Director of Consumer Affairs Victoria v Robert Pedersen Real Estate Pty Ltd (Review and Regulation) [2019] VCAT 528

1. Under section 28A(1)(a) of the Estate Agents Act 1980 (Vic) (the Act), the respondents are reprimanded.
2. Under section 28A(1)(e) of the Act, the respondents' estate agent's licences are subject to a condition that they must cause any trust account held by them to be audited for the following periods and for those audited accounts to be produced to the applicant within three months:
   • (a) 1 July to 30 September;
   • (b) 1 October to 31 December;
   • (c) 1 January to 31 March; and
   • (d) 1 April to 30 June.

This condition is additional to and does not reduce the respondents' obligations under section 64 of the Act (the additional audits condition).

1. The additional audits condition applies from the date of these orders to 30 June 2021.
2. Under section 28A(2) of the Act, the respondents must pay a monetary penalty of $1,000 each by 12 June 2019.

1. Mr Robert Pedersen has been an estate agent for around 50 years. He is the sole director of Robert Pedersen Real Estate Pty Ltd (the company). Both Mr Pedersen and the company have been licensed under the Estate Agents Act 1980 (Vic) (Estate Agents Act).
2. On 17 January 2018, the Director of Consumer Affairs Victoria (CAV) applied to the Tribunal for an inquiry into the company and Mr Pedersen's conduct.
3. In summary, the inquiry into the company was concerned with the company's non-compliance with provisions of the Estate Agents Act and the Estate Agents (General, Account and Audit) Regulations 2008 (Vic) (Regulations). In broad terms, the non-compliance concerned the company's failure to:
   • Complete trust account audits as required by section 64(1) of the Estate Agents Act for the 2015, 2016 and 2017 financial years;
   • Since 26 July 2014, keep a trial accounts journal recording all daily receipts of money into the trust account, contrary to Regulation 21(1);
   • Since 14 July 2014, to keep a trust account cash payments journal recording all daily payments of money out of the trust account, contrary to Regulation 22(1); and
   • Since July 2014, to complete and keep a trust account reconciliation statement at the end of each month, contrary to Regulation 25(1);
4. I hasten to add that there was no allegation any funds were used improperly at any time or that any funds have gone missing from the trust account.
5. The inquiry into Mr Pedersen arose because he is the company director and the officer in effective control. CAV alleged that Mr Pedersen knowingly authorised the breaches summarised above. That conduct is capable of amounting to breaches of the Estate Agents Act by him personally as a result of section 195(1) of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (ACLFTA). Section 195 says that, if a body corporate contravenes any provision of that Act, each officer of the body corporate is deemed to have contravened the same provision if the officer knowingly authorised or permitted the contraventions.
6. Section 93A of the Estate Agents Act has the effect that section 195 of the ACLFTA applies to officers of bodies corporate, such as Mr Pedersen. The consequence is that the Tribunal has the power to find that Mr Pedersen is personally liable for conduct of the company.

1. On 5 December 2018, the parties signed a statement of agreed facts. The agreed facts included:
   • Background matters as to the licences granted to the company and Mr Pedersen;
   • CAV's inspections and investigations; and
   • The factual elements set out in the grounds for inquiry.
2. By signing that document, Mr Pedersen agreed the company had contravened the relevant sections of the Estate Agents Act and the specified Regulations. He also agreed that he, as an officer of the body corporate, knowingly authorised or permitted the contraventions and so had also contravened the same sections and Regulations.

1. The hearing of this matter commenced on 12 December 2018. After hearing from CAV and Mr Pedersen about the factual findings I should make and the determinations sought by CAV, I agreed to adjourn the matter to allow Mr Pedersen an opportunity to obtain a report from a psychologist or other medical practitioner if he so wished. As will become apparent, Mr Pedersen asked me to take into account a range of events involving himself and his family when assessing his conduct.
2. The hearing resumed on 13 March 2019. Mr Pedersen relied on a psychologist's report dated 28 February 2019. CAV and he made submissions including about the report's contents and the determinations they each sought.

