Pavlou v Commissioner of Police, NSW Police Force

Fraud offences in 2001

1. In 2001, Mr Pavlou was an employee of Australian Discount Mortgages Pty Ltd. At this time, he went by the name of Kon Mourtekis. Mr Allan was the Director of Australian Discount Mortgages.
2. Mr Pavlou became involved in a scheme proposed by Mr Allan which involved purchasing a property in Greystanes at a grossly exaggerated price, to be financed by a bank. Mr Pavlou was to receive $120,000 for his involvement in the scheme.
3. Falsified tax returns for Mr Pavlou were prepared by an accountant with the involvement of Mr Allan, showing that he earned more than he did. Mr Pavlou knew that the tax returns showed false amounts, and that they would be used for the home loan application.
4. Mr Allan's brother purchased the Greystanes property in 2000 for $255,000 and Mr Pavlou bought it from him for $520,000 in April 2000. The purchase was financed by a bank loan for $376,000.
5. There was an immediate default and no repayments were made to the bank.
6. At Mr Allan's suggestion, Mr Pavlou then bought a property in Canley Vale from Mr Allan's brother for $680,000, in about July 2001. Mr Allan's brother had bought the property two months earlier for $180,000.
7. Falsified income details were provided to a bank to obtain a loan. The loan application was approved for an amount of $530,000.
8. Mr Pavlou did not make any repayments on the loan.
9. At the end of 2001, Mr Pavlou changed his name to Kosta Geropavlou.
10. The bank sold the Canley Vale property in March 2003 for $255,000.
11. In July 2003, Mr Pavlou declared himself bankrupt.
12. On 23 July 2004, Mr Pavlou was interviewed by police officers in relation to the alleged fraud. He denied any knowledge about the inflated prices on the loans or his part in the loan applications. On 31 May 2005, in another interview, Mr Pavlou admitted that he had lied when he denied any knowledge of these matters because he was scared of Mr Allan.
13. In January 2006, Mr Pavlou was convicted of the offence of "Conspire with others to cheat and defraud." He was sentenced to imprisonment for two years, a sentence which was suspended on condition that he enter into a good behaviour bond.

Involvement with Mr Kitas

1. Mr Pavlou was discharged from bankruptcy in July 2006.
2. Mr Pavlou was self-employed as a mortgage broker for residential loans when he met Scott Kitas in about 2008. Mr Kitas was bankrupt but had an office in the city and appeared to be running it. Mr Pavlou had been told, including by Mr Kitas, that Mr Kitas owed $77 million.
3. Mr Pavlou accepted a role in Mr Kitas's company. In September 2007, Mr Pavlou became director of a company called "Armstrong Wiley Finance" which was associated with Andrew Wiley, an associate of Mr Kitas. Mr Pavlou says that he received no remuneration for performing this role and that he resigned after three months.
4. Around this time, according to Mr Pavlou, Mr Kitas proposed an arrangement whereby he found properties to buy, organised for them to be renovated, then split the profit 50:50 with Mr Pavlou. Mr Pavlou agreed. He became sole director of a company known as "Macquarie Land Group" because Mr Kitas was bankrupt but, in Mr Pavlou's words, Mr Kitas "ran the show." Mr Pavlou said he was also made director of five other companies which were "set up with" Mr Kitas.
5. Mr Pavlou later had a falling out with Mr Kitas.

Failure to co-operate with liquidator

1. In February 2013, a liquidator was appointed for OTS Pty Ltd, a company of which Mr Pavlou was a director. The company had net debts of about $685,000.
2. A court attendance notice was issued to Mr Pavlou, alleging that, between 24 April 2013 and 21 October 2013, Mr Pavlou failed to provide a report about the affairs of the company to the liquidator (the first charge) and failed to deliver up books of account to the liquidator (the second charge).
3. On 10 December 2013, Mr Pavlou was convicted of both offences and fined $1,000 in each matter.
4. Another court attendance notice was issued to Mr Pavlou, alleging that, between 10 December 2013 and 16 January 2014, Mr Pavlou failed to provide a report about the affairs of the company to the liquidator (the first charge) and failed to deliver up books of account to the liquidator (the second charge).
5. On 11 February 2014, Mr Pavlou was convicted of both offences and fined $1,500 in each matter.

Second bankruptcy

1. In June 2014, Mr Pavlou was made bankrupt at the petition of OTS Pty Ltd. The company obtained a judgment for over $231,000 in respect of loans made to Mr Pavlou which were not repaid.
2. Max Prentice was appointed Mr Pavlou's trustee in bankruptcy. Mr Prentice wrote to Mr Pavlou and used other methods to try to contact him after he was declared bankrupt, to arrange for Mr Pavlou to attend for an interview. Mr Pavlou was not responsive. Letters to Mr Pavlou were returned marked "Return to Sender."
3. Mr Pavlou eventually attended a meeting with the trustee.

