MATTER : An application for a Writ of Certiorari and for a Writ of Mandamus against the Real Estate and Business Agents Supervisory Board

Administrative law - Prerogative writs - Certiorari and mandamus - Jurisdictional error of law by Real Estate and Business Agents Supervisory Board - Claims against Fidelity Fund for defalcations in form of fictitious mortgages by licensee - "Real estate transaction" in Real Estate and Business Agents Act 1978 includes mortgage finance broking by licensee

Administrative law - Prerogative writs - Certiorari and mandamus - No jurisdictional error of law by Board - Interest on claims sought as damages against Fidelity Fund - s 116(1) and s 117(2) of Act limits claims to extent of defalcation at time of defalcation

Administrative law - Prerogative writs - Certiorari and mandamus - Decision by Board that claims were out of time so manifestly unreasonable as to constitute a jurisdictional error of law

Administrative law - Prerogative writs - Certiorari and mandamus - Failure by Board to consider claims for costs a jurisdictional error of law

Administrative law - Prerogative writs - Remedies, forum and cause of action - Court's discretion to refuse prerogative relief on basis that District Court action was more appropriate not invoked

Administrative law - Natural justice and due process - Opinion of counsel retained by Board privileged - No obligation to provide copy to claimants against Fund, but obligation to fully disclose case against claimants

Gudgeon v Black (1994) 14 WAR 158 distinguished

Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125 distinguished

Cocks v The Real Estate Agents Supervisory Board (1988) 5 SR (WA) 154 overruled

Real Estate and Business Agents Act 1978 s 4, s 6, s 7, s 8A, s 13, s 14, s 15, s 19, s 20, s 22, s 28, s 68, s 70, s 84, s 102, s 110, s 111, s 166, s 117, s 118, s 119, s 145

Interpretation Act 1984 s 3, s 1

Transfer of Land Act 1893 s 106

ACCC v Australian Safeway Stores Pty Ltd (1998) 153 ALR 393

Esso Australia Resources Ltd v FCT [1998] FCA 1655; (1998) 159 ALR 664

Hot Holdings Pty Ltd v Creasy & Ors (1996) 185 CLR 149

James Hardie & Co Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; (1998) 159 ALR 268

Newcombe v Ame Properties Ltd (1995) 14 WAR 259

Parsons v Martin [1984] FCA 408; (1984) 5 FCR 235

R v Criminal Injuries Compensation Board; Ex parte Lain [1967] 2 QB 864

Secretary of State for Trade v Baker [1998] Ch 365

Somerville v ASC (1995) 60 FCR 319

Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702

1 MALCOLM CJ: This is the return of an order nisi for a writ of certiorari and for a writ of mandamus made by Miller J dated 29 September 1998 by which it was ordered that:

1. The Real Estate and Business Agents Supervisory Board ("the Board") do show cause before the Full Court why a writ of certiorari should not be issued against the Board to remove into this Court for the purpose of being quashed the decision made by the Board to:

1.1 refuse parts of a claim by the first-named applicant ("Mr Cohen") in his personal capacity pursuant to s 117 of the Real Estate and Business Agents Act 1978 (WA) ("the Act") for the loss of moneys forwarded to Bridget Micheline Paterson ("Ms Paterson") or alternatively Ideal Realty, to be advanced to third parties as loans on the security of first registered mortgages, interest thereon and costs of applications by Mr Cohen, Betty Rose Cohen ("Mrs Cohen") and Margot Anne Levy ("Ms Levy") and of other actions to protect those applicants' claims against other parties;

1.2 refuse the whole of Mr Cohen's claim (in his capacity as trustee of the estate of Madge J Cohen) pursuant to s 117 of the Act;

1.3 refuse the whole of Mr Cohen's claim (in his capacity as trustee for the Cosmer Syndicate) made pursuant to s 117 of the Act;

1.4 refuse the whole of Mrs Cohen's claim made pursuant to s 117 of the Act;

1.5 refuse the whole of Ms Levy's claim made pursuant to s 117 of the Act;

1.6 refuse the whole of Mr and Mrs Cohen's joint claim made pursuant to s 117 of the Act; and

1.7 refuse the whole of the joint claim made by Mr and Mrs Cohen and Ms Levy pursuant to s 117 of the Act

2. The Board do show cause before the Full Court why a writ of mandamus should not be issued against the Board to require the Board to determine the applicants' claims made pursuant to s 117 of the Act according to law.

