenancy agreements, a condition that the late payment of rent would render the tenant liable to pay a late payment fee of $110. The respondent did so despite knowing that it was unlawful to demand or accept a penalty fee for the late payment of rent.
    • (Ground 3) In contravention of r 13(2) of the Regulations, it engaged in conduct that is unprofessional or detrimental to the reputation or interests of the estate agency industry in that:
      • Between August 2013 and October 2014, it facilitated the rental of 21 properties of which it was leasing agent and property manager to the same tenant, who was later charged with cultivating and trafficking a commercial quantity of cannabis from the 21 properties, and whose alleged conduct resulted in damage to five of the properties and required the landlord(s) of those properties to arrange, and in some case, pay for repair work to be done;
      • In the same period omitted to notify all landlords of the fact that Mr Maikantis was the tenant of multiple properties and continued to endorse him as a tenant;
      • The rental files were not maintained in the same or a similar manner as a random sample of 15 other rental files in the office, in that 13 files did not contain a copy of a tenancy application form, 14 did not contain a copy of a bond claim form, nine did not contain a copy of a condition report, 12 did not contain a copy of any bills relating to the property in question, 15 did not contain a copy of any correspondence between the respondent and the landlord(s), and none contained copies of the tenant's financial records; and .
13. In summary, I have found that Mr Vassilios (Bill) Kaimakamis in his capacity as officer in effective control of Bill Kaye & Co:
    • (Ground 1) In contravention of s 29B(2)(d) of the Act, failed to take reasonable steps to ensure that any estate agents, agents' representatives or other employees of the business complied with laws relevant to the conduct of the business while engaged in that business; and
    • (Ground 2) in contravention of r 13(2) engaged in conduct that was unprofessional or detrimental to the reputation or interests of the estate agency industry.
14. The next step in the proceedings is for the parties to address the question of whether the conduct rendered the respondents unfit to hold an estate agent's licence. When that matter is decided the parties will then make submissions and I will consider what determinations ought to be made under s 28A of the Act.

Multiple rentals to the same tenant: Background

1. At various times between August 2013 and October 2014, Mr Maikantis rented 21 properties, for periods between 6 and 12 months, in respect of which City Wide was the leasing agent and property manager.
2. Following a police raid in January 2015, police charged Mr Maikantis with cultivating and trafficking a commercial quantity of cannabis from the properties. In simple terms he and a syndicate had used them as 'drug houses' for growing marijuana. Five of the properties were found damaged as a result of being used in this way. Mr Maikantis was later convicted and is serving a prison term.
3. In his opening statement, Mr Ventrice for the Director made it clear that the Director does not allege that Mr Kaimakamis or Bill Kaye & Co had any knowledge of the tenant's activities or were involved in any illegal activity.
4. Police did not charge Mr Kaimakamis or any other estate agent or other employee of City Wide with any criminal offence.
5. The particulars do not allege that Mr Bill Kaimakamis or Bill Kaye & Co by their actions or inaction caused the damage to the five properties. None of the landlords of the damaged properties have taken civil action against City Wide.

1. The evidence filed on behalf of the Director comprised five folders of material:
   • Affidavit of Chris Vlahakis affirmed 6 August 2015, and exhibits 1-22 to the affidavit. Mr Vlahakis is a compliance and enforcement officer in the Enforcement and Legal Services Branch of Consumer Affairs Victoria (CAV) and is an inspector appointed by the Director under section 114 of the Fair Trading Act 1999.
   • Affidavit of Hamish Singh sworn 16 October 2015, and exhibits 1 - 3 to the affidavit. Mr Singh is an acting compliance and enforcement officer in the Enforcement and Legal Services Branch of CAV.
   • Affidavit of Laura Roberts affirmed 11 August 2015. Ms Roberts was the tenant of a property in Joyce Street Elwood who sought and obtained early termination of her fixed term tenancy.
   • Affidavit of Detective Acting Sergeant Joshua Tate Renfrey affirmed 4 August 2015. Detective Acting Sergeant Renfrey's affidavit relates to the investigation by the Drug Task Force in relation to suspected illicit drug cultivation from properties rented by Mr Maikantis and the outcome of that criminal investigation.
   • Affidavits of owners/landlords of the five rental properties found to be damaged:
     • Affidavit of Nagender Kasarla affirmed 12 August 2015,
     • Affidavit of Lou Iliadis affirmed 28 August 2015 and exhibits 1-3
     • Affidavit of Gerald Weerasooriya affirmed 28 August 2015 and exhibits 1-3
     • Affidavit of Diana Chow, affirmed on 1 September 2015 and exhibits 1-3
     • Affidavit of Christos Hletsos affirmed 11 September 2015.
2. The respondents did not require the Director's witnesses to attend for cross-examination.
3. The evidence on behalf of the respondents comprised:
   • Affidavit of Vassilios (Bill) Kaimakamis sworn 30 January 2017
   • Affidavit of Aki Kaimakamis sworn 30 January 2017 and exhibits 1-8
   • Affidavit of Phillip Kaimakamis sworn 30 January 2017.
4. Bill Kaimakamis and Phillip Kaimakamis gave additional evidence in chief and were cross-examined. Aki Kaimakamis was not required to attend for cross-examination.

1. It is apparent from the material in the five folders of evidence filed by the Director that CAV carried out an extensive investigation into the respondents' conduct in respect of the 21 properties rented by Mr Maikantis.
2. Much of the material relates to enquiries made and documents obtained in the course of the investigation. Some of the evidence related to allegations which were not pursued in the amended applications for inquiry, including allegations that Mr Aki Kaimakamis had made various misrepresentations to Ms Roberts in respect of her requests for early termination of her tenancy.
3. After the respondents filed a Response and Identification of Agreed Facts (the respondent's Response) in February this year, the Director file the applicant's Schedule referred to above.
4. The applicant's Schedule contained 'agreed facts' in Part 2, which the applicant submitted appeared from the respondents' Response. I agree that is the case.
5. The Schedule also contained a further category of facts in Part 3 submitted to arise from the un-contradicted and unchallenged evidence of the applicant's witnesses. I agree that they do so.
6. In paragraph 1 of the applicant's Schedule and in the written submissions on behalf of the Director, it was submitted that I could make a range of factual findings that in a number of cases went beyond the factual allegations.[3]
7. The approach I have taken to making factual findings is to consider whether evidence is relevant to establishing the factual allegations made under each ground in the amended applications for inquiry.
8. To the extent that I am asked to make findings beyond the factual allegations I have not done so, for the following reasons.
9. First, in disciplinary proceedings such as this, procedural fairness requires that the tribunal not go beyond the factual allegations made and make findings about matters that were not expressly alleged.[4] The respondent is entitled to assume that the case they will have to meet is the one set out in the grounds.
10. Second, the principles in Briginshaw[5] apply here. The allegations and the potential consequences are serious. I agree with the summary of those principles in the written submissions on behalf of the Director, at [2] - [8]. As submitted, I must be reasonably (or comfortably) satisfied as to the existence of each fact in issue, in reaching a determination that each of the matters alleged occurred.
11. Third, as observed above, with some minor exceptions the agreed facts establish the factual allegations made by the Director in the Amended Applications for Inquiry. I do not need to go further.
12. For example, Paragraphs 16 to 19 in Part 2 of the applicant's Schedule relate to the contents of the tenancy application forms in the eight out of 21 files where there was one; the dates (where legible) that appeared on the tenancy application forms; the inclusion in each of the standard prohibition on assignment and sub-letting without the landlord's written consent; the fact that none of the 21 files contained any such consent; and the fact that City Wide was unaware of any assignment or subletting by the tenant.
13. Because these matters are not the subject of any factual allegation in the particulars, it is not necessary for me to make any findings about them. In any event, it is not disputed that the files relating to Mr Maikantis' tenancy were not maintained in the same or similar manner to a random sample of 15 other rental files maintained by City Wide, which is the allegation made.
14. Similarly, paragraphs 22 to 78 in Part 2 of the applicant's Schedule relate to the individual experiences of the five landlords whose homes were found damaged in January 2015.
15. They provide background information about the circumstances in which Mr Maikantis came to be the tenant, consistent with the allegation in 1(b) above that although the respondent was aware that Mr Maikantis was the tenant of numerous rental properties managed by the respondent, it continued to endorse Mr Maikantis.
16. To the extent they relate to damage to the five properties, they establish the factual allegation in paragraph (a) of Ground 1 in Z2971, that Mr Maikantis' alleged conduct resulted in damage to several of the 21 properties, and required the landlord(s) of those properties to arrange, and in some instances pay, for repair work to be done. I make that finding below.
17. Because that is the extent of the allegation, and it is not alleged that the respondents by their action or inaction caused any of the damage, it is not necessary for me to make particular findings about the exact damage that occurred. These are not civil proceedings of that nature requiring such findings.
18. It is not in dispute that, understandably so, the landlords were upset and concerned that their properties had been used for illegal purposes, were damaged to a greater or lesser extent, and that the damage had in most cases put them to personal expense. Some of them continued to use City Wide. Others engaged other managing agents.
19. Paragraphs 22 to 78 in Part 2 of the applicant's Schedule also contain information not directly relevant to the allegations made, about such matters as whether, and if so when, inspections were carried out. The allegation in 1(c) of Ground 1 is limited to the maintenance of and contents of the rental files and does not include any specific allegation that the respondents failed to carry out inspections, or that any failure to carry out inspections caused or contributed to the damage suffered. It is not therefore necessary for me to make findings in respect of those matters.
20. Similarly, the evidence summarised in Part 3 of the applicant's schedule 'Applicant's Un-contradicted and Unchallenged Evidence' in relation to the rental of the 21 properties does not, in my view, need to be the subject of specific findings.
21. To the extent it is evidence of landlords as to conversations they had with Mr (Bill) Kaimakamis' third son Costa Kaimakamis, I accept it - Costa Kaimakamis did not give evidence, the respondents did not require the landlords to attend for cross-examination and did not otherwise challenge the evidence.
22. I discuss here the submission on behalf of the Director that a Jones v Dunkel [6] inference ought to be drawn by me from the respondents' decision not to call Costa Kaimakamis.[7]

