1. Under section 28A(1)(a) of the Estate Agents Act 1980 (Vic) (Act), LMG Commercial Property Services Pty Ltd and Leo Grogan are reprimanded for their conduct.
2. Under section 28A(1)(c) of the Act, any current estate agent's licence held by LMG Commercial Property Services Pty Ltd is cancelled with effect from 30 March 2017 and it is disqualified from holding a licence before 1 March 2019.
3. Under section 29A(1) of the Act, LMG Commercial Property Services Pty Ltd is ordered to return its estate agent's licence to the Business Licensing Authority by 30 March 2017.
4. Under section 28(1)(b) of the Act, LMG Commercial Property Services Pty Ltd is ordered to close all of its trust accounts under which it had conducted its estate agency business by 30 March 2017 and provide evidence of doing so to the Business Licensing Authority.
5. Under section 28A(1)(c) of the Act, Leo Grogan's estate agent's licence is cancelled with effect from 30 March 2017 and he is disqualified from holding a licence before 30 March 2019.
6. Under section 29A(1) of the Act, Leo Grogan is ordered to return his estate agent's licence to the Business Licensing Authority by 30 March 2017.
7. Under section 28A(1)(g) of the Act, Leo Grogan is ordered to undertake to:
   1. By consent, before engaging in the instruction or training of current or prospective estate agents, complete the following units of study:
      1. Minimising Agency and Consumer Risk;
      2. Establishing and Maintaining Agency Trust Accounts; and
      3. Maintaining Business Records; and
   2. By 23 March 2017, provide to The Benchmarque Group Pty Ltd a copy of these orders and reasons and the orders and reasons published on 19 October 2016. Leo Grogan is ordered to provide a copy of those documents to any future registered training organisation he is employed or contracted by to work as an instructor or trainer within seven days of entering into employment or into a contract for services.

1. On 22 March 2016, the Acting Director of Consumer Affairs Victoria (CAV) applied to the Tribunal for an inquiry into the conduct of LMG Commercial Property Services Pty Ltd (LMG) and Mr Leo Grogan under the Estate Agents Act 1980 (Vic) (Act).
2. A hearing was held on 15 September 2016 and, on 19 October 2016, I gave reasons for findings of fact I had made about the subject matter of the inquiry and for making determinations.[2] The orders and reasons for decision given on 19 October 2016 set the factual and legal context for this decision and should be read with these reasons.
3. My earlier findings were based on the contents of an agreed statement. In summary, I found that LMG and Mr Grogan failed to implement systems of record keeping or management to enable compliance with the Act and relevant regulations and as a result there were many breaches of the Act and those regulations. It is fair to say that LMG and Mr Grogan's records were in a dismal state.
4. In particular I found:
   • LMG and Mr Grogan had breached sections 63(1)(a) and 64 of the Act and regulations 18(2), 25(1) and 25(3) of the Estate Agents (General, Accounts and Audit Regulations) 2008 (Vic) (Accounts and Audit Regulations). Those provisions concern trust account maintenance and reporting obligations and obligations regarding the handling of cheques;
   • Mr Grogan breached section 29B(c) and (e) of the Act which concern the obligations of an officer in effective control to properly control and supervise any estate agency business carried on by the agent or for which the person is responsible and to establish procedures designed to ensure that the business is conducted in accordance with the law and good estate agency practice;
   • In breach of regulations 11 and 13(1) of the Estate Agents (Professional Conduct) Regulations 2008 (Vic) (Conduct Regulations), LMG and Mr Grogan:
     • Failed to at all times, act to the best of the agent's knowledge and ability in the performance of the agent's functions as an estate agent;
     • Failed to exercise all due skill, care and diligence in performing the agent's functions as an estate agent; and
     • Engaged in conduct that is unprofessional or detrimental to the reputation or interests of the estate agency industry.
5. On the basis of those findings, I determined under section 25(1)(a) and (c) of the Act that LMG and Mr Grogan had:
   • Contravened or failed to comply with the Act and Accounts and Audit and Conduct Regulations; and
   • Been guilty of conduct as an estate agent which rendered them unfit to hold a licence.
6. Having made those determinations, it was next necessary for me to consider what orders ought to be made under section 28A of the Act. That provision empowers the Tribunal to make a range of orders including to reprimand the person, to cancel any licence held by the person and to disqualify the person either permanently or for a specified period from holding a licence. The Tribunal may also require the person to give undertakings.
7. In accordance with my orders, the parties filed written submissions on the appropriate orders to be made under section 28A of the Act. A hearing was listed for 2 February 2017. Ms Spee, solicitor, represented CAV and Mr Cameron of counsel represented LMG and Mr Grogan.
8. The parties were in agreement about a number of the orders to be made. The areas of dispute concerned whether Mr Grogan's licence as an estate agent should be suspended or cancelled and, if cancelled, for what period he ought to be disqualified from holding a license. There was also a dispute about what undertaking Mr Grogan should provide in respect of his future work.