2 Section 117 of the Act provides for the Board to receive and settle claims against the Real Estate and Business Agents Fidelity Fund established under s 107 of the Act in respect of defalcation by a licensed agent.

3 The grounds of the application which are set out in detail in par 3 of the order nisi are in summary that:

(1) in making the determination the Board denied the applicants natural justice;

(2) further or alternatively, the Board made a jurisdictional error of law in finding that there was not a defalcation by a licensee within the meaning of that term as defined in the Act;

(3) further or alternatively, the Board made a jurisdictional error of law in holding that Mr Cohen's claim (in his capacity as trustee of the Cosmer Syndicate) could not be determined because it was made out of time when the evidence before the Board showed that it was plainly within time;

(4) further or alternatively, the Board made a jurisdictional error of law in refusing the applicants' claim for interest as damages made in accordance with the principles enunciated in Hungerfords v Walker (1989) 171 CLR 175;

(5) further or alternatively, the Board made a jurisdictional error of law by its failure to consider Mr Cohen's claim for costs; and

(6) further or alternatively, the Board made a jurisdictional error of law in failing to give the applicants reasons for the Board's decision despite request, in contravention of s 22 of the Act.

4 The substantive issue raised by the proceedings is whether a transaction, by which a customer of a licensed real estate agent provides money to the agent with instructions to invest the same on behalf of the customer, by way of a loan to a person to be found by the agent and to be secured by a first registered mortgage of land, is a "real estate transaction" as defined in s 4 of the Real Estate and Business Agents Act 1978. It was common ground that Ideal Realty and Ms Paterson were licensees under the Act.

5 There is a preliminary issue raised on behalf of the Board that the proper remedy for a claimant whose claim has been refused by the Board is simply to commence civil proceedings against the Board to enforce the claim, rather than to invoke a remedy by way of a prerogative writ. In this respect the Board says that on 16 October 1998 it granted the applicants leave to commence an action for indemnity by the Board from the Real Estate and Business Agents Fidelity Guarantee Fund ("the Fidelity Fund") in respect of their claims. Counsel for the Board submitted that this was the proper course to determine the applicants' entitlement to indemnity from the Fidelity Fund. It was contended that the present proceedings, if successful, could only result in a reconsideration of the claims by the Board and could not establish the applicants' entitlement to indemnity from the Fidelity Fund. It was submitted that the proceedings involve "a waste of limited judicial resources" and "should be summarily dismissed in the exercise of the Court's discretion".

6 In my opinion, it is not possible to determine the preliminary point without first making an examination of the scope and purpose of the Act and its relevant provisions.

Relevant Provisions of the Act

7 The Board is established by s 6(1) of the Act. Section 6(2) provides that:

(a) shall be a body corporate with perpetual succession and a common seal;

(b) shall be the licensing and supervisory authority for the purposes of this Act; and

(c) shall have the powers, duties, and functions, conferred, imposed, or prescribed by or under this Act."

8 Under s 8A(1)(c) and s 8A(1)(e) the functions of the Board include the administration of the scheme of licensing and registration established under the Act and the performance of such other functions as are conferred upon the Board under the Act. Such other functions include the administration of the Fidelity Fund and the receipt and settlement of claims against the Fund. By s 7 of the Act the Board consists of five members appointed by the Governor, of whom one, who is not a licensed agent, shall be appointed to be a member and chairman of the Board and one, being a person who is not a licensed agent, shall be a person who is a legal practitioner.

