On 2 November 2020, the Applicant, Katherine Konrad, lodged an application for a Class 1 Real Estate Agent Licence under the Property and Stock Agents Act 2002 (the Act). On 1 February 2021, her application was refused on the ground that she did not meet the qualification requirements under the Property and Stock Agents (Qualifications) Order 2019 (Order). That decision was affirmed on internal review. The Applicant now seeks review by this Tribunal.
Relevant legislation
Licensing of real estate and property services agents was previously governed by the Property, Stock and Business Agents Act 2002 (the old Act). The Act commenced on 23 March 2020 so as to provide stricter licensing, regulation and discipline of individuals, and corporate or other entities engaged in business in the real estate industry. These reforms aimed to enhance educational and professional standards across the industry and streamline the licensing framework. At its core, the amendments are intended to regulate the industry and to provide a measure of protection to consumers in their dealings with the industry.
A person cannot act or carry on the business of a real estate agent, unless the person is the holder of a real estate agent's licence: s 8(1)(a) of the Act. Section 14(1)(c) of the Act provides that a person is eligible to hold a licence only if the Secretary is satisfied that the person has the qualifications required for the issue of the licence or class of licence. Section 19 of the Act provides that an application for a licence must not be granted unless an applicant is eligible to be granted a licence (as provided by s 14).
Section 15 of the Act provides, relevantly, that the qualifications required for the issue of a licence are such qualifications as the Minister may approve from time to time by order published on the NSW legislation website. On 23 March 2020 the Minister published the Order. The Order, relevantly, provides the qualification and experience requirements for three new licence classifications: certificate of registration ("assistant agent"), class 2 licence ("licensed agent") and class 1 licence ("licensee in charge"). A real estate agent's licence under the old Act transitioned to a Class 2 licensed agent under the Act.
The Second Reading Speech dated 21 November 2017 explained with respect to Class 1 licences:
… The highest level will be a class 1 licence. This licence will be required for anyone working as a licensee in charge of a business. In order to apply for the new "licensee in charge" class licence, a licensee will need to have two years' work experience and will have to complete a diploma from the national property services training package. Alternatively, they must hold a certificate IV and an equal qualification in business management.
While all property businesses are currently required to have a licence holder acting as licensee in charge to supervise the operation of the business, there is currently no specific licence type or qualification for this role. … Given the level of responsibilities of licensees in charge, these training and experience requirements are considered appropriate and they will enhance industry professionalism, and help minimise consumer detriment. These higher education requirements reflect the significant responsibilities of licensees in charge.
The framework will also provide more flexibility, as one licensee in charge will be allowed to supervise more than one office of the same business, but they will still have to ensure that business operations are being properly and effectively supervised. …
The Second Reading Debate states:
… The bill will help to streamline the current licensing arrangements and provide for the integration of the buyers agents' licence, the on-site residential property agents' licence and the business agents' licence into the real estate agents' licence. That does not mean that current licence holders will be inconvenienced. The bill contains grandfathering provisions so those currently doing that work will have a smooth transition….
Clauses 9 and 10 of the Order sets out "Pathways" by which a person may obtain a class 1 licence, and relevantly provide:
9 Class 1 real estate agent's licence without restriction condition
(1) A person has the qualifications required for the issue of a class 1 real estate agent's licence (the new licence) without a restriction condition if the person satisfies one of the pathways set out in this clause.
(2) Pathway 1 - holders of class 1 licence without restriction condition
The person has held a class 1 real estate agent's licence without a restriction condition within 12 months before making the application for the new licence.
(3) Pathway 2 - holders of class 1 licence with restriction condition
The person has -
(a) held a class 1 real estate agent's licence with a restriction condition within 12 months before making the application for the new licence, and
(b) satisfactorily completed the class 1 work experience requirements during a 2 year period, and
(c ) satisfactorily completed Certificate IV in Real Estate Practice.