1. There was no dispute about the guiding principles to be applied to making orders under section 28A of the Act. They are, in summary:

• The Tribunal's powers to make disciplinary orders are primarily protective, even though they may have a punitive effect on the particular agent;
  • When considering whether a person should continue to work as a licensed estate agent, there are two matters raised which focus on the public interest: the protection of the public and the necessity of maintaining standards in the conduct of the profession. A very high standard of care, compliance and honesty is required for estate agents;
  • The Tribunal is to have regard to specific deterrence and general deterrence when making orders. In respect of the latter, the Tribunal should consider the effect its orders will have on agents' understanding as to the requirements and the standards expected, to prevent others from engaging in similar misconduct in the future. Agents who do not deal with trust accounts according to the law need to know that serious consequences for their participation in the industry will follow. Other matters to take into account are the risk of repetition of the same conduct and the agent's level of insight into the conduct in issue;[3]
  • While other cases may provide some guidance, each case must be decided on its own facts and circumstances; and

1. A reprimand is not a trivial determination and has the potential for serious adverse implications.[4] It tells the public and other estate agents that the standards expected have not been met and that the agent has been censured.

1. The parties agreed that it was appropriate for each of LMG and Mr Grogan to be reprimanded for their conduct under section 28(1)(a) of the Act.
2. I am satisfied that is an appropriate order.

1. In the written submissions, the parties agreed that LMG's estate agent's licence should be cancelled under section 28(1)(c). At the 2 February 2017 hearing, I was told that LMG's licence was due to expire within around a week and that the estate agency business had been largely wound down. Ms Spee from CAV was unable to confirm the expiry date of the licence.
2. I am satisfied that cancellation of LMG's estate agent's licence is appropriate.
3. In view of the uncertainty about when LMG's licence would expire I will order that, if at the time of my order, LMG's licence is current, that licence is cancelled with effect from four weeks of the date of the order.
4. The parties also agreed that:
   • Under section 29A(1) of the Act, LMG ought to be ordered to return its estate agent's licence to the Business Licensing Authority (BLA) within 14 days of the order being made; and
   • Under section 28(1)(b) of the Act, LMG ought to be ordered to close all of its trust accounts under which it had conducted its estate agency business within four weeks of the order being made.
5. Those orders are appropriate and will be made.
6. The parties agreed that LMG ought to be disqualified from holding an estate agent's licence for a specified period. While initially there was agreement that a period of five years was appropriate, once Mr Grogan became aware of the implications of that period for his own future licence, LMG sought a disqualification period of two years. I will discuss that aspect of the orders in respect of LMG below.