9 Section 13 of the Act provides that the Registrar may, of his own motion, and shall at the direction of the Board, and an inspector shall, at the direction of the Board or Registrar, make any investigation or inquiry that the Registrar or the Board considers necessary or expedient for the purpose of -

"(a) determining any application or any other matter before the Board;

(b) determining whether or not agents ... are complying with the requirements of this Act;

(d) detecting offences against this Act."

10 Section 14 of the Act contains provision for the Commissioner of Police, at the request of the Board or the Registrar, to cause his officers to make an investigation or inquiry and report relating to any matter that is the subject of investigation or inquiry pursuant to s 13. Section 15 confers wide powers to obtain information, require the production of documents, enter and search premises and inspect documents and to make a copy or abstract of any document produced or inspected, subject to obtaining a warrant from a Magistrate or Justice of the Peace. Section 19(1) of the Act requires the Board to give to any person who is a party to proceedings instituted before the Board reasonable notice of the time and place at which it intends to conduct those proceedings, and shall afford any such person a reasonable opportunity to call or give evidence, to examine or cross-examine witnesses, and to make submissions to the Board unless, relevantly for present purposes:

"(c) in the case of an application for an inquiry into the conduct of an agent, or a sales representative, there is no allegation against him which would, if substantiated, enable the Board to exercise its powers of discipline under the Act."

11 Section 20(1) gives wide powers to the Board in the exercise of its powers and functions under the Act to require the attendance of a person before the Board for the production of any books, papers or documents, to inspect the same, to require any person to make oath or affirmation, and require any person appearing before the Board, including the person whose conduct is subject to an inquiry, to answer any relevant questions put by the Board, or by any other person appearing before the Board. Section 20(3) provides for the application of the privilege against self-incrimination. Section 20(5) provides that:

"in any proceedings the Board shall act according to equity, good conscience, and the substantial merits of the case without regard to technicalities and legal form and it shall not be bound by the rules of evidence ..."

12 Section 22 provides that:

"The Board may, and, on request by any party to the proceedings, shall, give to the parties reasons for its decision."

13 Section 23 makes provision for an appeal to the District Court against a decision or order of the Board by any person aggrieved by such decision or order.

14 Part III of the Act makes provision for the licensing of agents. Part VI makes provision for agents' trust accounts. Part VII provides for the discipline of agents and sales representatives. Section 102(1)(a) provides that the Board may on the application of the Registrar, an inspector, or any other person:

"hold an inquiry into the conduct of any agent for the purpose of determining whether or not the agent is or has been acting in conformity with the special conditions, if any, of his licence and triennial certificate and with the agents' code of conduct and is or has been complying with the requirements of this Act."

15 Section 102(2) provides that:

"An application under subsection (1) shall be made in writing and in a manner and form determined by the Board in respect of such an application and shall contain such information as is required by the Board in respect of such an application."

16 Part VIII makes provision for the establishment of a Real Estate and Business Agents Fidelity Guarantee Fund. Section 116 of the Act provides that:

"(1) Subject to this Act the Fidelity Fund shall be held and applied for the purpose of reimbursing persons who may suffer pecuniary loss or loss of property by reason of any defalcation by a licensee during any period when he was the holder of a current triennial certificate, but reimbursing only to the extent of the defalcation of the licensee.

(2) A person shall not have a claim against the Fidelity Fund, unless notice of the claim was given in writing to the Board within one year after the claimant has become aware of the defalcation."

17 Section 117 of the Act relevantly provides that:

"(1) The Board may receive and settle any claim against the Fidelity Fund at any time after the defalcation in respect of which the claim has occurred, but no person is entitled, without the leave of the Board, to commence any action in relation to the Fidelity Fund, unless the Board has disallowed his claim and unless and until the claimant has exhausted all relevant rights of action and other legal remedies available against the defaulting licensee or any other person in respect of the loss suffered by the claimant.