(4) Pathway 3 - holders of class 2 licence without restriction condition
The person has -
(a) held a class 2 real estate agent's licence without a restriction condition for at least 2 years, and
(b) satisfactorily completed the class 1 work experience requirements during a 2 year period, and
(c) been issued with a relevant diploma from a registered training organisation.
(5) Pathway 4 - holders of class 2 licence with restriction condition
The person has -
(a) held a class 2 real estate agent's licence for at least 2 years and the licence has been subject to a restriction condition during some or all of those 2 years, and
(b) satisfactorily completed the class 1 work experience requirements during a 2 year period, and
(c ) been issued with a relevant diploma from a registered training organisation, and
(d) satisfactorily completed Certificate IV in Real Estate Practice.
Clause 10, Part 2 "Class 1 licences", of the Order provides:
10 Class 1 real estate agent's licence with real estate agent restriction condition
(1) A person has the qualifications required for the issue of a class 1 real estate agent's licence (the new licence) with a restriction condition that the holder exercise no real estate agent functions other than real estate sale or leasing functions or on-site residential property manager functions (the relevant restriction condition) if the person satisfies one of the pathways set out in this clause.
(2) Pathway 1 - holders of class 1 licence with relevant restriction condition
The person has held a class 1 real estate agent's licence with the relevant restriction condition within 12 months before making the application for the new licence.
(3) Pathway 2 - holders of class 2 licence with relevant restriction condition
The person has -
(a) held a class 2 real estate agent's licence with a relevant restriction condition for at least 2 years, and
(b) satisfactorily completed the class 1 work experience requirements during a 2 year period, and
(c ) been issued with a relevant diploma from a registered training organisation.
(4) Pathway 3 - transitional provision former licence holders
The person -
(a) holds a class 2 real estate agent's licence with the relevant restriction condition, and
(b) applies for the class 1 real estate agent's licence with the relevant restriction condition within 12 months after the commencement day, and
(c) immediately before the commencement day -
(i) held a real estate agent's licence for at least 2 years, or
(ii) held a real estate agent's licence and carried on business under the licence or was employed to be the person in charge of business carried on under a real estate agent's licence at a place of business.
As to determining how long a person has held a particular licence cl 6 of the Order relevantly provides:
6 Holding an equivalent authorisation counts towards period for which authorisation held
(1) For the purposes of determining how long a person has held a particular licence or certificate of registration for the purposes of this Order, any period before the commencement day during which the person held an equivalent licence or certificate of registration is to be counted.
(2) In this clause -
equivalent licence or certificate of registration means the following -
(a) for a class 2 real estate agent's licence subject to a condition that the holder exercise no real estate agent functions other than real estate sale or leasing functions or on-site residential property manager functions - a real estate agent's licence
…
Tribunal's approach
Section 63 of the Administrative Decisions Review Act 1997 (ADR Act) provides that in determining an application for review the Tribunal is to make the correct and preferable decision having regard to the material before it, and any applicable written or unwritten law. The Tribunal makes its own decision in place of the Commissioner's, and there is no presumption that the decision of the Commissioner is correct: McDonald v Director General of Social Security (1984) 1FCR 353 at 357. The standard of proof that applies in these proceedings is the civil standard, that is, on the balance of probabilities. There is no onus of proof: Nakad v Commissioner of Police, New South Wales Police Force [2014] NSWCATAP 10 at [28]- [34]. Under s 28(2) of Civil and Administrative Tribunal Act 2013 (CAT Act) the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice: s 38(2) of the CAT Act. It is well established that in considering an application for review the Tribunal is not restricted to a consideration of the material that was before the decision-maker, but may have regard to any relevant material before it at the time of the review: Shi v Migration Agents Registration Authority [2008] HCA 31.