1. I agree with the submission on behalf of the Director that the decision not to call Costa Kaimakamis carries with it evidentiary consequences but I do not agree that it is either necessary or appropriate to draw a 'Jones v Dunkel' inference, for the following reasons.
2. As submitted on behalf of the Director, the rule in Jones v Dunkel has been applied in disciplinary proceedings before the tribunal, referring to Legal Services Commissioner v Brereton [2008] VCAT 1723 at [18]. It is relevant to set out paragraphs [18] and [19] of that decision:
   1. We agree with the Legal Services Commissioner that the rule in Jones v Dunkel can apply in a proceeding of this nature, whereby an unfavourable inference of fact can be drawn where a party without explanation fails to call as a witness a person that party might reasonably be expected to call who could have spoken to, or explained, that fact.
   2. Although the Tribunal is not strictly bound by the rules of evidence and practices of a court, we agree that it is open to us to apply the rule in Jones v Dunkel in this case, and that it is appropriate to do so in a proceeding of this nature. This does not of course mean that either Mr Brereton personally, or other witnesses he might potentially call, have a 'duty' to come forward and give evidence. The respondent is not obliged to help the Legal Services Commissioner prove its case, and is entitled to put the applicant to its proofs save for risking the possibility that a Jones v Dunkel inference may be drawn in relation to some facts.
3. The submissions on behalf the Director referred to the case of Chong v CC Containers Pty Ltd.[8] As observed in that case:

The rule does not enable the absence of a witness to make up any deficiency of evidence. It will not support an adverse inference unless the evidence otherwise provides a basis on which that unfavourable inference can be drawn.

1. I agree with the submission on behalf of the respondents that, to the extent that specific factual allegations have been made about City Wide's conduct in respect of the leasing of properties to Mr Maikantis, the respondents have admitted the substance of those allegations.
2. On the basis of those admissions, I have found that the substance of the factual allegations have been proven. On the basis of the case as put and the admissions made, it was submitted, they did not need to call Costa Kaimakamis. I agree.
3. To the extent that landlords have given evidence about conversations they had with Costa, in the absence of evidence from Costa himself and any other challenge to that evidence, I can accept the landlords' evidence. But in terms of the specific allegations made, that evidence does not add anything more to what has already been admitted in my view. There was no relevant factual allegation in issue.
4. The unchallenged evidence of the landlords in so far as it specifically relates to Costa is at 104 - 123, and 136 in Part 3 of the applicant's Schedule. It includes that Costa was the person who spoke to both Mr Kasarla and Mr Iliadis about the prospective tenant and highly recommended him. It is not disputed that City Wide endorsed and continued to endorse Mr Maikantis and that Costa was involved in the leasing and management of a number of the properties.
5. On behalf of the Director, it was submitted that those conversations and the fact that Costa's name features prominently on documents in the rental files ought to have been further explored and/or explained, and that the Tribunal should have had all relevant evidence before it.
6. What was not clear, however, was the content of any unfavourable inference of fact which I am asked to draw and how any such unfavourable inference would relate to the specific allegations made, in circumstances where the substance of the factual allegations has been admitted. In simple terms, I had before me the relevant evidence, including agreed facts, required to prove the allegations made.
7. The caution in Briginshaw concerning 'inexact proofs' and 'indirect inferences' is operative here.
8. I was also asked to, and decline to draw a Jones v Dunkel inference from the fact that the respondents referred to additional electronic records in evidence but did not produce them.[9] The allegation made in relation to records is that the files did not contain certain documents. The respondents have agreed that this was the case.
9. Other evidence before me may be relevant to determinations under s 28A of the Act. That will be addressed separately, after the parties have made submissions on those matters.

AGREED COMMON PARTICULARS IN THE TWO PROCEEDINGS

1. The following common particulars are agreed.
   1. At all material times, Bill Kaye & Co Pty Ltd (ACN: 006 406 257) ("the company") was a company duly incorporated and registered in Victoria pursuant to the provisions of the Corporations Act 2001 (Cth).
   2. At all material times, the company traded under the business name 'City Wide Real Estate'.
   3. At all material times, the company was the holder of the estate agent's licence number 025877L and so held that licence since 29 July 1985.
   4. At all material times, the company's registered office and principal place of business was 282 Clayton Road, Clayton, Victoria 3168.
   5. At all material times, Mr Vassilios Kaimakamis ("Bill") was the officer in effective control, the secretary and a director of the company.
   6. At all material times, Bill was the holder of the estate agent's licence number 028730L and so held that licence since 15 October 1992. Prior to that date Bill had acted as an agent's representative since 1969.
   7. Neither Bill nor the company have ever been the subject of any disciplinary action as an estate agent or as an agent's representative.
   8. Costa Kaimakamis ("Costa"), Phillip Kaimakamis ("Phillip") and Aki Kaimakamis ("Aki") hold estate agents licences, and are and were at all material times officers of the company.
   9. Mr Chris Vlahakis is and was at all material times a duly appointed Inspector pursuant to section 114 of the Fair Trading Act 1999 (Vic) (and by the operation of section 16 of the Interpretation of Legislation Act 1984 (Vic) and Schedule 4 to the Australian Consumer Law and Fair Trading Act 2012 (Vic), was an Inspector duly appointed under section 142 of the Australian Consumer Law and Fair Trading Act 2012 (Vic)), and by virtue of that appointment, was an Inspector for the purposes of the Estate Agents Act 1980 (Vic) and the regulations made under that Act.
   10. Mr Hamish Singh was at all material times employed as an Acting Compliance and Enforcement Officer within the Enforcement and Legal Services Branch of Consumer Affairs Victoria, and was duly authorised to assist Inspectors in the execution of their duties and to perform investigative functions that were not required to be performed by appointed Inspectors.
2. I turn now to the four Grounds in Z297/2016.