(2) A person is not entitled to recover from the Fidelity Fund an amount greater than the balance of the loss suffered by him after deducting from the total amount of his loss, the amount or value of all money or other benefits received or receivable by him from any source other than the Fidelity Fund in reduction of his loss, including any benefits received by reason of services rendered or payments made by the defaulting licensee.

(3) No amount shall be charged or be chargeable to the Fidelity Fund as interest on the amount of any judgment obtained or of any claim admitted against the Fidelity Fund."

18 Section 118 provides that, in any action brought against the Board in relation to the Fidelity Fund, all defences that would have been available to the defaulting licensee are available to the Board. Section 119 provides that on payment from moneys standing to the credit of the Fidelity Fund in settlement in whole or in part of any claims under the Act, the Board shall be subrogated, to the extent of that payment, for rights and remedies of the claimant against the licensee in relation to whom the claim arose.

19 In my opinion, it is clear that, in the exercise of its functions as the administrator of the Fidelity Fund in determining whether to settle or admit a claim against the Fund, or to grant leave to a claimant to commence an action in relation to the Fund, the Board is acting as an administrative tribunal, but is not vested with judicial power in the exercise of these functions. The primary decision to be made by the Board is whether or not to admit the claim. While this may involve some consideration of the basis of the claim, the acceptance of the claim is an admission of liability, the refusal of the claim may involve a question of law, but the Board's determination does not decide the question of law. Consistently with the decision in Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163 at 179 per Brennan CJ, Deane, Toohey, Gaudron and McHugh JJ, where, as in this case, an administrative tribunal not vested with judicial power:

"... falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is a jurisdictional error which will invalidate any order or decision of the tribunal which reflects it."

20 In the case of the claims made or foreshadowed by the applicants, the question which arose was whether, in each case, the claim was made or to be made by a person who had suffered "pecuniary loss or loss of property by reason of any defalcation by a licensee during any period when he was the holder of a current triennial certificate" within the meaning of s 116(1) of the Act.

21 By a letter dated 11 November 1997 the solicitors for Mr Cohen gave notice of claims against the Fidelity Fund. The particulars of the claims were as follows:

"The abovementioned claim arises out of the conduct of Bridget Micheline Paterson ('Paterson') and/or Ideal Realty. We are instructed that, in summary, Paterson and/or Ideal Realty engaged in the following conduct:

1. Paterson and/or Ideal Realty, whilst acting as managing agent, fraudulently mortgaged two properties owned by Cohen. The fraudulently mortgaged properties are 177-179 Oxford Street, Leederville, Western Australia and 51 Dixon Road, Rockingham, Western Australia (the 'properties'). Paterson and/or Ideal Realty mortgaged the Properties by forging Cohen's signature on the mortgages. Paterson and/or Ideal Realty successfully registered the mortgages against the titles to the Properties.

2. Cohen instructed Paterson, through Ideal Realty, to arrange for him to lend moneys secured by mortgages. Over time Paterson informed Cohen that she had arranged a number of such mortgages. Cohen paid the moneys to be lent to the mortgagees to Ideal Realty. Paterson and/or Ideal Realty never lent the moneys advanced by Cohen to the proposed mortgagees, nor did she obtain mortgages securing Cohen's loans. Paterson and/or Ideal Realty forwarded Cohen false Land Titles Office mortgage forms purporting to show mortgages securing Cohen's moneys.

3. Paterson and/or Ideal Realty arranged a number of other business investments for Cohen. She/they received moneys from Cohen to be invested in these ventures. No such investments were ever made."