Determinations under section 25

1. At the hearing before me on 12 December 2018, I confirmed with Mr Pedersen that he understood the above consequences of signing the agreed statement.
2. Accordingly, there was no dispute that the company and Mr Pedersen:
   1. In 2015, 2016, 2017 and 2018, failed to cause the company accounts of trust money for the whole or part of that financial year to be audited within three months after 30 June in each year, in contravention of section 64(1) of the Estate Agents Act;
   2. After 26 July 2014, failed to keep a trust account cash receipts journal which recorded all daily receipts of money into its trust account, in contravention of Regulation 21(1);
   3. After 14 July 2014, failed to keep a trust account cash payments journal which recorded all daily payments of money out of its trust account, in contravention of Regulation 22(1); and
   4. After July 2014, failed to complete and keep a trust account reconciliation statement at the end of each month, in contravention of Regulation 25(1).
3. I am satisfied that the company and Mr Pedersen contravened or failed to comply with the Act and the Regulations as specified above and so make that determination under section 25(1)(a) of the Estate Agents Act.

Determinations under section 28A

1. Section 28A(1) of the Estate Agents Act sets out the determinations the Tribunal may make. Relevantly, the Tribunal may make one or more of the following orders:

(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; and/or

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

1. Under section 28A(2), the Tribunal may also impose a penalty not exceeding $5000 on the person and specify when the penalty must be paid.
2. The nature of the regulatory scheme is particularly important in cases of this kind.
3. The estate agent industry is highly regulated. The public expects estate agents to be skilled, professional and honest. The public also expects strict compliance with all requirements arising from estate agents access to and use of all monies held in or required to be paid into trust accounts in order to minimise any possible risk to those funds. Estate agents who adopt a less than rigorous approach and attitude to complying with regulatory requirements, particularly over an extended period, place their clients at unacceptable risk.
4. There is an expectation that accurate and complete records will be kept for all transactions and that these records will be created and held consistent with regulatory requirements so that regulators and auditors can review them and determine all the elements of transactions are in order. These requirements apply regardless of the size of the estate agency business or how frequently they conduct business. Successful regulatory compliance is not just a matter of knowing what the rules are in a technical sense, as important as that is, but also having insight into the importance of those regulatory requirements.
5. When considering what orders ought to be made under section 28A of the Act, the Tribunal is required to take into account the following propositions:

• 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 consider are the risk of repetition of the same conduct and the agent's level of insight into the conduct in issue;[1]
  • 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.[2] It tells the public and other estate agents that the standards expected have not been met and that the agent has been censured.

1. On the first hearing day, CAV submitted that I should make the following orders:

(b) Suspend the licences of both the company and Mr Pedersen for up to six months;

(c) Require that all outstanding audits be lodged by a specified date, failing which the company and Mr Pedersen's licenses would be cancelled;

(d) After the periods of suspension had been completed, impose a condition on their licenses prohibiting them from receiving trust monies or opening, operating or maintaining a trust account; and

(e) Impose a financial penalty on both the company and Mr Pedersen of up to $5,000.

1. By the time of the hearing on 13 March 2019, the outstanding audits had been completed. While CAV had some criticisms of the content of those reports and the delay in completing them (see further below), it no longer sought an order under (c) above.
2. CAV informed me that on 30 September 2015, the company pleaded guilty in the Magistrates' Court to failing to comply with the audit requirements for the financial year ending 30 June 2014. Accordingly, it was said to be on notice of the seriousness of the breach but despite that continued to be non-compliant.
3. It also drew my attention to the fact that, although CAV's inquiry commenced in January 2018, Mr Pedersen failed to have the 2018 financial year audit completed when due. It took until early March 2019 for the outstanding audits to be submitted.
4. Noting shortcomings in the completed audits and other records, CAV contended there was no reasonable explanation why the company had failed to meet all of the other obligations, including as to completing compliant reconciliation statements.
5. CAV contended these matters showed that the company, through Mr Pedersen, demonstrated a lack of insight into the nature of the breaches and their seriousness and/or a lack of understanding as to the nature of the obligations and how they are to be met.
6. CAV contended that:
   • A reprimand would ensure general and specific deterrence and would also serve as an appropriate punitive function;
   • While acknowledging the proposed licence condition would mean the company and Mr Pedersen could not hold trust funds, they could still each operate within the industry. The imposition of the condition would protect consumers and the industry and improve the prospects of Mr Pedersen being compliant in future;
   • Suspension would be appropriate in the circumstances. Those circumstances included the fact Mr Pedersen had not demonstrated any substantial changes had been made to the business that would minimise future non-compliance. Given the events in the Magistrates' Court and the continuing non-compliance over the course of the inquiry, the public and industry could not have any confidence the company and Mr Pedersen would not continue to engage in the same kind of behaviour. A suspension would also send a clear message to the industry that the conduct engaged in would not be tolerated; and
   • The combination of the suspension proposed condition appropriately balanced the right to work in the real estate industry and the right of the community to be protected and to have confidence in the licensing regime.

