1. Ground Four:
   • (a) Contents of Brett Watson's affidavit relating to him being an inspector pursuant to s 142 of the Australian Consumer Law and Fair Trading Act 2012 and the Estate Agents Act 1980 and his request to produce the named documents pursuant to s 70C of the Act;

(b) Copy of Certificate from the Authority confirming the Respondent was a licensed estate agent;[11]

(c) Copy of the business extract for 'Partners Real Estate';[12]

(d) Correspondence from Consumer Affairs Victoria to the Respondent concerning his failure to comply with s 70C of the Act;[13] and

(e) The Respondent's emails,[14] confirming that he was carrying on business as an estate agent and the reasons for the failure to provide the documentation.

1. The Respondent failed to respond to letters dated 1 April 2009; and 27 October 2011; sent to him on behalf of the Applicant, which advised of outstanding audit reports, the Respondent's statutory obligations and possible contraventions of the legislation; and requested immediate compliance.
2. In addition, the Respondent failed to reply to telephone messages left by compliance officers and failed to make himself available when advised by letter dated 12 December 2011, that an inspection would be conducted at his business premises on 20 December 2011.
3. By letter dated 4 July 2012, the Respondent was again alerted to outstanding audit reports and failure to make accounting records available as requested; and given a draft notice of suspension of licence which would be issued, in the event of his continued failure to comply. The Respondent initially replied by telephone, stating that he would attend to the outstanding audit reports. Subsequently, by email dated 8 August 2012, the Respondent stated that he had suffered ill-health and stress and requested an extension to 30 September 2012. Significantly, there was no mention that he was conducting a separate franchise business. The Respondent sought two further extensions of time, but has still failed to date, to lodge the outstanding audit reports, the subject of this application and inquiry.
4. The Respondent was self-represented and gave oral evidence on his own behalf. He did not file any supporting material or personal or professional references. He accepted the affidavit material filed and evidence given on the behalf of the Applicant and had no complaint regarding the investigation conducted on behalf of the Applicant. He also accepted that he had failed to return phone calls made and correspondence sent, on behalf of the Applicant.
5. By way of explanation for his conduct, he said that in late 2004/2005 he bought an electrical testing and tagging franchise with the intention that it would be operated by his son. However, after about 12 months his son ceased involvement in the business and the Respondent continued to conduct the franchise business alone. He said it occupied a lot of time both during the day and then in the evening entering items on the computer. At the same time he conducted a small rent roll comprising nine properties, two commercial and seven residential. While he managed to receipt rental payments received by him and advise landlords accordingly, he failed to maintain the cash book, monthly reconciliation, or arrange for the annual audit of accounts. He did not engage any person to assist him to comply with his statutory obligations.
6. The Respondent confirmed that following his failure to comply with requests on behalf of the Applicant to provide information and directions to file outstanding audit reports and accounts, his licence was suspended on 31 October 2012 and he has not operated a trust account since then. He paid out the balance in his trust account to the landlords and notified tenants to pay the rent to another licensed estate agent.
7. The Respondent confirmed that prior to operating his current real estate agency business, which is based at his residence, he was always employed by another estate agency.
8. The Respondent said that he has not yet engaged an auditor to perform the outstanding audits but he is confident he will complete all of his records so as to enable such audits to be completed and reports and financial accounts, filed by 30 June 2013.
9. The Respondent acknowledged that he knew his obligations under the Act, including the requirements to maintain financial records and file annual audit reports and financial accounts. He further acknowledged that the Applicant currently would have no way of knowing about deficiencies or defalcations in his trust account for the relevant periods.

1. 'Estate agent' or 'agent' is defined under s 3 of the Act as follows:

estate agent or agent means any person (whether or not he carries on any other business) who exercises or carries on or advertises or notifies or states that he exercises or carries on or that he is willing to exercise or carry on or in any way holds himself out to the public as ready to undertake the business of -

(a) selling buying exchanging letting or taking on lease of or otherwise dealing with or disposing of;

(b) negotiating for the sale purchase exchange letting or taking on lease of or any other dealing with or disposition of;

any real estate or business on behalf of any other person.

1. Section 25(1) of the Act vests power in the Tribunal to conduct an inquiry as follows:

At any time the Director or the Chief Commissioner of Police may apply to the Tribunal for the holding of an inquiry to determine whether an estate agent -

(a) has contravened or failed to comply with this Act or the regulations; or

(aa) has contravened or failed to comply with the Sale of Land Act 1962; or

(b) is of good character or is otherwise a fit and proper person to hold a licence; or

(c) has been guilty of conduct as an estate agent which renders him or her unfit to hold a licence; or

(d) improperly obtained, or is improperly holding, a licence.