Evidence
In support of her Application for Review the Applicant provided a log book of her work experience. She also provided information in relation to issues with her pregnancy from July 2018 to January 2019. She gave evidence and was cross examined. In support of her Application for Review, Chris Coffey, Principal of her employer, Mollymook Property Pty Ltd, trading as Mum Real Estate, provided two letters - one undated and one dated 14 September 2020. Mr Coffey also gave evidence and was cross examined.
The Applicant's licensing and employment history
The Applicant gave evidence that she started working in the real estate industry as soon as she left school, commencing work in 2008 as a receptionist. She obtained her Certificate of Registration (now called an Assistant Agent in Real Estate) in 2011, which was current to 26 September 2018. In 2015 she achieved a Certificate IV in Property Service (Real Estate). She obtained a licence as a Real Estate Agent under the old Act on 9 November 2016, which expired on 8 November 2018. She explained that she had been distracted from seeking renewal by the severe complications associated with her pregnancy and ill child.
When she re-applied, a new licence as a real estate agent was granted (under the old Act) from 17 June 2019 until 22 March 2020. With the commencement of the Act on 23 March 2020 her licence is as a class 2 real estate agent - Real Estate - Sales or Leasing and is current until 16 June 2022. Her contains conditions that she may only exercise real estate sales or leasing functions or on-site residential property manager functions.
The Applicant submitted that, as she has been working in real estate since 2008 and definitely has the experience needed to move from a class 2 to class 1 licence. The Applicant said she joined Mr Coffey's company about 4 years ago and was engaged to do property management. There had been no one performing that role and she built up the business. Mr Coffey confirmed that the Applicant had created the property management side of the business "from nothing". The Applicant said she took maternity leave for about 7 months. She now works 3 days a week and is "on call" the rest of the time.
She said that the licensee of the business is Mollymook Property Pty Ltd which trades as Mum Real Estate, and Mr Coffey is the sole director and the principal licensee. She is now "part owner" of the business pursuant to a partnership agreement with Mr Coffey whereby she is responsible for the property management side of the business and he is responsible for sales. To undertake a complete corporate restructure would have been too expensive, although that course may be adopted as the business grows.
The Applicant said that, under her previous licence she did all the trust account work in relation to the property management side of the business, and Mr Coffey did all the trust account work for the sales side of the business. Now, under the new regime, Mr Coffey must do it all. Mr Coffey gave evidence of the disruption to the business in the event he should be ill or even if he were to take holidays.
In cross examination Mr Coffey said that, before the legislative changes, he and the Applicant both had the same type of licence and his went 'straight to Class 1', whereas the Applicant's did not.
[2]
CONSIDERATION
Section 19 of the Act provides, relevantly, that an application for a licence must not be granted unless an applicant is eligible to be granted the licence, as provided by s 14 of the Act. Section 14(1)(c) states that a person is eligible to hold a licence only if the Secretary, and hence the Tribunal on review, is satisfied that the person has the qualifications required for the issue of the licence or class of licence. The qualification requirements are those set out in the Order. I turned to consider if the Applicant met those qualification requirements in relation to a class 1 licence.
In order to be eligible to be granted a Class 1 licence, the Applicant is required to satisfy the qualification requirements of either cl 9 or cl 10 of the Order. The Applicant's primary contention was that she satisfied the "Pathway" in cl 10(4) in relation to the transitional provision former licence holders. For completeness though, I considered it appropriate to address all Pathways in clauses 9 and 10 which may be available to the Applicant.
While an applicant may meet various criteria in respect of the Pathways, an applicant must meet every element of a Pathway in order for it to apply.
[3]
Pathway 1
Pathway 1 is only available if an applicant has held a class 1 licence. The Applicant does not meet this criterion because she has never held class 1 licence: cl 9(2).
[4]
Pathway 2
Pathway 2 requires an applicant to have held a class 1 licence. The Applicant does not meet this criterion because she has never held class 1 licence: cl 9(3)(a).