1. At the hearing on 12 December 2018, Mr Pedersen gave evidence about his history as an estate agent and the events which he considered were relevant to the context in which the breaches occurred.
2. In summary, he stated:
   • He had been in real estate for 50 years including managing an estate agents office for 20 years;
   • He had been the secretary of the Eastern branch of the Real Estate Institute of Victoria;
   • He had never had any defalcations or any other problems in all of that time;
   • He understood how important it was to ensure that audits are and that they must be done on time;
   • He and his then auditor were engaged by CAV to investigate a significant defalcation by another estate agent;
   • He taught estate agents the law at Swinburne University including as to obligations under the Estate Agents relating to the handling of funds, trust accounts and audits;
   • He trained 10 or more young men in the industry, all of whom had gone on to success;
   • He had shown a commitment to the industry and compliance over 50 years; and
   • The company estate agency was opened in 2010 and he was fully compliant until 2014.
3. I referred earlier to events which Mr Pedersen contended affected his compliance with his obligations as an estate agent and director of the company.
4. Mr Pedersen gave evidence that, in 2014, his son was operating a tree loping/removal business. One of his son's employees was involved in an accident in May 2014 and died. The business was investigated by WorkCover and was cleared to operate without any restrictions.
5. However, Mr Pedersen's son fell into a deep depression about the accident and was unable to undertake the day to day work associated with running the business. The distress and inability to work increased and continued when WorkCover commenced legal action against the son and his business.
6. Mr Pedersen stepped in to support his son with the day to day running of the business and in respect of the legal action. He attended court hearings and meetings with solicitors and barrister. The legal action was not completed until late 2017 and his son did not get back on his feet until around early 2018.
7. Mr Pedersen stated that, during the period 2014 to 2018 he was distracted from his own business and so he did not get the audits done. He explained he had a book-keeper at the time and he asked her to arrange for them to be done. He described the failure to attend to the audits as a 'glitch in character' due to the assistance he was focussed on providing to his son and grandchildren.
8. In around January 2018, Mr Pedersen's wife had a recurrence of a serious illness. In March 2018, she had a knee operation. During that period Mr Pedersen was occupied caring for and supporting her.
9. In June 2018, Mr Pedersen's mother passed away.
10. Mr Pedersen said he regretted the breaches and was embarrassed. He described himself as 'totally remorseful'. Mr Pedersen did not consider, though, the public needed protection from him given his overall record and his intention to make necessary arrangements to better manage the company's financial affairs.
11. Mr Pedersen gave evidence at the time of the hearings he had only a handful of rental properties and a minimal number of property sales. The latter tended to come from longstanding clients or as a result of referrals from colleagues or solicitors. He was otherwise working as a contract auctioneer, undertaking three to four on weekends.
12. As he is the sole operator of the estate agency and the sole director of the company, Mr Pedersen stated that, if his licence was affected he may have to close the business. Between the two hearing dates, Mr Pedersen considered whether he could arrange for someone to take over or manage the office. He told me that was not feasible. He also expressed concern that a suspension would suggest to others that he had misused trust account funds and so he may lose work in future. He stated that, at his age, he was unlikely to be employed elsewhere.
13. As to his current financial situation, Mr Pedersen said he and his wife were renting as they no longer owned their own home. They have no savings or superannuation. Although Mr Pedersen is now 70 years old, he intends to keep working as long as he can. Mr Pedersen's wife does not work. Mr Pedersen gave evidence about the company and his financial position and stated that neither could afford to pay any fines.