Z297 GROUND 1: CONTRAVENTION OF R 13(1) OF THE REGULATIONS

1. Regulation 13(1) is:
   1. Good practice of estate agents

(1) An estate agent must exercise all due skill, care and diligence in performing the agent's functions as an estate agent.

1. Ground 1 is:
   1. Between August 2013 and October 2014, the respondent failed to comply with the Regulations by failing to exercise all due skill, care and diligence in performing its functions as an estate agent, in contravention of Regulation 13(1) of the Regulations.

(a) Between August 2013 and October 2014, the respondent facilitated the rental of 21 properties, in respect of which the respondent was the leasing agent and property manager, to the same tenant, namely, Mr Vasilios Maikantis. Mr Maikantis was later charged with cultivating and trafficking a commercial quantity of cannabis from the 21 properties, with a street value of approximately $3,000,000. Mr Maikantis's alleged conduct resulted in damage to several of the 21 properties, and required the landlord(s) of those properties to arrange, and in some instances pay, for repair work to be done. The 21 properties in question were: [properties listed]

(b) During the period from August 2013 until October 2014, the respondent was aware that Mr Maikantis was the tenant of numerous rental properties managed by the respondent, however it omitted to notify landlords of this matter and further it continued to endorse Mr Maikantis as a tenant when dealing with landlords.

(c) The rental files for the 21 properties listed in paragraph (a) above ("the 21 rental files") were not maintained in the same or a similar manner as a random sample of 15 other rental files maintained by the respondent ("the random sample"), in that:

(i) 13 of the 21 rental files did not contain a copy of a tenancy application form, whereas all 15 files in the random sample contained a copy of the tenancy application form;

(ii) 14 of the 21 rental files did not contain a copy of a bond claim form, whereas all 15 files in the random sample contained a copy of a bond claim form;

(iii) 9 of the 21 rental files did not contain a copy of a condition report, whereas all 15 files in the random sample contained a copy of a condition report;

(iv) 12 of the 21 rental files did not contain a copy of any bills relating to the property in question, whereas all 15 files in the random sample contained a copy of bills relating to the property in question;

(v) 15 of the 21 rental files did not contain a copy of any written correspondence between the respondent and the landlord(s), whereas 14 of the 15 files in the random sample contained records of correspondence between the respondent and the landlord(s); and

(vi) none of the 21 rental files contained copies of tenants' financial records, whereas 13 of the 15 files in the random sample contained copies of tenants' financial records.

The following are the agreed facts directly relevant to the particulars to Ground 1:

1. At various times between August 2013 and October 2014, City Wide Real Estate ("City Wide") facilitated the rental of 21 properties, in respect of which it was the leasing agent and property manager, to the same tenant, namely, Mr Vasilios Maikantis.
2. Mr Maikantis was later charged with cultivating and trafficking a commercial quantity of cannabis, with a street value of approximately $3,000,000, from those 21 properties, from time to time.
3. The 21 properties in question were [the 21 properties listed]:
4. During the period from August 2013 until October 2014, City Wide was aware that Mr Maikantis was the tenant of a number of rental properties managed by City Wide. City Wide did not notify all landlords of the properties in question that Mr Maikantis was leasing other properties from City Wide. City Wide continued to endorse Mr Maikantis as a suitable tenant when dealing with landlords.
5. The rental files for the 21 properties listed in paragraph 13 above ("the 21 rental files") were not maintained in the same or a similar manner as a random sample of 15 other rental files maintained by City Wide ("the random sample"), in that:

15.1 13 of the 21 rental files did not contain a copy of a tenancy application form, whereas all 15 files in the random sample contained a copy of the tenancy application form

15.2 14 of the 21 rental files did not contain a copy of a bond claim form, whereas all 15 files in the random sample contained a copy of a bond claim form

15.3 9 of the 21 rental files did not contain a copy of a condition report, whereas all 15 files in the random sample contained a copy of a condition report

15.4 12 of the 21 rental files did not contain a copy of any bills relating to the property in question, whereas all 15 files in the random sample contained a copy of bills relating to the property in question

15.5 15 of the 21 rental files did not contain a copy of any written correspondence between City Wide and the landlord(s), whereas 14 of the 15 files in the random sample contained records of correspondence between City Wide and the landlord(s)

15.6 None of the 21 rental files contained copies of tenants' financial records, whereas 13 of the 15 files in the random sample contained copies of tenants' financial records.

1. The above agreed facts establish, and I find, that the alleged particulars (a), (b) and (c) are proven, save for:
   • The allegation in (a) that Mr Maikantis' alleged conduct resulted in damage to several of the properties - it was not expressly agreed but my finding in relation to that allegation appears below.
2. As noted above in the section headed 'Observations on the evidence', paragraphs 22 to 78 of the applicant's Schedule relate to the individual experiences of the five landlords whose homes were found damaged in January 2015.
3. They provide background information about the circumstances in which Mr Maikantis came to be the tenant, consistent with the allegation in 1(b) above that although the respondent was aware that Mr Maikantis was the tenant of numerous rental properties managed by the respondent, it continued to endorse Mr Maikantis.
4. To the extent they relate to damage to the five properties, they establish the allegation in 1(a) above that Mr Maikantis' alleged conduct resulted in damage to several of the 21 properties, and required the landlord(s) of those properties to arrange, and in some instances pay, for repair work to be done. I find accordingly.

Z297 Ground 1: Findings - breach of Regulation 13(1) of the Regulations?

1. As submitted on behalf of the Director, the meaning of the words 'skill, care and diligence' under the Regulations is yet to be judicially determined and accordingly, those words should be given their ordinary meanings: from the Oxford English Dictionary those meanings are:
   • skill: the ability to do something well; expertise
   • care: serious attention or consideration applied to doing something correctly or to avoid damage or risk; and
   • diligence: careful and persistent work or effort.
2. I agree with the submission on behalf of the Director that, in interpreting the level of skill, care and diligence to be required of an estate agent, the Tribunal should have regard to the clear intention of Parliament in relation to the regulatory regime,[10] namely, that the highest standards are observed in the real estate industry.[11]
3. While there is no absolute prohibition on renting multiple properties to the same tenant, where a tenant is renting multiple properties it is essential that an estate agent maintain the same high standards in respect of each property consistent with their obligations to the individual landlords.
4. In his witness statement and evidence at the hearing, Phillip Kaimakamis took responsibility for the poor record keeping, stating that he was under considerable work pressure between August 2013 and November 2014 when the Maikantis leases were entered into. In addition, he stated, he and his wife had two children born in March 2013 and April 2014 respectively, which required a lot of his attention and distracted him from his work obligations.
5. In my view, it is clearly in breach of r 13(1) not to maintain a file that contains for each property copies of a properly executed tenancy application form, a bond claim form, a condition report, financial records and records of bills or correspondence as alleged and proven.
6. While Philip Kaimakamis gave evidence that he told the majority of landlords that Mr Maikantis was the tenant of multiple rental properties, due skill care and diligence would require ensuring that in every case the landlord was informed of that fact.
7. On Philip Kaimakamis' evidence, those landlords he told were not concerned provided the rent was paid on time. That may be so in the case of those particular landlords, but no estate agent should ever assume that a landlord will not be concerned. A tenant renting multiple properties raises obvious questions such as whether the tenant will be living in the property or allowing others to occupy it and, if so, who and why.
8. I agree as a general proposition with the submission on behalf of the Director that a tenant renting a number of properties at the same time calls for some enquiries to be made. Mr Maikantis did not rent all 21 properties at the same time, [12] but he nevertheless rented multiple properties at different times during the period.
9. Mr Bill Kaimakamis gave evidence that he accepted Mr Maikantis' explanation that he had people that he wanted to assist, either workers or students, who would occupy the premises; Mr Maikantis showed him a proposed leasing agreement for a farm which he said he had entered into and said he was proposing to become involved in big agricultural project and employ farmworkers.
10. Whatever the plausibility of that explanation, I was not satisfied that any such explanation would be a sufficient reason not to make sure the paperwork in respect of each property was complete, and the landlord informed. For example, I would expect that a bond claim form and condition report would become even more important if the tenant had indicated they proposed to house what might be a floating population of students and workers.
11. While the shortcomings in this case to do with the rental files are not as extensive as those in Director of Consumer Affairs Victoria v LM G Commercial Property Services [2016] VCAT 1742 which Member Dea described as "a litany of shortcomings", the member's observations are apposite here:

It is difficult to imagine that any licensed estate agent and officer in effective control exercising all due skill, care and diligence in performing the agent's functions consistent with the law and good estate agency practice would regard those records as acceptable.

1. I agree with the submission on behalf of the Director that poorly kept rental files, which are missing essential matters which an owner of a rental property might expect to find in their file, amounts to a failure to exercise all due skill, care and diligence in performing the agent's functions.
2. The respondent's conduct, as alleged and proven, fails the requirement in the Regulations to undertake the letting and management of a rental property with - to refer to the dictionary definitions - serious attention or consideration applied to doing it correctly, to do it well, with expertise, or to apply careful or persistent work or effort - the meanings of the words skill, care and diligence.
3. I am satisfied to the required degree that the respondent failed to exercise due skill, care and diligence. Ground 1 is proven.

An estate agent must at all times act fairly and honestly and to the best of the agent's knowledge and ability in the performance of the agent's functions as an estate agent.

1. Ground 2 as amended relates to the inclusion of a 'late fee' term[13] in 18 residential tenancy agreements; the late lodgement of bond monies in three cases; and a finding by VCAT in a residential tenancies case that City Wide had consented to a tenant ending her tenancy early.
2. Ground 2 is:

1. In September 2010, and between August 2013 and February 2015, the respondent failed to comply with the Regulations by failing to act fairly and honestly and to the best of its knowledge and ability in the performance of its functions as an estate agent, in contravention of Regulation 11 of the Regulations.

(a) On 3 September 2010, and between 2 August 2013 and 12 February 2015, the respondent included, on a total of 18 signed tenancy agreements, a condition that the late payment of rent would render the tenant liable to pay a late payment fee of $110. The respondent did so despite knowing that it was unlawful to demand or accept a penalty fee for the late payment of rent. The 18 signed tenancy agreements pertained to the following properties [properties listed]:

(b) On 22 September 2010, and between 23 May 2014 and [deleted] 26 August 2014, the respondent failed to give bond moneys to the Residential Tenancies Bond Authority ("RTBA") within 10 business days after receiving an amount of bond from a tenant, as required by section 406 of the Residential Tenancies Act 1997, in the following five [sic] [14] instances:

(i) on 7 September 2010, the respondent received a bond in the amount of $1,173 from the tenant of 1/7 Hayden Road, Clayton South in the State of Victoria, and that amount of bond was not given to the RTBA until 13 October 2010, being 26 business days after the amount of bond was received by the respondent;

(ii) on 8 May 2014, the respondent received a bond in the amount of $1,521.00 from the tenant of 23 Cambro Road, Clayton in the State of Victoria, and that amount of bond was not given to the RTBA until 11 June 2014, being 23 business days after the amount of bond was received by the respondent; and

(iv) on 8 11 August 2014, the respondent received a bond in the amount of $2,600.00 from the tenant of 14 Robinson Street, Clayton in the State of Victoria, and that amount of bond was not given to the RTBA until 28 August 2014, being [deleted] 13 business days after the amount of bond was received by the respondent.; and

(d) On 4 February 2015 VCAT found that there were ongoing discussions between the respondent, as agents of the landlord of the property located at 5/9 Joyce Street, Elwood in the State of Victoria and the tenant of that property, and that the respondent on behalf of their client consented to the tenant ending her tenancy on 27 January 2015 without consequence to the tenant.

1. The agreed facts directly relevant to Ground 2 as amended are:

Condition on tenancy agreements that late payment of rent would result in a late payment fee of $110

1. On 3 September 2010, and between 2 August 2013 and 12 February 2015, City Wide included, on a total of 18 signed tenancy agreements, a statement that the late payment of rent would render the tenant liable to pay a late payment fee of $110. Bill knew that it was unlawful to demand or accept a penalty fee for the late payment of rent. Bill also said he had previously received a notification from CAV warning against this practice. The statement was included under Clause 2 (which pertained to Rent) on the standard form Residential Tenancy Agreements used by City Wide.
2. At a compliance monitoring inspection which took place at the City Wide office on 17 February 2015, Bill told Inspector Vlahakis that he knew it was against the law to demand a penalty fee for the late payment of rent. City Wide claim to have included the statement in the tenancy agreements as a deterrent so that tenants were not late with their rent. City Wide never demanded payment.
3. The 18 signed tenancy agreements pertained to the following properties [properties listed in (i)-(xviii) above]
4. Bill or City Wide never actually demanded or accepted a penalty for the late payment of rent in relation to any of the 18 signed tenancy agreements referred to in paragraph 81 above.

Failure to lodge bonds with the RTBA within 10 business days

1. On 7 September 2010, City Wide received a bond in the amount of $1,173 from the tenant of 1/7 Hayden Road, Clayton South in the State of Victoria, and that amount of bond was not given to the Residential Tenancies Bond Authority ("RTBA") until 13 October 2010, being 26 business days after the amount of bond was received by City Wide.
2. In May 2014, City Wide received a bond in the amount of $1,521.00 from the tenant of 23 Cambro Road, Clayton in the State of Victoria, and that amount of bond was not given to the RTBA until 11 June 2014. The tenant did not sign the bond lodgement form until 5 June 2014.
3. On 11 August 2014, City Wide received a bond in the amount of $2,600 from the tenant of 14 Robinson Street, Clayton in the State of Victoria, and that amount of bond was not given to the RTBA until 28 August 2014, being 13 business days after the amount of bond was received by City Wide.
4. In relation to the allegation in 2(d) above - that VCAT made certain findings, the respondent does not dispute the fact that VCAT made the findings on Ms Roberts' unopposed application. In the respondent's Response and Identification of Agreed Facts at [115] - [118], the following is stated:

115.The request for the landlord's consent to terminate the lease was passed on to the landlord.

116. Ms Roberts' departed the premises, without giving formal notice in writing, on 24 January, 2015, and handed over the keys. Ms Roberts applied to VCAT for return of her bond. The application was not opposed and bond was returned.

117. Ms Roberts paid rent for the period until she left the premises, but paid no further rent.

118. She was never asked for payment of any arrears of rent or penalty rent. The premises were ultimately sold by the landlord, before the premises were occupied by another tenant.