[5]
Pathway 3
The Respondent contended, inter alia that the Applicant had not been issued with a relevant diploma from a registered training organisation: cl 9(4)(c). "Relevant diploma" is defined in cl 8 of the Order as being one of two specific diplomas with numbered identifiers. The Applicant has neither of these qualifications, as she only holds a Certificate IV in Property Services (Real Estate) which she attained in May 2015.
[6]
Pathway 4
In relation to Pathway 4, as discussed at [23] above, the Applicant does not hold a relevant diploma: cl (5)(c). Further, although the Applicant holds a Certificate IV in Property Services (Real Estate), this certificate does not satisfy the criteria for Certificate IV in Real Estate Practice (CPP41419): see cl 3 (1) of the Order.
[7]
Pathway 1
In relation to Pathway 1 the sole criterion is that an applicant has held a class 1 licence with a restriction condition within 12 months before making the application for the new licence: cl 10(2). The Applicant does not meet this criterion because she has never held a class 1 licence.
[8]
Pathway 2
As discussed in [22] above, the Applicant does not have a relevant diploma from a registered training organisation: cl 10(3)(c).
[9]
Pathway 3
Pathway 3 specifically addresses the requirements for those seeking to transition from a class 2 licence to a class 1 licence. This was the Applicant's main contention.
There was no dispute that the Applicant holds a class 2 real estate agent's licence with a real estate agent restriction condition, and that she applied for the class 1 real estate agent's licence with a real estate agent restriction condition within 12 months after the commencement day: cl 10(4)(a) and (b).
As to whether, for the purposes of cl 10(4)(c), "immediately before the commencement day" the Applicant held a real estate agent's licence for at least 2 years, the evidence is that the Applicant had a real estate agent's licence under the old Act for two years from November 2016 to November 2018. Because of her family circumstances, which I accept were serious and distressing, she did not renew that licence until 17 June 2019. On that date she was issued with a real estate agent licence. She had held that licence for 9 months before the commencement day of 23 March 2020.
The Respondent contended that, consequently, immediately before the commencement date, the Applicant had held a real estate agent's licence for only 9 months, that is, from 17 June 2019 to 22 March 2020. I sought to clarify what "immediately before" the commencement day means, given that, over the years, the Applicant had held a real estate agent's licence for in excess of 2 years.
Section 33 of the Interpretation Act 1987 relevantly provides:
33 Regard to be had to purposes or objects of Acts ...
In the interpretation of a provision of an Act ..., a construction that would promote the purpose or object underlying the Act ... (whether or not that purpose or object is expressly stated in the Act ...) shall be preferred to a construction that would not promote that purpose or object.
The Act, it seems to me, suggests that the real estate agent's licence must have been held for a continuous period of 2 years immediately before the commencement of the Act. There is no provision for aggregating licence periods. In coming to that view I observe that cl (4)(c)(i) and (ii) both require that the person held a real estate agent's licence. If "immediately before" were to be interpreted otherwise, those provisions would have said "has held". Similarly, on that interpretation, "immediately before" would have no work to do.
The Act commenced on 23 March 2020. The Applicant had no licence under the old Act from 9 November 2018 to 16 June 2019, some 7 months and 8 days. On 12 June 2019, some 7 months after her licence had expired on 8 November 2018, the Applicant lodged an Application for Property Individual. On 17 June 2019, the Applicant was issued the Real Estate Agent Licence. She had held that licence for 9 months before the commencement day of 23 March 2020, that is 15 months short of the required 2-year period. Having come to that view, the Applicant is unable to meet cl 10(4)(c)(i), as immediately before the commencement of the Act the Applicant did not hold a class 2 licence (or its equivalent per cl 6) for 2 years immediately before the commencement of the Act.
The sole remaining available criterion to be considered, given that immediately before the commencement day the Applicant held a real estate agent's licence, is whether the Applicant carried on business under the licence or was employed to be the person in charge of business carried on under a real estate agent's licence at a place of business: cl 10(4)(c)(ii).