1. At the 12 December 2018 hearing, Mr Pedersen informed me that the documents required to complete the audits in issue had been sent to the auditor two days earlier.
2. The 2015 to 2018 financial year audits were completed and submitted to CAV on around 5 February 2019, eight days before the second hearing in the proceeding.
3. The auditor's covering letter stated that trust banking such as receipts and payments were in good order with the exception of monthly sale ledgers and monthly trial balances in all years. Because of that, all four reports were qualified. CAV's solicitor, Ms Palmer observed that the auditor's comments showed that, although those were some of the issues which had led to the inquiry which commenced in January 2018, they had still not been rectified.
4. The auditor recommended that Mr Pedersen obtain a cloud based trust accounting system and engage an independent trust accounting firm to assist with set up, training and initial reconciliations to build his knowledge. While Mr Pedersen stated at the December 2018 hearing that he intended to obtain the relevant software to better manage his trust accounts, he had still not done so by the March 2019 hearing.
5. At the March 2019 hearing, Mr Pedersen said he would be willing to agree to more regular than usual audits as a means to demonstrate his compliance and reassure CAV.

1. Mr Pedersen presented a report from Ms Rhonda Sidaoui, Clinical Psychologist dated 28 February 2019. The report was prepared after Mr Pedersen had attended for two sessions. It detailed his history including a number of the matters summarised above. The report said Mr Pedersen stated he had undertaken his role of company director and auctioneer at 'a normal level' in the relevant period. He also told Ms Sidaoui that, as a result of the various stressors, he had been unable to undertake all tasks, including submitting audit reports. The report said he did not understand why his ability to work as an estate agent was being scrutinised after so may years hard work in the industry.
2. Ms Sidaoui went on to infer that it was highly likely that since 2014 Mr Pedersen may have been diagnosed with an adjustment disorder with mixed depressed mood and anxiety. Ms Sidaoui also said he would have had problems adjusting to his psychological limitations and his inability to function at a normal level in respect of his social and occupational status.
3. After describing how Mr Pederson constantly felt stressed and anxious, she concluded that Mr Pedersen's declining mental state in the period from 2014 to around 2018 would have affected his ability to foresee the consequences of his actions and that would have led him to not being able to complete the audit reports as stipulated, at one stage.
4. As at February 2019, Ms Sidaoui rated Mr Pedersen as within the normal range of depression, anxiety and stress and in the minimal range for the Beck Depression Inventory and the Beck Anxiety Inventory. The final section of the report said:

Mr Pedersen has been punctual, attentive and eager to develop insight. His mood has improved and is within the normal range. He has been able to generate greater self-understanding and self-acceptance. He has significantly improved his ability to understand and regulate his emotions and this has resulted in greater confidence in his relationships and his day to day interactions/commitments.

The client has advised that he has learnt from his experiences.

1. Mr Pedersen produced four references addressed to the Tribunal. CAV did not require the referees to attend to be questioned.
2. Three of the references were given by estate agents who had all known Mr Pedersen professionally and socially for in excess of 30 years. They each spoke very positively about Mr Pedersen's training of young estate agents and of him as a professional and ethical member of the industry.
3. Mr Mario Butera said he found Mr Pedersen's current situation to be 'totally out of character as during the time that [he] had known him, he has always complied diligently with the Estate Agents Act and Regulations.'
4. Mr Paul Gittings said:

Since Robert asked me for this reference and outlined the serious offences for which he has been charged, I was first shocked then sympathetic on hearing of the personal challenges he has been facing. . .

In my view these disruptions in Robert's life are the main contributor in overlooking his important obligation as a licensed Estate Agent.