1. On the basis of the agreed facts, and the evidence at the hearing, I find the factual allegations in the particulars to Ground 2 proven, save that in respect of the bond from the tenant of 23 Cambro Road, Clayton, I am satisfied that bond was not received until 13 May 2014 and the late period is therefore 20 business days after its receipt, and not 23 business days as alleged.
2. A copy of VCAT's order was in evidence and records that there was no appearance on behalf of the landlord. The following findings and orders were made:

1. The landlord and tenant are parties to a fixed term tenancy agreement which commenced on 12 June 2014 and is due to end on 04 February 2015.
2. I accept the tenant's evidence that there were ongoing discussions between the tenant and the landlord's agents and the agents upon behalf of their client consented to the tenant ending her tenancy on 27/1/2015. This evidence is reflected in the termination agreement sent to the tenant by text by the agent. The agents acknowledged that there would be no consequences to the tenant.

The tenant physically moved out of the property before 27/1/2015.

1. Pursuant to sections 217 and 218 Of the Residential Tenancies Act the tenancy agreement has terminated and ended on 27 January 2015.

No appearance by or on behalf of the landlord at hearing scheduled at 10:30 AM on 04 February 2015.

1. It is not in dispute and I find that VCAT made the findings referred to in paragraph (d) of the particulars to Ground 2.
2. A more serious allegation, that Mr Aki Kaimakamis made certain misrepresentations to the tenant, was withdrawn. Paragraphs [90] - [100] of the agreed facts in the applicant's Schedule related to the withdrawn allegation, as did much of the evidence contained in Ms Robert' witness statement. It is not necessary or appropriate in those circumstances to make findings about those matters.

Ground 2: failure to act fairly or honestly and to the best of its knowledge and ability in the performance of its functions as an estate agent?

1. I agree with the submissions on behalf of the Director that guidance can be obtained as to the meaning of the term 'fairly and honestly' from the decision of the Full Court of the Supreme Court of Western Australia in Johnson v Sheppard [2005] WASCA 13.
2. In that case the Full Court considered the duty of estate agents to act fairly and honestly under the relevant governing legislation, the Code of Conduct for Agents and Sales Representatives.
3. In considering the meaning of 'fairly and honestly', Murray J (with whom Templeman and Simmonds JJ agreed) said this:

I consider that there is nothing in the Code of Conduct which gives any support for the view that "honesty' in the context of the code bears any special meaning related to the duties of an agent which would take it outside the ordinary English meaning of the word 'honesty'. The phrase used in s 5(1) of the Code is that the agent must act 'fairly and honestly'. The ordinary meaning of the word is, in my opinion, the appropriate meaning.

There is no reason to suppose that standards of fairness and honesty applicable to real estate agents differ in any way from those applicable in the community at large, in relation to the standards to be observed when a person is acting for another, with the duty to act in the best interests of the principal, but not in such a way as to advance those interests improperly, according to the ordinary standards of reasonable, honest people. In particular, it would be no answer to say that the person concerned, his honesty was under consideration, did not appreciate that ordinary, decent people would view his or her conduct as dishonest...

1. As submitted, similarly there is nothing in the Act or the Regulations to suggest that the words 'honestly and fairly' should be given anything other than their ordinary meaning.

1. Counsel on behalf of the respondents submitted that no offence under the Residential Tenancies Act 1997 (the Residential Tenancies Act) was committed because the late payment fee was never actually demanded or accepted by City Wide agents, and that the alleged breach of regulation 11 of the regulations is accordingly misconceived.
2. Counsel on behalf of the respondents submitted that the term was intended to be an incentive for tenants to pay their rent on time in accordance with the tenancy agreement. In written submissions the question was asked, 'what can be wrong with that?'.
3. In discussions with Counsel at the hearing, I expressed some concern that while City Wide had not taken the additional step of demanding or enforcing the purported late fee, and so had not committed an offence under the Residential Tenancies Act, what City Wide did seemed at the least to be against the spirit of that act.
4. I agree with the written submission on behalf of the respondents that it is not an offence under the Residential Tenancies Act to do something which is regarded as against the spirit of that act.
5. The allegation here, however, is not that City Wide have committed an offence under the Residential Tenancies Act but that they have breached their professional conduct obligations under the regulations to the Estate Agents Act.
6. It is not necessary that an agent commit an offence under any particular act, for the agent to be in breach of those obligations.
7. I agree with the submissions on behalf of the Director that in circumstances where Mr Kaimakamis knew it was illegal to demand or accept such a payment and, further, had previously been warned by CAV about the practice, such conduct was not acting fairly or honestly or to the best of the respondent's knowledge and ability.
8. I agree with the submission on behalf of the Director that it would not be regarded as either fair or honest for an estate agent to include a condition on tenancy agreements purely for incentive purposes in circumstances where the condition was never going to be enforced because the agent knew that enforcing it would have been illegal. Nor is to the best of their knowledge and ability.
9. In my view, the inclusion of the term is effectively a representation that a late fee of $115.00 can be imposed on a tenant who is late with their rent. To the knowledge of the respondent such a late fee, of any amount, cannot be imposed because it would be an offence to do so.
10. It makes the representation no less dishonest in my view that City Wide never intended to enforce the term, which would not have been apparent to tenants, and included it purely as an incentive or a deterrent.
11. I am satisfied to the required degree that the conduct was in breach of r 11 of the Regulations.

1. In relation to the late payment of bonds in three instances, I am not comfortably satisfied that the conduct is in breach of regulation 11 of the regulations.
2. I agree with the submission on behalf of the Director that in the three instances alleged, the respondent did not act to the best of its knowledge and ability in handling the bond moneys in question, but a breach of regulation 11 requires that the agent not act fairly and honestly and to the best of its knowledge and ability.
3. The conjunctive 'and' means, in my view, that each component must be satisfied before a breach can be found.[15] Late payment of bonds in three instances might conceivably be a breach of the obligation in r 13(1) to exercise all due skill, care and diligence in performing functions as an estate agent, but that was not the allegation made. A breach of r 11 is a more serious allegation in my view than a breach of r 13(1) and something more would be required in order to find it proven.

1. Similarly, in relation to the allegation that VCAT made the findings referred to, I am not comfortably satisfied that a breach of r 11 of the Regulations is established by the facts alleged and proven.
2. While the VCAT findings are certainly unchallenged findings, neither the landlord nor the respondents were represented at the VCAT hearing for return of the bond.
3. The tenant had made an application for reduction of a fixed term tenancy agreement [16] that was otherwise due to end on 4 February 2015. The Tribunal's order was that the tenancy agreement had terminated and ended on 27 January 2015. The application was not opposed on behalf of the landlord.
4. The findings go no further than to record that the tribunal member accepted the tenant's evidence on the matters set out, which is not surprising. In any event, the findings on their face do not, in my view, support a conclusion in these proceedings that the respondents failed to act fairly and honestly and to the best of their knowledge and ability.
5. In his affidavit, Aki Kaimakamis stated that the request for the landlord's consent to terminate the lease was passed on to the landlord [32]; Ms Roberts' application for return of the bond[17] was not opposed; the bond moneys were returned to her; [33] and the landlord ultimately sold the property before the premises were occupied by another tenant.
6. As submitted by Counsel on behalf of the respondents, there was no evidence that the landlord ever complained about the conduct of the respondents, or that the landlord was troubled by the tenant's application or the outcome. The evidence is that there were no consequences to the tenant as a result of vacating the premises eight days before the end of the fixed term agreement.
7. As I also observe in relation to the related allegation in Ground 4 below, it is one thing for the tribunal to make findings on the uncontradicted evidence of the tenant for the purposes of the application that was before it under the Residential Tenancies Act, but it would be quite a different matter to rely upon those findings in disciplinary proceedings such as these where Briginshaw applies, in circumstances where Aki Kaimakamis does not agree that he consented to the early termination of the tenancy.

Z297 GROUND 3: CONTRAVENTION OF R 13(2) OF THE REGULATIONS

(2) An estate agent must not engage in conduct that is unprofessional or detrimental to the reputation or interests of the estate agency industry.