Mr Grogan's licence - conditions and/or suspension or cancellation

1. It is convenient to set out Mr Grogan's proposed orders first which are put in the alternative.
2. Mr Grogan's first submission was for an order under section 28A(1)(e) imposing a condition that he be prohibited from:
   • Operating an estate agent's business; and
   • Opening, operating or maintaining a trust account or receiving trust monies.
3. If that was not regarded as acceptable by the Tribunal, Mr Grogan's second submission was that his licence be suspended for a period of 12 months and then be made subject to the conditions described above.
4. His third alternative submission, was for cancellation of the licence and disqualification for two years.
5. The submissions in support of the possible orders proceeded on the basis that Mr Grogan did not intend working as an estate agent again in the future. He only wished to work as an instructor or trainer. As explained in my earlier reasons, for the last four years Mr Grogan has been working as a consultant to a registered training organisation (RTO). He explained that organisation offers an agent's representative course and an estate agent's full licence course. He is an instructor in those courses. He provides one on one and group training and, at the time of the September 2016 hearing, worked around 25 hours per week.
6. Mr Grogan intends to make that work his primary occupation and source of income. I understood that Mr Grogan believed he would need to continue to hold an estate agent's licence to continue in that work and so wished to continue to hold his licence but on the basis that he would be unable to operate an estate agent's business. The proposition seemed to be that there would be no risk to the public arising from work as an estate agent and so he ought to be able to retain his licence or resume holding it after a period of suspension or cancellation.
7. Consistent with his position, irrespective of whether his licence was made subject to conditions, suspended or cancelled, Mr Grogan proposed that he be ordered to give an undertaking to complete specified courses or units of study before working again as an instructor or trainer. His counsel, Mr Cameron, contended that the public would be protected from any risk associated with Mr Grogan's training activities by him first completing that study. I will return to the question of undertakings later.

1. CAV sought the following orders in respect of Mr Grogan's licence:
   • Under section 28A(1)(c), Mr Grogan's estate agent's licence be cancelled and he be disqualified from holding a licence for a period of five years; and
   • Under section 29A(1), Mr Grogan return his estate agent's licence to the BLA within 14 days of the order being made.
2. CAV relied on President Maxwell's comments about balancing the protective function and punitive element in disciplinary proceedings involving solicitors in Quinn v Law Institute of Victoria.[5] His Honour noted the connection between protection of the public, the inherent punitive effect of sanctions and the fact that the objective of deterrence was dependent on the sanctions having a punitive effect. His Honour said:

Critically for present purposes, however, the Tribunal's protective function is paramount. Thus, where there is a choice of sanctions, it is to be expected that the Tribunal will choose that sanction which maximises the protection of the public.

1. I agree those comments can be applied to this context.
2. CAV confirmed that it made no allegation that Mr Grogan was not of good character or that he committed the various breaches for personal gain. However, the conduct was very serious given Mr Grogan was aware of the legislative requirements under the Act and the Audit Regulations regarding trust accounts and records. The need for deterrence was said to apply in circumstances such as this and was not only to be confined to matters of fraud or other dishonest conduct.
3. CAV referred to comments I made in my 19 October 2016 reasons regarding the nature and seriousness of the breaches. CAV described LMG and Mr Grogan's conduct as cavalier or reckless and contended that agents who engage in such conduct must expect serious consequences to flow. That is because, by failing to comply with the relevant regulatory requirements, estate agents place their clients at unacceptable risk and so the conduct must be viewed seriously even if the client suffered no actual loss. CAV noted that it was difficult to reconcile Mr Grogan's conduct given for a number of years he had been instructing people who were seeking to become licensed agents or agent's representatives in relation to regulatory requirements, including some he had breached.
4. CAV contended that Mr Grogan's licence should be cancelled in view of the serious nature of his conduct: suspension was not appropriate because at the end of any suspension Mr Grogan could re-enter as a licensee without any scrutiny. By contrast, if Mr Grogan's licence was cancelled he would need to demonstrate to the BLA that he was at that time a fit and proper person to be granted a licence. CAV further submitted that both specific and general deterrence called for cancellation.

1. At the 15 September 2016 hearing, Mr Grogan gave evidence that he had failed to take seriously enough the detail required to comply with obligations, including trust account obligations. He described himself as professionally embarrassed. Mr Grogan stated that he had been struggling for the last two to three years, although he did not attribute that to any specific life events. He did say he had personal issues and had struggled with the matters raised in this proceeding and had decided to move on. He apologised for the time wasted and what had happened. Mr Grogan said he wanted to keep his estate agent's licence because he considered he was a good agent, it was important to his self-esteem and he might want to use it for business purposes in the future. Those business purposes included helping longstanding clients buy or sell properties or being available to assist the purchaser of his estate agency business.