I remain deeply concerned of the devastating effect loss of his license would have on his future, however I am confident, should mercy be shown, he will not re-offend in the future.

1. The fourth reference was given by Ms Julie Glenister, solicitor and principal of Glenister Steinfort & Co. She has known Mr Pedersen for 39 years and described him as 'an exceedingly competent Real Estate Agent who takes his professional obligations very seriously.' She described him ethical and someone she would have no hesitation in recommending to others. Ms Glenister said Mr Pedersen has an impeccable professional reputation within the community and industry and noted he is a devoted family man.

1. As noted above, Ms Palmer, solicitor for CAV, said it remained concerned that the audit reports were qualified. It noted some compliance issues with the trust reconciliations statements and other records.
2. CAV emphasised the fact that in four of the eight years the company has operated, the audits and other trust account requirements had not been complied with.
3. CAV expressed some surprise that the risk of suspension by this Tribunal had not been a sufficient motivator to get the audits completed sooner than a week before the final hearing and more than a year after the inquiry commenced.
4. As to the personal matters, Ms Palmer expressed sympathy but also noted that many licensee experience personal difficulties at different times. She contended that, had there been a one off failure, more weight could have been given to the personal challenges. Given the repeated breaches, it could not be said there was a one off or temporary lapse of judgement.
5. CAV queried how it was that Mr Pedersen could have taught the law applicable to estate agents in the past and continued to train new entrants to the industry and yet fail to comply with his own obligations. She submitted no reasonable excuse for the failure to complete the audits had been offered.
6. Ms Palmer submitted that, although CAV did not suggest Mr Pedersen had acted deliberately or dishonestly, the conduct indicated either a lack of understanding of legislative requirements or a lack of care of those requirements.
7. Having reviewed the psychologist's report, Ms Palmer submitted there was nothing in it to show that Mr Pedersen had any real insight or remorse into his actions. As to Mr Pedersen's difficulty understanding why he was being so closely scrutinised, Ms Palmer submitted he seemed to blame CAV for his current circumstances and lacks understanding of the role of the regulator. While the report said Mr Pedersen had learned from his experiences, it did not refer to any remorse or explain what he has learnt and why.

1. I make some general remarks first and then turn to the sanctions CAV said should be imposed.
2. I agree with CAV's characterisation of these breaches as serious because they undermine the regulatory scheme which is designed to ensure, amongst other things, that all moneys moving through the trust account (cash or otherwise), are properly recorded and accounted for. The reconciliation statement is a means by which the estate agent and CAV can ascertain whether the trust account balances. A trust account that does not balance acts as a warning that there may be a deficiency or defalcation. In effect, there was no opportunity to make that assessment for a period of four years. The trust account audits play a central role in ensuring high standards are applied to estate agents dealings with other people's money and are an essential means by which CAV undertakes its protective role.
3. Turning to Mr Pedersen, I have given significant weight to the personal references Mr Pedersen produced and in particular have accepted that, over his long career, Mr Pedersen has acted ethically in undertaking his professional responsibilities. I noted his longstanding colleagues were dismayed by his recent breaches and non-compliance with legislative requirements.
4. Ms Sidaoui's report was of great assistance to me. It seemed to me that Mr Pedersen's attendance at appointments assisted him to place the breaches in context and, perhaps for the first time, to appreciate that he had not been functioning well professionally since around May 2014.
5. Taking the report's comments about Mr Pedersen's likely mental state at the relevant time together with his evidence, I considered it likely that Mr Pedersen was simply unable to organise himself and understand the significance of compliance with the audit requirements. It appeared to me that Mr Pedersen had never put in place modern or sufficiently careful accounting practices. The identified breaches were the result of that and him being occupied with other troubling events and influenced by stress and anxiety which he did not himself recognise. While Ms Sidaoui's provisional diagnosis does not justify the breaches in the period 2014 to 2018, I am satisfied it explains them.
6. Like CAV, I found that at times Mr Pedersen seemed to regard the inquiry and the examination of his conduct by this Tribunal more generally as some form of unfair harassment. He seemed to assume that, because he had a long and good history in the industry and there were no trust account deficiencies or defalcations, his breaches were minor and of little consequence. While he stated that he understood compliance was necessary and important, he still seemed a little impatient at the fact that the regulator was taking action against him.
7. I found that approach puzzling given Mr Pedersen's pride in his past teaching role and training of new entrants into the industry. It suggested to me that he had not yet fully understood and accepted his own professional shortcomings. The company's failure to implement appropriate software suggested Mr Pedersen had still not organised himself in an effective way despite the company continuing to operate in the industry.
8. As mentioned above, CAV still had concerns about what the audits revealed about possible non-compliance with the various Estate Agents Act and Regulations requirements. While the detail of those compliance issues were not before me, I noted with concern the fact that, despite all the time available, Mr Pedersen had still not ensured that, where appropriate, past inadequacies were rectified. That raised a legitimate question about his capacity to understand the full extent of the company's (and his) obligations and to ensure strict compliance in the future.