1. Ground 3 is:
   1. In September 2010, and between August 2013 and February 2015, the respondent contravened the Regulations by engaging in conduct that is unprofessional and/or detrimental to the interests of the estate agency industry, in contravention of Regulation 13(2) of the Regulations.

The Alleged Particulars for Ground 1,[18] and the matters stated at paragraph (a) of the Alleged Particulars for Ground 2,[19] are also relied upon as the alleged particulars for this Ground of Action.

1. I refer to without repeating the factual findings made in relation to the alleged particulars for Ground 1 and paragraph (a) of the alleged particulars for Ground 2.

Ground 3 Findings: conduct that is unprofessional or detrimental to the reputation or interests of the estate agency industry?

1. Unlike r 11, r 13 (2) of the Regulations uses the conjunctive 'or', so that conduct may be in breach of r 11 if it is either unprofessional or is detrimental to the reputation or interests of the estate agency industry, or both.
2. As submitted on behalf of the Director, relatively few cases have considered the question of what constitutes conduct by an estate agent that is 'unprofessional' or 'detrimental to the reputation or interests of the estate agency industry' for the purposes of r 13 (2).
3. In Director of Consumer Affairs Victoria v Murray [2016] VCAT 612, at [111] Member Dea took the following approach:
   1. The term 'unprofessional conduct' is not defined in the Regulations or in the Estate Agents Act. In the earlier matter involving Mr Murray,[20] the tribunal discussed the term and disagreed with the approach to that term taken in Acting Director of Consumer Affairs Victoria v Cohen.[21] Relevantly, in the earlier proceeding involving Mr Murray, the tribunal concluded that, in order to find a breach of regulation 13(2), it was not necessary to find that the conduct would be reasonably regarded as disgraceful or dishonourable by peers of good repute and competency. Nor was it necessary to find that there had been conduct which fell short to a substantial degree the standards of professional conduct observed by peers of good repute and competency. What was required was an assessment of the particular conduct. I agree with that approach.
4. I agree that what is required is an assessment of the particular conduct. Unprofessional, in my view, can be defined as conduct that falls below the standard of professional conduct observed by peers of good repute and competency. But it does not need to fall 'substantially' below that standard (which is the test used to describe professional misconduct, as opposed to unprofessional conduct, in a number of disciplinary regimes). Nor does it need to be 'disgraceful or dishonourable' (which is the test for the very serious misconduct at common law in the legal disciplinary regime).
5. I am comfortably satisfied that the factual allegations which have been proved establish that the respondent has engaged in conduct that is unprofessional and, in a number of respects, detrimental to the reputation of the estate agency industry.
6. I consider it to be unprofessional conduct on the part of a leasing agent to:
   • Facilitate the rental of 21 properties to the same tenant without notifying each individual landlord of the fact that the proposed tenant is the tenant of numerous rental properties managed by the respondent and without properly maintaining the rental files for those properties in the manner alleged in paragraph (c) of the alleged particulars to ground 1;
   • Include in any tenancy agreement a condition that the late payment of rent would render the tenants liable to pay a late payment fee of $110, particularly in circumstances where the agents knew that it would be unlawful to act on that term by demanding or accepting such a fee.
7. I am comfortably satisfied that the inclusion of the late payment fee term in tenancy agreements is also detrimental to the reputation of the estate agency industry because, for the reasons outlined above, it is a dishonest assertion to tenants of an entitlement which the landlord does not have and which it would be an offence to act on.
8. As submitted on behalf of the Director, put simply, leasing agents of good repute and competency do not knowingly mislead tenants as to the consequences of late payment of rent, or knowingly include a condition on tenancy agreements enforcement of which would be contrary to law and an offence under the Residential Tenancies Act. Such conduct is in my view detrimental to the reputation of the industry.
9. In relation to the multiple rentals, I am comfortably satisfied that the conduct alleged and proven is unprofessional conduct. I agree with the submission on behalf of the Director that landlords are entitled to expect that a professional leasing agent will notify them of potentially important information such as that the proposed tenant leases multiple properties and therefore may not actually live in the property. Whether or not an individual landlord is concerned by that information, it is not information that should be kept from landlord and a professional agent will disclose it.
10. Not doing so, in circumstances where 21 properties in total were rented to the same tenant, is in my view also detrimental to the reputation of the estate agency industry.
11. Further, landlords are entitled to expect that an agent professionally managing the landlord's property will ensure that the file contains copies of a tenancy application form, the bond claim form, a condition report, any bills relating to the property, any written correspondence between the respondent and the landlord, and the tenant's financial records. While these are all important, in my view the failure to have a copy of a bond claim form and a condition report on the file are the more serious because they may have a direct effect on the landlord's ability to succeed in any claim for the bond and/or compensation at the end of the tenancy.
12. I am comfortably satisfied that Ground 3 is proved.
13. On behalf of the Director, the submission was also made that where an estate agent fails to meet reasonable expectations of landlords, 'and that failure is followed by the sort of catastrophic consequences as the illegal and damaging activity which occurred in the 21 properties in question, that failure is likely to erode significantly the public's confidence in the ability of estate agents to effectively screen tenants and manage rental properties. Any conduct that has this result constitutes conduct that is detrimental to the reputation of the estate agency industry'.
14. There are some difficulties with that submission.
15. I accept that in this case the tenant used the properties for the purpose of illegal activity. I also accept that it inevitably 'looks bad' when an agent has rented multiple properties to a tenant who has then used the properties as 'drug houses'.
16. It is important, however, not to conflate the consequences of the tenant's conduct with the conduct of the estate agent in considering whether the agent's conduct is detrimental to the reputation of the estate agency industry. My task in deciding whether there is a contravention of r 13 (2) of the Regulations is to focus on the conduct of the agent.
17. This is particularly important where, as here, it is not alleged and I have not been asked to find that the agents knew of or were involved in any way in the illegal activity or that their conduct caused the damage to the property.
18. As submitted on behalf of the respondents, the activities of tenants, including illegal activities such as drug cultivation and trafficking involving rented premises, can occur and can cause damage to rental properties without any failure or knowledge on the part of the leasing agent. In this case, for example, the evidence before me included that one of the landlords lived close to the rented property he owned and did not suspect that the premises were being used for the cultivation of cannabis.
19. It would be otherwise, of course, if the agent concerned had been charged with and convicted of criminal involvement in the tenant's activities.

Z297 GROUND 4: CONTRAVENTION OF REGULATION 12(1) OF THE REGULATIONS

12 Potential conflict of interest of estate agent

(1) An estate agent must always act in a principal's best interests except where it would be unlawful, unreasonable, improper or contrary to the principal's instructions to do so.

1. Ground 4 is:
   1. Between August 2013 and November 2014, the respondent failed to comply with the Regulations by failing to act in a principal's best interests, in contravention of Regulation 12(1) of the Regulations.

The matters stated at paragraph (b) of the Alleged Particulars for Ground 1, and the matters stated at paragraph (d) of the Alleged Particulars for Ground 2, are also relied upon as the alleged particulars for this Ground of Action.

The respondent's principals were the landlords of the properties in question.

1. For ease of reference, the matters in paragraph (b) of Ground 1 are:

During the period from August 2013 until October 2014, the respondent was aware that Mr Maikantis was the tenant of numerous rental properties managed by the respondent, however it omitted to notify all landlords of this matter and further it continued to endorse Mr Maikantis as a tenant when dealing with landlords.

On 4 February 2015 VCAT found that there were ongoing discussions between the respondent, as agents of the landlord of the property located at 5/9 Joyce Street, Elwood in the State of Victoria and the 10th of that property, and that the respondent on behalf of their client consented to the tenant ending her tenancy on 27 January 2015 without consequence to the tenant.

1. I refer to and repeat the findings made above relation to those particular allegations.

Ground 4 findings: failing to act in a principal's best interests?