1. In deciding on appropriate orders, I have been particularly mindful of giving greater weight to the protective nature of the orders to be made under section 28A of the Act as compared to Mr Grogan's personal interests and preferences.
2. In light of the determinations made under section 25 of the Act, including the findings that Mr Grogan had engaged in unprofessional conduct and had been guilty of conduct as an estate agent which rendered him unfit to hold a licence, I do not consider the imposition of conditions alone to be appropriate.
3. I acknowledge that Mr Grogan expressed regret for his conduct and is embarrassed by it and its consequences. The evidence does not allow me to consider whether personal matters or other events influenced his conduct and no submission to that effect was made on Mr Grogan's behalf.
4. Mr Grogan has no current intention of working as an estate agent. However, his circumstances or wishes might change and suspension would entitle him to resume work not only as an agent but as an officer in effective control. I note he stated at the 15 September 2016 hearing that, in the future, he might assist old clients or the current owner of the LMG business. I am not satisfied that those clients or the public generally could be confident that Mr Grogan's business practices would be improved such that their interests would be protected.
5. I am aware there was no actual financial loss to any of Mr Grogan's clients but, given the very extensive shortcomings in the management of the business, I consider that a beneficial accident rather than something that can be positively attributed to Mr Grogan.
6. I accept CAV's submission that suspension would not be appropriate in this case. That is because of the very serious nature of the findings I have made, including in relation to the holding of trust monies and the absence of any system of record keeping or management directed towards compliance with the applicable regulations. Given the many breaches of the Act and Regulations and the state of Mr Grogan's records, I do not consider that a suspension would meet the requirements of specific or general deterrence. I am satisfied that Mr Grogan's conduct means that he ought not to be able to readily re-enter the industry and ought to demonstrate to the BLA that he is a fit and proper person to hold a licence in future. Accordingly, I will order that Mr Grogan's estate agent's licence be cancelled.

1. CAV submitted that, if Mr Grogan's licence was cancelled, he should be disqualified from applying for a licence for five years. It contended that the seriousness of the Tribunal's findings and the circumstances, including Mr Grogan's past compliance history, warranted that period of time. CAV also expressed concern about Mr Grogan's insight into his conduct, including as to the seriousness of the breaches. That was in spite of Mr Grogan admitting the factual basis for the allegations made against him. CAV also sought an order that any future licence be subject to conditions that he be prohibited from holding or maintaining a trust account for five years.
2. Mr Grogan's counsel, Mr Cameron, submitted that, if Mr Grogan's licence was cancelled, it should only be for a period of two years and that any future licence ought to be subject to the two conditions outlined in paragraph 19 above regarding operating an estate agency business and holding and maintaining a trust account.

Decision on period of disqualification for Mr Grogan

1. I will order that Mr Grogan be disqualified from applying for an estate agent's licence for a period of two years.
2. In deciding what period of disqualification to impose, I have been mindful that elements of specific and general deterrence are relevant. Also relevant is the need to ensure other estate agents are aware that conduct like that engaged in by Mr Grogan will not be tolerated and will attract significant negative consequences. As discussed earlier, decisions of this kind will necessarily have a punitive effect on the agent involved.
3. I considered other decisions of this Tribunal regarding the appropriate period before a licence may be granted.[6] I have also been mindful that, as discussed by Kaye J in Buzzo Holdings Pty Ltd & Anor v Loison, what is required is for me to tailor the period of disqualification to fulfil the objectives of protecting the public, deterrence, the maintenance of industry standards, and the preservation of community confidence in the industry. As Kaye J put it, each case essentially depends on its own circumstances.[7]
4. I am not persuaded that imposing a disqualification period of five years would better protect the public than the shorter period of two years. Given Mr Grogan's planned future work and the fact that Mr Grogan has agreed to undertake to complete relevant units of study (see further below) I see no utility in imposing the longer period. If the BLA has concerns about any other matters related to Mr Grogan's licence, it can impose any conditions it considers appropriate under section 21A of the Act.