1. Having regard to the purpose of a reprimand and the breaches Mr Pedersen has agreed were committed by the company and him in his capacity as director and officer in effective control, it is appropriate that the company and Mr Pedersen be reprimanded.

1. CAV referred me to other cases where estate agents have been suspended for like breaches. It is apparent that, even where funds are not misused, failures to undertake audits and otherwise meet the financial record keeping obligations may be met with a period of suspension[3] and sometimes cancellation.[4]
2. In Director of Consumer Affairs Victoria v Murray (No 3),[5] Mr Murray had previously breached his obligation to complete and lodge audit reports. A condition had been placed on his licence requiring him to take certain steps in respect of future audit reports. I found Mr Murray breached the condition the very next financial year after the condition was imposed. Mr Murray sought to explain the further breach as arising from personal circumstances. While I found Mr Murray's circumstances may have explained the breaches to a point, they did not in any way excuse them. I determined that his licence was to be suspended for six months.
3. In Director of Consumer Affairs Victoria v Daly,[6] a company and its sole director and officer in effective control, Mr Daly, failed to complete audit reports for four years. There were a number of other breaches of the kind found in this case. Like Mr Pedersen, Mr Daly had been in the industry for around 40 years and had a previously unblemished record. The reasons for decision indicated Mr Daly accepted he was responsible for the failure to lodge audit reports, however there also seemed to be some substantial delay by the auditor. The Tribunal found Mr Daly's failures were at the lower end of the spectrum and were below the level of culpability compared to a number of other cases. Although Mr Daly referred to the breaches as administrative errors, the Tribunal found that seemed to be based on an understanding that there had been no dishonesty. Accordingly, the Tribunal found he had insight into the failures. The Tribunal decided that neither general deterrence nor maintaining the reputation of the industry required cancellation or suspension in that case. Instead Mr Daly was reprimanded and a $1,000 fine was imposed. The evidence showed, at the time of the proceeding, Mr Daly was no longer active in the real estate industry and was unlikely to return.
4. These cases show that there cannot be any fixed determination for breaches, even where they are of a similar kind. Sometimes past decisions offer a guide against which to measure the seriousness of a breach but one must always look to the specific agent particularly when considering suspension or cancellation. Although strong action may appear appropriate to meet the needs of general deterrence, the factual circumstances may call for that to be tempered so as to ensure that the determination does not become unduly punitive. The role of specific deterrence is also an important factor so as to ensure the public is protected and the industry's reputation is upheld.
5. Unlike Mr Murray, I am satisfied that Mr Pedersen has provided an explanation about how the breaches came about that does, if not excuse them, at least rank them in a different way.
6. I accept Ms Sidaoui's opinion that, at the relevant time, Mr Pedersen was most likely affected by depression and anxiety. It is apparent from the history I have summarised that, during the period 2014 to at least mid-2018, Mr Pedersen was under a great deal of pressure arising from his son's very significant legal problems and his wife's ill health. I understand Mr Pedersen was also experiencing financial challenges throughout the period. In June 2018 his mother died. It seems to me that Mr Pedersen may have believed he was undertaking his usual work at a normal (and presumably professional) level but it is clear he was not.
7. CAV's submissions squarely raise a question about whether Mr Pedersen now understands the gravity of the breaches and his responsibility to ensure like breaches cannot be accepted in future. The shortcomings in the recent audit reports suggested he did not. As discussed, Mr Pedersen seems perplexed by the possibility of his licence being interfered with when no funds were misused or lost. He has yet to change his accounting processes and computer software despite having been advised to by his auditor and being well aware of continuing issues.
8. I proceed on the expectation that Mr Pedersen has and will continue to experience professional and personal shame about the inquiry and these proceedings.
9. All of those matters lead me to consider whether, in order to meet the requirements of specific and general deterrence, it would be unduly punitive to suspend Mr Pedersen given: his age; his limited income and prospects for employment during suspension; and the fact that he would most likely have to close the business with a real risk it might not revive if he was suspended. I add to those considerations my sense that he has only recently understood the impact of the pressures he dealt within between 2014 and 2018.
10. Giving weight to Mr Pedersen's past excellent record and placing the breaches in context, I am not persuaded suspension would be appropriate. Noting the company's limited involvement in the industry and Mr Pedersen's work as an auctioneer, I am satisfied the condition I discuss below is sufficient to protect the public. I have concluded that it would be unduly punitive to impose a determination which in effect would amount to a cancellation where I am satisfied the conduct in issue arose because of a mental health condition. Those circumstances are also relevant to general deterrence - while breaches of this kind cannot be accepted, the community and the real estate industry can be expected to understand that sometimes ill health impacts negatively on professional performance.