1. Section 28A of the Act sets out the determinations which the Tribunal may make after conducting an inquiry, as follows:

(1) After conducting an inquiry in respect of a person under section 25 or 28, the Tribunal, if it considers it appropriate, may, by order, do any one or more of the following -

(b) require the person to comply within, or for, a specified time with a requirement specified by the Tribunal;

(c) cancel any licence held by the person and disqualify the person either permanently or for a specified period from holding a licence;

(d) suspend any licence held by the person for a specified period not exceeding one year;

(e) impose any condition or limitation on any licence held by the person;

(f) declare any person to be ineligible to hold a licence or to be an agent's representative either permanently or temporarily;

(g) require the person to enter into an undertaking to perform, or not to perform, certain tasks to be specified in the undertaking.

(2) In addition to the powers conferred by subsection (1), if the Tribunal determines that the person has contravened or failed to comply with this Act or the regulations, it may impose a penalty not exceeding $5000 on the person and specify when the penalty must be paid.

(3) Any penalty imposed under subsection (2) must be paid to the Fund.

(4) If the Tribunal suspends or cancels a licence, the cancellation or suspension takes effect on the date specified by the Tribunal.

(5) If an estate agent fails to pay a penalty imposed under subsection (2) by the required date, the Tribunal may without giving the agent an opportunity to be heard -

(a) suspend the agent's licence until the penalty is paid; and

(b) cancel the licence if the penalty has still not been paid after the end of a further period of time equal to the initial period of time the agent had in which to pay the penalty.

(6) A reference to a person in this section includes a reference to any person who was an estate agent or agent's representative at the time of any breach or alleged breach of any relevant law, even though the person is not an estate agent or agent's representative at the time any action is taken under this Act.

1. Section 64 of the Act provides, to the extent relevant to this inquiry, that:

(1) Within three months after 30 June in each year, every person who carried on business as an estate agent during the whole or any part of the previous financial year shall cause his accounts of trust money for the whole or the part of that financial year to be audited. Penalty: 120 penalty units.

(a) take all reasonable steps to ensure that his report is completed within three months after 30 June; and

(b) as soon as the report is completed, deliver the report to the agent concerned.

(3) The agent shall retain the signed copy of the report for a period of 7 years after it was delivered to the agent and produce it on demand pursuant to this section. Penalty: 20 penalty units.

1. Section 70C of the Act imposes an obligation upon the licensed estate agent to provide documents and answer questions as required:

For the purpose of monitoring compliance with this Act or the regulations or carrying out any audit under this Act, an inspector may require an estate agent at a time and place specified by the inspector -

(a) to answer orally or in writing any questions put by the inspector relating to the estate agent's business as an estate agent;

(b) to supply orally or in writing information required by the inspector relating to that business;

(c) to produce to the inspector specified documents or documents of a specified class (including trust accounts and records) relating to that business.

A person must not refuse or fail, without reasonable excuse, to comply with a requirement of an inspector under this Division.

1. Estate agents are highly regulated, as indicated by the complex provisions in the Act and the regulations. This reflects the fact that property transactions can involve very large amounts of money. Although the real estate industry is a business, many people who come into contact with it do not have a lot of business experience and so need protection. Accordingly, the legislation requires estate agents' trust accounts to be closely monitored, by auditing and by requirements that agents balance their accounts each month.
2. In the Second Reading Speech for the Estate Agents Bill,[15] the relevant Minister said:

...it is most important that the law of this State relating to estate agents and sub-agents (now agent's representatives) should be sound law, ensuring that the highest standards are observed in the real estate industry.