1. As mentioned earlier, at the hearing there was a discussion about the period of disqualification to be imposed on LMG. There was an initial agreement in principle that five years was appropriate. Mr Grogan changed his position on becoming aware that, if that period applied to LMG, as a consequence of him having been a director of LMG, section 14(5)(b) of the Act would render him ineligible to be licenced until that five year period had passed. Accordingly, LMG sought a disqualification period of two years only to ensure that Mr Grogan could, if he wished to do so, apply for a licence after that period of time.
2. CAV maintained its position that the period of disqualification for each of LMG and Mr Grogan ought to be five years.
3. Having decided that the period of disqualification for Mr Grogan is to be two years, I consider it would be inappropriate to impose a longer period of disqualification on LMG as Mr Grogan would in practice be unable to apply for a licence for the same period. The two time periods should be the same and accordingly, I will impose on LMG a period of disqualification of two years.

Conditions on a future licence issued to Mr Grogan

1. The parties jointly submitted that I should make an order under section 28A(1)(e) of the Act that conditions be applied to any future licence to be granted to Mr Grogan. The suggested conditions were that Mr Grogan be prohibited from:
   • Operating an estate agent's business; and
   • Opening, operating or maintaining a trust account or receiving trust monies.
2. When I queried whether the Act empowers the Tribunal to impose conditions on a future licence when an estate agent's licence is to be cancelled, CAV referred me to the Tribunal's decisions in Consumer Affairs Victoria v Pantelios and Department of Consumer Affairs Victoria v McDonald.[8]
3. The decision in Pantelios concerned Mary Pantelios, Steven Pantelios and a corporate entity. Ms Pantelios was declared ineligible to hold an estate agent's licence for a specified period. Mr Pantelios and the corporate entity were reprimanded and a condition was placed on their continuing estate agent's licences to the effect that, once the period of ineligibility imposed on Ms Pantelios expired, they could not employ her as an estate agent. Accordingly, no condition with future operation was placed on a cancelled licence.
4. In McDonald, the estate agent's licence was cancelled and conditions were imposed on any future licence. The Member considered that the conditions on a future licence were less harsh than the terms of an undertaking offered by Mr McDonald himself. The decision does not expressly refer to the power to make the future conditions and that seemed not to have been the subject of submissions by the parties.
5. In the absence of express words in section 28A(1) or clear authority on the point, I am not satisfied that section 28A(1)(e) gives me the power to make orders about a future estate agent's licence where the licence the subject of the proceeding is to be cancelled. I note that section 28A(1)(e) is drafted in the present tense referring to the imposition of any condition or limitation on 'any licence held by the person'. Once an order is made cancelling an estate agent's licence the person no longer holds a licence. I also note that the power to cancel a licence contained in section 28A(1)(c) refers to disqualification for a specified period but makes no reference to conditions being imposed on a future licence.
6. In the absence of a clear statutory power to make the orders sought, I do not consider it open to me to make the orders sought even though the parties are in agreement. Further, I do not regard it as appropriate for the Tribunal to seek to bind the BLA if it decides at some point in the future to grant Mr Grogan a licence. To do so would require me to hypothesise now about Mr Grogan's future intentions and his future conduct. If Mr Grogan does apply for an estate agent's licence in future and agrees to conditions in the form set out above and the BLA considers them appropriate, the BLA can impose them.

Mr Grogan's work as an instructor and trainer

1. As discussed above, Mr Grogan intends to work only as an instructor and trainer of future estate agents. He had been working in that capacity before the 15 September 2016 hearing.
2. Mr Grogan offered to give an undertaking to only engage in training related work after completing units in the following subjects:
   • Minimising Agency and Consumer Risk;
   • Establishing and Maintaining Agency Trust Accounts; and
   • Maintaining Business Records.
3. Those are subjects which are prescribed under section 14(1)(a) of the Act as prerequisites for licence eligibility.
4. CAV consented to an order being made in those terms.
5. CAV also sought an undertaking that Mr Grogan not be engaged as an instructor or trainer for any course units prescribed by the Act for a period of five years. CAV sought that undertaking in order to protect the public and also to uphold standards. CAV is understandably concerned about Mr Grogan seeking to offer instruction in the very matters before the Tribunal where he has demonstrated past failings.