Further conviction for failure to co-operate with liquidator

1. In April 2015, another company of which Mr Pavlou had been a director, Trenddair Pty Ltd, went into liquidation. It owed unsecured creditors $28,812.
2. A court attendance notice was issued to Mr Pavlou, alleging that, between 28 March 2015 and 17 August 2015, Mr Pavlou failed to provide a report about the affairs of the company to the liquidator of Trenddair Pty Ltd.
3. On 13 October 2015, Mr Pavlou was convicted of this offence and fined $1,500.

Application for a security licence

1. In April 2018, Mr Pavlou applied for a Class 1AC security licence under the Security Industry Act 1997 (NSW). Class 1A - Unarmed guard - authorises the licence holder to patrol, protect or guard any property while unarmed. Class 1C - Crowd controller - authorises the licence holder to act as a crowd controller or in a similar capacity.
2. The Commissioner refused the application on the bases that Mr Pavlou is not a fit and proper person to hold a security licence and that to grant the licence would be contrary to the public interest.

Tribunal's jurisdiction

1. Mr Pavlou is entitled to apply to the Tribunal, under s 29(1)(a) of the Security Industry Act, for a review of the decision not to grant him a licence.
2. The Tribunal has "administrative review jurisdiction" over a decision of an administrator in the circumstances set out in the Administrative Decisions Review Act 1997 (NSW) (Civil and Administrative Tribunal Act 2013 (NSW), s 30(1)). That Act provides, in s 9(1)(a), that the Tribunal has administrative review jurisdiction over a decision of an administrator if enabling legislation provides that applications may be made to the Tribunal for an administrative review under the Administrative Decisions Review Act of any such decision made by the administrator in the exercise of functions conferred or imposed by or under the legislation. Section 29(1)(a) of the Security Industry Act so provides.

Fit and proper person

1. The Commissioner is required to refuse to grant an application for a licence under the Security Industry Act if the Commissioner is not satisfied that the applicant is a fit and proper person to hold the class of licence sought by the applicant (Security Industry Act, s 15(1)(a)).

Meaning of "fit and proper person"

1. The word "fit" in the expression "fit and proper" involves three things: honesty, knowledge and ability: Hughes and Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127 at 156-157.
2. A "fit and proper person" is someone "possessed of sufficient moral integrity and rectitude of character" as to permit the person "to be safely accredited to the public … as a person to be entrusted with the sort of work which the licence entails": Sobey v Commercial Agents Board [1979] 22 SASR 70, Walters J at 76.
3. The expression "fit and proper person" takes its meaning from its context including the "activities in which the person is or will be engaged and the ends to be served by those activities": Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, Toohey and Gaudron JJ at 380; see also Austin v Commissioner for Fair Trading & Commissioner of Police [2016] NSWCATAP 179 at [82]. In the context of the security industry, a high standard applies, "because of the special role [the security industry] plays in ensuring that public order is maintained, in safeguarding community assets and private property and in ensuring that the public and public venues are safe": IJ v Commissioner of Police, NSW Police Force [2003] NSWADT 230 at [27]. "[H]onesty and integrity are implicit requirements for the holder of" a security licence: Brandusoiu v Commissioner of Police, NSW Police Force [2011] NSWADT 57 at [48].

Is Mr Pavlou a fit and proper person?