1. CAV sought orders that both the company and Mr Pedersen's future licences be subject to a condition that they not handle trust funds or open, operate or maintain a trust account.
2. As set out earlier, Mr Pedersen's evidence was that only some of the company's income comes from a limited number of rental properties and occasional sales. As I understood it, the main income comes from Mr Pedersen's work as an auctioneer.
3. In those circumstances, it seems to me that the imposition of the conditions suggested would effectively close down the company because neither it nor Mr Pedersen could undertake the leasing and sales work unless they merged with another agency.
4. Given there was no misuse of trust funds, I do not consider the imposition of a condition of that kind is necessary. I am satisfied that it would be more appropriate in terms of meeting the requirements of specific deterrence and protection of the public for a condition to be imposed requiring that the company (or Mr Pedersen if he was to hold a trust account personally) submit to CAV audited reports every three months for a period of two years. Noting the annual audit to 30 June 2019 must be produced by 30 September 2019, the first additional report will be required to be produced by 31 December 2019 for the period 1 July to 30 September 2019.
5. That will ensure regular checks are done on the way in which records are kept and will ensure that Mr Pedersen makes all necessary arrangements to upgrade and better manage accounting practices. The condition will be accompanied by a financial cost to the company and Mr Pedersen and will call for a level of diligence and organisation not in place before.
6. While mindful of the financial limitations Mr Pedersen faces, I am satisfied it is appropriate to impose a fine on him and the company to bring home the seriousness of the misconduct and the Tribunal's admonishment on behalf of the community. In particular, the fine is imposed given the company and Mr Pedersen's failure to produce the required audits until eight days before the final hearing date. As much of the pressure discussed above had lifted by the second half of 2018, there was no reasonable explanation for the ongoing non-compliance. All the while the company continued to operate and generate income from the real estate industry.
7. I have decided to impose a fine of $1,000 on each of the company and Mr Pedersen.

[1] 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. [2] 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.

[3] See for example Director of Consumer Affairs Victoria v Marshall [2013] VCAT 1316, Director of Consumer Affairs Victoria v Roberts [2015] VCAT 1627 and Director of Consumer Affairs Victoria v Murray (No 3) [2016] VCAT 1691.

[4] For an example of cancellation for conduct which included a significant trust account deficiency and a failure to keep records, see Director of Consumer Affairs Victoria v LMG Commercial Property Services Pty Ltd (No 2) [2017] VCAT 311.

[5] [2016] VCAT 1691.

[6] [2017] VCAT 1421.