1. Section 28A(1)(g) of the Act empowers the Tribunal to require a person to enter into an undertaking to perform, or not to perform, certain tasks to be specified in the undertaking.
2. I raised with the parties my concern that the two proposed undertakings seemed to address matters which are beyond those required for an estate agent to be licensed under the Act. I noted I could find no reference to working as a trainer being a component of the usual work of an estate agent under the Act. The section 4 definition of 'estate agent' refers to dealing with the real estate or other business of a person such as by selling, buying, exchanging, letting or taking on lease. Express reference is made to collecting rents. While the Act refers to prescribed courses of instruction and examinations in the context of demonstrating eligibility to be licensed, there is no reference to estate agents being the instructor or trainer of those courses.
3. While accepting that there are serious questions about Mr Grogan's knowledge of the Act and his capacity to teach others in the light of my earlier findings, I asked the parties whether Mr Grogan's capacity to instruct and train was an issue for any RTO which sought to engage him as an employee or contractor rather than the Tribunal and the BLA. As at the last hearing and apparently as at the February 2017 hearing, Mr Grogan had not informed the RTO he has been working with about these proceedings or my earlier findings.
4. I suggested that a proper undertaking would be for Mr Grogan to provide a copy of the orders and reasons in these proceedings to the RTO he has been engaged by (The Benchmarque Group Pty Ltd) and any other RTO he seeks to provide instruction or training services to in the future.
5. Mr Grogan agreed to give that undertaking.
6. CAV still pressed for an undertaking that he not engage in instruction or training for a period of five years.
7. Although the proposed undertaking to complete the specified units of studies is related to Mr Grogan's future work as an instructor and trainer, I am satisfied that there is a sufficient connection with the Act for the agreed order to be made. That connection arises under section 14(1)(a) as those units of study are pre-requisites for being granted a licence. Accordingly, if Mr Grogan wishes to be licensed in future he would need to demonstrate he has satisfactorily completed them. Completing those units of study in the near future might assist in protecting the public by increasing the likelihood that the students under Mr Grogan's tuition are better informed about the applicable law.
8. I am not satisfied that an order requiring Mr Grogan to give an undertaking not to work as an instructor or trainer ought to be made given that work is not regulated by the Act and is not a component of the usual work of an estate agent under the Act.
9. I will, however, require the undertaking Mr Grogan has agreed to give in respect of the disclosure of these proceedings. I am satisfied that the public interest and the standards of the profession will be upheld if his current employer and any future RTO's are aware of Mr Grogan's past disciplinary history - it will be a matter for them to decide whether he has demonstrated knowledge of the relevant areas he intends to instruct in and is suitable to do so.

[1] The parties applied for orders by consent extending the time for compliance with orders 3, 6 and 7b. Those orders were made on 9 March 2017.

[2] Consumer Affairs Victoria v LMG Commercial Property Services Pty Ltd [2016] VCAT 1742.

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

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

[6] Including Director of Consumer Affairs Victoria v Worldwide Scope Pty Ltd [2013] VCAT 702; Director of Consumer Affairs v Marshall [2013] VCAT 1316; Director of Consumer Affairs Victoria v Rounds [2013] VCAT 1882; Acting Director of Consumer Affairs Victoria v Moularas [2014] VCAT 474; Director of Consumer Affairs Victoria v Shaba [2014] VCAT 815; Director of Consumer Affairs v Baycrown Management Pty Ltd [2015] VCAT 380; and Consumer Affairs v Hoare (No 2) [2015] VCAT 1077.

[7] [2007] VSC 31 at paragraph [28].

[8] [2004] VCAT 925 and [2015] VCAT 1625 respectively.