1. Mr Pavlou has been convicted of the serious offence of "Conspire with others to cheat and defraud," committed in 2001. The scheme he was involved in, to fraudulently obtain loans to purchase properties at an inflated price, had a purpose of deceitfully inducing lenders to provide him with money which the lender could not recover. This reflects very poorly on his character and indicates that, in the absence of any character reformation, he is not a fit and proper person to hold a security licence.
2. I am not persuaded that Mr Pavlou has undergone any kind of character reformation since 2001. The statement Mr Pavlou provided to the Tribunal in support of his application contains no expressions of regret or remorse for his past conduct. In his application to the Tribunal, Mr Pavlou states that "the conviction happened over 10 years ago and I have learnt from the past." However, the evidence establishes that Mr Pavlou's learning has been, at best, limited. He has continued to behave in a dishonest way and to express disrespect for the law or to operate at its outer limits.
3. Mr Pavlou's business dealings with Mr Kitas indicate a disregard for the law. Having been given information that Mr Kitas was a bankrupt owing $77 million, Mr Pavlou nevertheless entered into a business with him. I accept the Commissioner's submission that this was probably a criminal enterprise, because Mr Kitas was disqualified from managing a corporation as an undischarged bankrupt (Corporations Act 2001 (Cth), s 206B(3)). On Mr Pavlou's evidence, Mr Kitas was managing several corporations and Mr Pavlou was aiding and abetting him in this. It is an offence to aid and abet a person, who is disqualified from managing a corporation, to manage a corporation (see Corporations Act, ss 11.2(1) and 206A).
4. When asked in cross-examination why he became a director of companies in which Mr Kitas, whilst bankrupt, "ran the show," Mr Pavlou gave the unsatisfactory answer, "I can't speak on that." When pressed, he responded "I'm not familiar with that side." Mr Pavlou has been a director of about eighteen companies. It stretches credulity to suggest that he does not have a basic understanding of company law or his duties as a director, or that he was not aware that Mr Kitas was not entitled to run the company. His statement strongly suggests he was so aware.
5. Mr Pavlou's failures to co-operate with two different liquidators, as he was required to do, have not been adequately explained. It is unclear whether Mr Pavlou's refusal to provide the requested books and records was because he had something to conceal. However, as a company officer, he was required to provide the material the subject of the liquidators' notices. I am satisfied that he received notices requiring him to provide liquidators with documents and that he deliberately chose not to do so.
6. I also find that Mr Pavlou failed to co-operate with Mr Prentice, his trustee in bankruptcy. The Commissioner put into evidence a standard form, completed in handwriting, signed by Mr Pavlou and dated 16 September 2014, which provides personal and financial details to the trustee in bankruptcy in response to questions on the form. Mr Pavlou claimed that, at his one meeting with Mr Prentice, he signed the form but that it was blank at the time.
7. Mr Pavlou's accounts of his dealings with the trustee in bankruptcy were inconsistent and confused. I do not accept that Mr Pavlou signed a blank form at Mr Prentice's request (or, possibly, at the request of another employee of Mr Prentice's firm). The allegation that a trustee in bankruptcy would act in this way is an extremely serious one. Mr Pavlou did not seek to summons Mr Prentice or anyone else from his firm to appear and give evidence so he could put this allegation to them. Mr Pavlou's evidence was otherwise unreliable and he has a history of dishonesty. In these circumstances, I consider that his story about signing a blank form is not true. I find that Mr Pavlou deliberately chose not to respond to Mr Prentice's requests for contact and for information.
8. Mr Pavlou was dishonest and/or misleading in other aspects of his evidence before the Tribunal. In his statement, he said, in relation to the 2001 offences, "I co-operated with the Police and I was not convicted of any offences. I was a protected witness."
9. Mr Pavlou was convicted of an offence for which he received a two-year suspended sentence. He did not co-operate with police in his first interview (in which he lied to them). He only co-operated much later, helping the police to obtain a conviction against an associate of his, presumably in order to obtain a reduced sentence.
10. Mr Pavlou wrongly described the proceedings against him for failure to co-operate with liquidators as "civil matters" and omitted to mention them in his application when he stated that his conviction was ten years ago (as if there were only one conviction).
11. Mr Pavlou claimed to have recently come out of bankruptcy. However, he is still an undischarged bankrupt. His trustee wrote to him informing him of the trustee's intention to object to the discharge of the bankruptcy. I find that Mr Pavlou knew, or at least had grounds to know, that he was an undischarged bankrupt, despite claiming that he only learned of this when the Commissioner's legal representative wrote to him after obtaining documents from the trustee in bankruptcy.
12. Mr Pavlou stated, in a statement to the Tribunal, that he had never been a director of a company before becoming a director of Armstrong Wiley Finance in 2007 and was unfamiliar with the paperwork required to give effect to resignation as a director. (This statement was presumably made to explain why he did not, in fact, cease to be a director after he informed Mr Kitas that he wanted to leave Armstrong Wiley Finance). Mr Pavlou had in fact been a director of at least seven companies before that date and had resigned as a director of some of them.
13. The trustee in bankruptcy's report states that the Australian Taxation Office has advised that Mr Pavlou failed to lodge tax returns for the years 2002, 2003, 2004, 2006, 2007, 2010, 2011, and 2012. When asked about this in cross-examination, Mr Pavlou said he could not recall whether he had lodged tax returns in those years. He also said that he could not recall if he had ever lodged a tax return. I find that he did not lodge a tax return in the years reported by the Australian Taxation Office. This indicates a failure to have proper regard to his financial and legal responsibilities.
14. For these reasons, I do not consider Mr Pavlou to be possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public as a person to be entrusted with protecting property, controlling crowds or ensuring public venues are safe. He possesses neither honesty nor integrity. He is not a fit and proper person to hold a security licence.
15. It follows that the correct and preferable decision is to affirm the Commissioner's decision not to grant him a licence.

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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 February 2019