1. The Respondent has claimed an inability to complete an audit of the trust account by the required deadlines for a continuous period of 6 years. The Respondent has also failed to provide named documentation relating to the trust account, including monthly reconciliation statements, register of trust receipts, cheques and securities, ledger print outs and transfer journals. The Estate Agents (General, Accounts and Audit) Regulations 2008 requires an estate agent to keep these records and s 98 of the Act requires them to be retained for a period of seven years from the date of the creation. The Applicant submitted that the Respondent has not given any reasonable excuse why these documents have not been provided to Consumer Affairs Victoria. The result of the Respondent failing to provide the outstanding audits and the named documents is that he, as a licensed estate agent, has fallen outside the scheme of supervision. As Consumer Affairs Victoria cannot inspect these documents, the Applicant has no way of knowing whether the Respondent has complied with the legislation relating to trust account practises. Specifically, the Applicant has no way of knowing whether there are any deficiencies or defalcations with respect to the trust monies held in the account.
2. What is more worrying is that the Respondent has been given many warnings about the contraventions and opportunities to provide the outstanding audits and provide the named documents but has not done so. In relation to the letters sent to the Respondent and dated 1 April 2009, 27 October 2011 and 12 December 2011, it appears that the Respondent has simply ignored them. It was not until the Respondent was threatened with licence suspension in the letter dated 4 July 2012, that he then contacted Consumer Affairs Victoria.
3. The Respondent has since requested numerous extensions to provide the audits and required documents. He has stated that the reason for the delay was due to his health, stress and that he also found compliance was taking longer than expected. Since his licence was cancelled, the Respondent claims the rental properties are being managed by an estate agent. Given that the Respondent can no longer carry on the business of an estate agent, there should be no reason for a delay in providing the required documentation and for the outstanding audits to be conducted by an approved auditor.
4. The Applicant acknowledged that the Tribunal's powers to make any order are primarily protective, however, they also serve a punitive function;[16] and the exercise of the punitive function is appropriate in the circumstances where such blatant breaches of the Act has been identified.
5. The Tribunal endorses the above submissions.
6. The Applicant sought Orders of the Tribunal to the following effect:
   • (a) A reprimand in relation to each ground, pursuant to s 28A(1)(a) of the Act;
   • (b) Cancellation or suspension or of the Respondent's licence for a period not exceeding one year, pursuant to s 28A(1)(c) or s 28A(1)(d) of the Act;
   • (c) Imposition of a licence condition to prevent the Respondent from receiving trust moneys or operating a trust account, pursuant to s 28A(1)(e) of the Act;
   • (d) The imposition of a financial penalty not exceeding $5,000, pursuant to s 28A(2) of the Act; and
   • (e) An order requiring the Respondent to lodge all outstanding audit reports and financial accounts within a specified period.

1. The Respondent accepted and made no excuses for his failure to comply with his accounting obligations. He confirmed that he has no intention of maintaining a trust account in future, will continue to operate his franchise business, but also hopes to retain his estate agency licence so that he can continue to operate a small estate agency rent roll.
2. The Respondent also referred to certain health problems and financial difficulties.

1. The Tribunal finds that the Respondent:
   • (a) failed or refused to respond to enquiries, requests and directions made on behalf of the Applicant for approximately 3 years;
   • (b) failed to retain financial records as required;
   • (c) failed to provide any satisfactory explanation as to why he failed to maintain proper accounting records or obtain and file audit reports;
   • (d) failed to engage or seek assistance in complying with his statutory obligations; and
   • (e) as at the date of the inquiry, has continued to fail to lodge any audit reports or accounting records or otherwise respond to any enquiries made by the Applicant in relation to the relevant accounting periods.
2. The Tribunal is otherwise satisfied that the Respondent has accepted full responsibility for his conduct.
3. The Tribunal also takes into account that the Respondent comes before the Tribunal with prior good character and there have been no prior adverse findings in relation to the Respondent, brought to the attention of the Tribunal.

1. This Tribunal has consistently reinforced the fundamental importance of strict compliance with the Act and Regulations, particularly where a licence authorises the receipt of trust moneys. Breaches of the kind committed in this case, as acknowledged by the Respondent, prevent a proper monitoring of statutory compliance and identification of possible trust account deficiencies or defalcations.
2. Although the Applicant is seeking audit reports only since the financial year ended 30 June 2007, the evidence revealed that the Respondent failed to comply with his accounting obligations from the commencement of his current business. Indeed it would appear that his attention has been predominately devoted to his franchise business and he has consistently neglected his obligations under the Act. Accordingly, the Tribunal has concluded that a period of licence suspension is warranted.
3. Furthermore, in view of the fact that the Respondent comes before the Tribunal without having complied in any respect in relation to his outstanding obligations, it is also appropriate to make a self-executing order to the effect that if he fails to file outstanding reports and accounts by 30 June 2013, then his licence will be cancelled at the expiration of the period of suspension otherwise ordered.
4. The Respondent will also be reprimanded, to signify an appropriate condemnation of his conduct; and fined an aggregate amount, which also has regard to his financial circumstances.
5. Specific and general deterrence are both relevant objectives in any sanction which this Tribunal now imposes.
6. The Tribunal has made the orders set out herein.

[1] Ex. A: affidavit of Brett Edward Watson Inspector dated 17 October 2012 and exhibits, TB 43-65; Ex C: affidavit of Saul John Dullard dated 29 November 2012 and exhibits, TB 1-41.

[16] Hanneberry v Legal Ombudsman [1998] VSCA 142.