Failing to notify all landlords that Mr Maikantis was the tenant of numerous rental properties and continuing to endorse him

1. I am comfortably satisfied that by failing to notify all landlords that Mr Maikantis was the tenant of numerous rental properties managed by the respondents and continuing to endorse him without doing so constitutes a failure to act in a principal's best interests.
2. It is clearly in a landlord's best interests to be told that a prospective tenant already rents multiple properties, because it raises reasonable questions about such matters as who will occupy the property and on what basis, and what is the purpose to which the property will be put by the tenant if he or she is not living there.
3. Whether or not the estate agent believes the landlord would not be concerned about a tenant renting multiple properties provided the tenant pays the rent is not to the point. The landlord is entitled to expect that he or she will be told.
4. I am comfortably satisfied that Ground 4 is made out on the above basis.

1. The submissions on behalf of the Director were that:
   • The matters found by VCAT amount to acting in a manner that was contrary to the landlord's best interests.
   • An estate agent will not act in the principal's best interests if it causes, or risks causing, financial detriment to the principal.
   • The finding by the tribunal that there had been consent to the early termination of the tenancy without consequence to the tenant in circumstances where Mr Aki Kaimakamis' evidence was that the landlord had not in fact consented, meant that the landlord was placed at risk of lost rent and/or monies which would have compensated for that lost rent and that this amounted to a risk of financial detriment to the landlord.
   • It would have been in the landlord's best interests not to consent to the early termination of the Roberts tenancy without consequence to Ms Roberts unless and until the landlord provided his consent for that to happen. VCAT found that the company did not do this.
2. As observed above in relation to Ground 2, the findings go no further than to record that the tribunal member accepted the tenant's evidence on the matters set out, which is not surprising in circumstances where there was no appearance by or on behalf of the landlord.
3. It is one thing for the tribunal to make findings on the uncontradicted evidence of the tenant for the purposes of the application that was before it under the Residential Tenancies Act, but it would be quite a different matter to rely upon those findings in disciplinary proceedings such as these where Briginshaw applies, in circumstances where Aki Kaimakamis does not agree that he consented to the early termination of the tenancy.
4. In other words, while VCAT was entitled to find, for the purposes of the tenant's application for early termination of the tenancy and on the basis of the tenant's unchallenged evidence, that the agents consented to the early termination, I am not comfortable making the same finding in disciplinary proceedings where the matter is disputed.
5. Nor does it necessarily follow that doing so would be against the landlord's best interests. The outcome of the tenant's application was that a tenancy due to end on 4 February 2015 was terminated by order of the tribunal as at 27 January 2015. There is no doubt that the respondents on behalf of the landlord did not attend and oppose the tenant's application. Whether or not it was in the landlord's best interest to take that course is not possible to determine on the evidence before me.
6. I am not satisfied that ground 4 is made out on the basis of the VCAT finding.
7. I turn now to the proceeding in relation to Mr Bill Kaimakamis' conduct.

DIRECTOR OF CONSUMER AFFAIRS VICTORIA V MR VASSILIOS (BILL) KAIMAKAMIS**

1. As submitted on behalf of the Director, the role and responsibilities of the officer in effective control of an estate agent business have been described as being at the centre of the regulatory regime.[22]
2. As Senior Member Proctor of this tribunal observed in Director of Consumer Affairs v Stewart: [23]

The role of [officer in effective control] is created in the Act as an essential element of the protection of the public. If the [officer in effective control] 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. As submitted on behalf of the Director, Mr Bill Kaimakamis is a director of Bill Kaye & Co and is the officer in effective control of that business. In essence, Mr Kaimakamis is the directing mind and will of City Wide and controls what it does.

Z298 GROUND 1: ALLEGED BREACH OF S 29B(2)(D) OF THE ACT

29B Duties of agents and officers in effective control

(d) Take reasonable steps to ensure that any estate agents, agents' representatives or other employees of the business comply with the provisions of this Act, the Sale of Land Act 1962 and any other laws relevant to the conduct of the business while they are engaged in that business.

1. Ground 1 is:
   1. In September 2010, and between August 2013 and February 2015, in his capacity as the officer in effective control of the company, the respondent failed to comply with the Act by failing to take reasonable steps to ensure that any estate agents, agents' representatives or employees of the company complied with laws relevant to the conduct of the business, in contravention of section 29B(2)(d) of the Act.

(a) Between August 2013 and October 2014, the company facilitated the rental of 21 properties, in respect of which the company was the leasing agent and property manager, to the same tenant, namely, Mr Vasilios Maikantis. Mr Maikantis was later charged with cultivating and trafficking a commercial quantity of cannabis from the 21 properties, with a street value of approximately $3,000,000. Mr Maikantis's alleged conduct resulted in damage to several of the 21 properties, and required the landlord(s) of those properties to arrange, and in some instances pay, for repair work to be done. [The 21 properties in question are as in Z297/2016 Ground 1, alleged particulars in paragraph (a)].

(b) During the period from August 2013 until October 2014, the company was aware that Mr Maikantis was the tenant of numerous rental properties managed by the company, however it omitted to notify landlords of this matter and further it continued to endorse Mr Maikantis as a tenant when dealing with landlords.

(c) The rental files for the 21 properties listed in paragraph (a) above ("the 21 rental files") were not maintained in the same or a similar manner as a random sample of 15 other rental files maintained by the company ("the random sample"), in that:

(i) 13 of the 21 rental files did not contain a copy of a tenancy application form, whereas all 15 files in the random sample contained a copy of the tenancy application form;

(ii) 14 of the 21 rental files did not contain a copy of a bond claim form, whereas all 15 files in the random sample contained a copy of a bond claim form;

(iii) 9 of the 21 rental files did not contain a copy of a condition report, whereas all 15 files in the random sample contained a copy of a condition report;

(iv) 12 of the 21 rental files did not contain a copy of any bills relating to the property in question, whereas all 15 files in the random sample contained a copy of bills relating to the property in question;

(v) 15 of the 21 rental files did not contain a copy of any written correspondence between the respondent and the landlord(s), whereas 14 of the 15 files in the random sample contained records of correspondence between the respondent and the landlord(s); and

(vi) none of the 21 rental files contained copies of tenants' financial records, whereas 13 of the 15 files in the random sample contained copies of tenants' financial records.

(d) On 3 September 2010, and between 2 August 2013 and 12 February 2015, the company included, on a total of 18 signed tenancy agreements, a condition that the late payment of rent would render the tenant liable to pay a late payment fee of $110. The company did so despite knowing that it was unlawful to demand or accept a penalty fee for the late payment of rent. The 18 signed tenancy agreements pertained to the following properties [properties listed in Z297/2016 Ground 2 paragraph (a) of the alleged particulars]:

Ground 1 Findings: in his capacity as officer in effective control failed to take reasonable steps to ensure compliance with the Act and Regulations?