In relation to such a person, 2 alternatives are available, namely where the person "carried on business under the licence", or was "employed to be the person in charge of business carried on under a real estate agent's licence at a place of business".
Did the Applicant carry on business under the licence?
"Carried on business" is not defined in the Act, the Regulation or the Order. As I observed in Loschiavo v Commissioner for Fair Trading [2021] NSWCATAD 102 (Loschiavo), at [29] - [30]:
29. On a broad view, the phrase "carry on business" may suggest that persons who held a licence could obtain a class 1 licence provided they had actually worked as a real estate agent. This would set those persons apart from those who had acquired a licence but not utilised it to facilitate their work in the industry and therefore do not have relevant experience. If this were the correct interpretation, namely that the person need only have had a licence for a short period of time (that is, less than 2 years), and had been employed in the industry, also for only an unspecified period of time, then clearly the increased qualification measures introduced would not be addressed, and the intention of the amendments would be ignored.
30. On the other hand, it should be recalled that, prior to the amendment, for licensing purposes there was effectively no distinction between licensees and licensees in charge. As I understand it, there was no distinction in the requirements in order to be employed as a real estate agent and to be the principal, or "licensee in charge" of a business. All licensees, on that view, could be said to have been "carrying on business", although not "carrying on a business".
In Loschiavo at [31] I formed the view that to satisfy the first alterative in cl 10(4)(c)(ii), an applicant must have previously been actively carrying on business as a real estate agent as the principal of that business.
The evidence was to the effect that the Applicant had been engaged by Mr Coffey (or his company) to develop the company's fledgling property management business. She was not the principal of the business nor was she an owner of the business. She did not actively carry on business as a real estate agent as the principal of that business. Consequently, she cannot meet this alternative within cl 10(4)(c)(ii).
[10]
Was the Applicant employed to be the person in charge of business carried on under a real estate agent's licence at a place of business?
In Loschiavo at [34] I discussed s 32 of the Act, which both before and after the amendments, helpfully contrasts responsibilities of an employed licensee and the principal of the business. At [35], I said observed that the applicant in that matter had been employed to be the person in charge of her employer's rental business, and that the applicant in that matter was not, on her own evidence, employed as the person in charge of the business conducted under the licence of her employer.
The Applicant said that she was engaged by Mr Coffey (or his company) to develop the company's fledgling property management business. The Applicant and Mr Coffey said that, under her previous licence she did all the trust account work in relation to the property management side of the business, and Mr Coffey did all the trust account work for the sales side of the business. Now, under the new regime, Mr Coffey must do it all.
[11]
Conclusion
It is unfortunate that immediately before the commencement date, the Applicant held a class 2 licence (or its equivalent) 15 months short of the required 2-year period; otherwise she would have easily, given her experience, met the requirements of cl 10(4)(c)(i) of the Order. I observe that the Bill which introduced the changes to the licensing regime was debated in Parliament in February 2018. Hence, the changes were foreshadowed well in advance of the introduction of the Act. It is highly likely, although I had no evidence to this effect, that the impending changes were well publicised within the industry, and hence, are likely to have been known to the Applicant well before her distressing personal problems arose. The Applicant is requesting consideration be given to her previous experience and her extenuating circumstances. I accept that her personal circumstances may have prevented her focusing on the need to maintain her licence in advance of the introduction of the changes. Sections 19 and 14(1)(c) of the Act however, clearly state the Secretary, and hence the Tribunal on review, must not grant a licence unless an applicant meets the qualification requirements specified in the Order; this is a mandatory requirement under the Act. I accept this decision affects both the Applicant and Mr Coffey, her business partner, and may create difficulties in the operation of their business. However, I have no discretion to consider the Applicant's circumstances such as to exempt her from the requirements.
Based on the above, I have determined the decision under review was correct in refusing to grant, at this time, the Applicant a class 1 licence under ss 19 and 14(1)(c) of the Act.
[12]
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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Decision last updated: 09 August 2021