1. I refer to and repeat the findings made in Z297/2016 above in relation to the relevant alleged particulars. The question under this ground is whether Mr Bill Kaimakamis, as officer in effective control of the company failed to take reasonable steps to ensure that any estate agents, agents' representatives or employees of the company complied with laws relevant to the conduct of the business.
2. In relation to the rental of the 21 properties to Mr Maikantis, Mr Bill Kaimakamis agreed in cross examination that:
   • He did not have proper oversight of files. He relied on his staff knowing what they had to do.
   • He did not instruct his staff to tell landlords that Mr Maikantis was renting manageable properties.
   • Landlords should have been told that the tenant would not be living in the property.
   • He himself had no idea who would be living in the properties.
   • He did not instruct his staff to conduct checks of, or make enquiries into, Mr Maikantis. His evidence was that he saw no reason to because he knew Mr Maikantis, who was relatively prominent in the Greek community, and he had once sold property to Mr Maikantis or his sister. Further, until shortly before the police raid the rent had been paid regularly.
   • He did not ensure that a fresh tenancy application was completed by Mr Maikantis each time and queried why he needed to do so as they knew Mr Maikantis.
   • The original application had been photocopied a number of times and placed in some of the rental files. By way of explanation he said "it was only a technicality for the file".
3. In relation to deficiencies in the files and the late payment fee on the 18 tenancy agreements, my strong impression from his evidence was that Mr Bill Kaimakamis did not see the problem. This indicated to me a lack of understanding of the obligation on a licensed estate agent, expressly set out in the Regulations, to exercise due skill care and diligence and act fairly and honestly and to the best of its, his or her knowledge and ability in the performance of functions as an estate agent.
4. The obligation under s29B (2) (d) of the Act is an essential component of the regulatory framework. It means that in any corporate estate agency business one identified person has the responsibility for ensuring that all those working in the business comply with the Act and the Regulations.
5. As the officer in effective control of the business, Mr Bill Kaimakamis is the directing mind and will of that business and controls what it does.
6. The word 'effective' is important.
7. The obligation requires oversight, identification and management of potential breaches of the Act and the Regulations, which in turn requires a good working knowledge of an estate agent's obligations under the Act and the Regulations. It is not enough to assume that agents, agents or representatives and employees will know what to do, even if they are experienced.
8. 'Reasonable steps' also requires, in my view:
   • leading by example;
   • demonstrating knowledge of and respect for those obligations;
   • demonstrating by the officer's own conduct the required skill, care and diligence in performing the functions of an estate agent; and
   • taking seriously the reasonable expectations of the owners of properties managed by a professional agency and ensuring these are met.
9. I am comfortably satisfied that Mr Bill Kaimakamis in his capacity as officer in effective control has contravened s 29B(2)(d) of the Act.

GROUND 2: CONTRAVENTION OF R 13(2) OF THE REGULATIONS

(2) An estate agent must not engage in conduct that is unprofessional or detrimental to the reputation or interests of the estate agency industry.

1. Ground 2 is
   1. In September 2010, and between August 2013 and February 2015 the respondent, in his capacity as the officer in effective control of the company, failed to comply with the Regulations by engaging in conduct that is unprofessional and/or detrimental to the reputation of the estate agency industry, in contravention of Regulation 13(2) of the Regulations.

The Alleged Particulars for Ground 1 above are also relied upon as the alleged particulars for this ground of action.

Ground 2: in his capacity as the officer in effective control of the company, engaging in conduct that is unprofessional and/or detrimental to the reputation of the estate agency industry?

1. I refer to and repeat the findings and observations made in relation to Z297/2016 Ground 3 that Bill Kaye & Co engaged in conduct that was both unprofessional and detrimental to the reputation or interests of the estate agency industry.
2. I am comfortably satisfied that Ground 2 in this proceeding is made out. Mr Bill Kaimakamis, as officer in effective control, has responsibility for the conduct of Bill Kaye & Co. As is evident from my findings in relation to the rental of the 21 properties to Mr Maikantis and the inclusion of the late payment fee in the 18 residential tenancy agreements, Mr Bill Kaimakamis is also personally responsible for much of the problematic conduct.

1. In both proceedings I have made factual findings in respect of the allegations made and on the basis of those findings have found the grounds for taking action asserted by the Director to be proven.
2. In summary, I find that the following grounds are proved.

1. In proceeding Z297/2016 (the proceeding against Bill Kaye & Co):
   • Ground 1: I find the respondent has contravened r 13(1) of the Estate Agents (Professional Conduct) Regulations 2008 (the Regulations) (failure to exercise due skill care and diligence).
   • Ground 2: I find the respondent has contravened r 11 of the Regulations (failure to act fairly and honestly and to the best of the agent's knowledge and ability).
   • Ground 3: I find the respondent has contravened r 13(2) of the Regulations (engaging in conduct that is unprofessional or detrimental to the reputation or interests of the estate agency industry).
   • Ground 4: I find that the respondent has contravened r 12(1) of the Regulations (failing to act in the principal's best interests).

1. In proceeding Z298/2016 (the proceeding against Mr Vassilios (Bill) Kaimakamis):
   • Ground 1: I find that Mr Bill Kaimakamis has contravened s 29B(2)(d) of the Act (in the capacity of officer in effective control failing to comply with the Act by failing to take reasonable steps to ensure that any estate agents, agent's representatives or employees of the company complied with laws relevant to the conduct of the business.
   • Ground 2: I find that Mr Bill Kaimakamis has contravened r 13(2) of the Regulations (in his capacity as the officer in effective control engaging in conduct that is unprofessional or detrimental to the reputation or interests of the estate agency industry)
2. The hearing before me and these findings and reasons relate to the grounds relied on under s 25 of the Act. In the applications for inquiry, the Director also sought findings that the respondents have been guilty of conduct as an estate agent which renders them unfit to hold a licence.
3. By my findings, I have found that both respondents have by their conduct contravened or failed to comply with the Act and/or Regulations.
4. The next step in the proceedings is for the parties to address the question of whether the conduct rendered the respondents unfit to hold an estate agent's licence. When that matter is decided the parties will then make submissions and I will consider what determinations ought to be made under s 28A of the act.
5. I will list the proceeding for directions before me for the purpose of making further procedural orders.

[1] Mr Maikantis was later charged with and convicted of cultivating and trafficking a commercial quantity of cannabis from the 21 properties, with a street value of $3,000,000.

[2] Available determinations include reprimand, fine, licence suspension and cancellation.

[3] For example at 53.1, 53.2, 53.4, 64.1, 64.4.

[4] Director of Consumer Affairs Victoria v Meng [2015] VSC 668, paragraphs 23 - 36. See also

Dawson v Greyhound Racing Victoria [2017] VSC 123 in relation to the importance of confining findings to the particulars alleged.

[5] Briginshaw v Briginshaw [1938] HCA 34.

[6] (1959) 101CLR298, - see the discussion in the Bell group Ltd (in liq) v Westpac Banking Corporation [2008] WASC 239 Peron J at [1004] - [1022].

[7] Applicant's written submissions, [36]-[46]

[8] [2011] HCA 11; (2011) 243 CLR 361 per Heydon, Crennan and Bell JJ at [63].

[9] Applicant's written submissions [53.4].

[10] Interpretation of Legislation Act 1984 (Vic) s 35(a).

[12] The commencement dates for the Tenancies were spread over the period 2 August 2013 through to 1 November 2014. All of the Tenancies, except for one, were for 12 months duration.

[13] In the section of the residential tenancy agreement headed 'Rent' after the rent amount, i.e. 'Pay period: monthly (date of each month when rent is due = [date of month]) (Late fee $110)'

[14] This appears to be a typographical error. The amended allegations reduced the instances from five to three.

[15] In contrast to r 13(2) which provides that an estate agent must not engage in conduct that is unprofessional or detrimental to the reputation or interests of the estate agency industry.

[16] Described in the respondent's submissions and the affidavit of Aki Kaimakamis as an application for return of bond. There was no order for the return of bond.

[18] Relating to the rental of multiple properties to Mr Maikantis, failing to notify all landlords that Mr Maikantis was the tenant of multiple properties, continuing to endorse Mr Maikantis as a tenant, and failing to properly maintain the rental files.

[19] Relating to the inclusion of the 'late fee' term on 18 residential tenancy agreements.

[20] Director of Consumer Affairs Victoria v Mr Joel Phillip Murray (unreported, Wentworth M, 22 September 2015)

[21] [2013] VCAT 2146.

[22] Director of Consumer Affairs Victoria v Roberts [2015] VCAT 1627 at [21].

[23] [2014] VCAT 446 at [86].