22 The letter was supported by a statutory declaration made by Mr Cohen dated 11 November 1997 together with two files of copy documents referred to in the statutory declaration which showed Ms Paterson's and/or Ideal Realty's conduct in relation to Mr Cohen's land and moneys. It was said that his losses exceeded $2 million. It was asserted that the licensee company appeared to have been dissolved in June 1997 and that the business premises of Ideal Realty had been recently advertised for sale by auction. A statutory declaration made on 11 November 1997 by Mr Cohen stated that he was then 90 years old having been born on 21 March 1907. He had met Ms Paterson six or seven years previously when he inspected a property in Wanneroo which was for sale. Some time later Ms Paterson contacted him. Mr Cohen told her he was primarily interested in making loans secured by mortgages and did not wish to further invest in property acquisitions. Ms Paterson told him she could arrange for him to make loans to be secured by registered mortgages of land.

23 Ms Paterson, through Ideal Realty, managed a property which Mr Cohen owned in Oxford Street, Leederville ("the Leederville land"). She arranged the lease of the property, collected the rent from the tenant and paid disbursements on the land. Ms Paterson, through Ideal Realty, also managed a property which Mr Cohen owned, as trustee for a syndicate, at Rockingham ("the Rockingham land"). Ms Paterson arranged the lease of the land, collected the rent from tenants, paid disbursements on the Rockingham land and attempted to arrange for subdivision. Mr Cohen delivered the duplicate certificates of title for the Leederville land and the Rockingham land to Ms Paterson at her request. She asked for the documents to prepare new leases for the tenants of the two properties. Mr Cohen subsequently discovered that the Rockingham land had been mortgaged to secure a loan of $150,000. He claimed that his purported signature on the mortgage and application for finance was like his signature but he had signed neither of the documents. He had recently seen a copy of a cheque made payable to him from Barry Barr & Associates which purported to be endorsed by him in favour of Ideal Realty. He says he never signed the cheque and never paid any interest in relation to the mortgage on the Rockingham land. It appears that there was an extension of the mortgage granted in 1996 which Mr Cohen says he never signed or knew about. He found out about the Rockingham land mortgage when he was telephoned and asked to attend at Barry Barr & Associates and asked whether it was his signature on a mortgage he was shown in June 1997.

24 Mr Cohen found out that the Leederville land had been mortgaged in favour of the Uniting Church in Australia Property Trust ("the Uniting Church") by way of a guarantee to secure a loan of $313,000 to Ms Paterson. Mr Cohen says he never executed such mortgage. The mortgage was registered in 1995. Mr Cohen says that in 1995 he did not need to borrow any money or secure any borrowings by a mortgage over the Leederville land, nor did he agree to mortgage the Leederville land by way of a guarantee for a loan to Ms Paterson. He denies that the signature on the mortgage was put there by him. The mortgages of the Rockingham land and the Leederville land were alleged to have been forged and used by Ms Paterson to obtain money by fraud.

25 Mr Cohen says that from time to time he paid money to Ms Paterson or Ideal Realty to be invested on behalf of himself or on behalf of his wife and himself jointly and on behalf of his daughter. At various times Ms Paterson told him she had arranged for him to lend moneys to various persons and companies which were secured by registered first mortgages. Ms Paterson sent him copies of the front of various Land Titles Office mortgage forms which purported to show each mortgage she had arranged. There were a number of transactions of this type which included mortgages in favour of Mr and Mrs Cohen and Ms Levy (Mr Cohen's daughter). In all there appear to be some 26 mortgages in favour of Mr Cohen, Mr and Mrs Cohen and others including mortgages granted to Mr Cohen as administrator of the estate of the late Madge J Cohen.

26 All of the correspondence between Ms Paterson and Mr Cohen concerning the various mortgage investments had been on the letterhead of Ideal Realty. All of the moneys advanced by him on mortgage investment were paid to Ideal Realty to be advanced on security of mortgage. Until mid-1996 all payments due under the mortgages were made. Mr Cohen received typed statements (not on Ideal Realty letterhead) from Ms Paterson regarding the payments. Moneys paid were banked directly into Town & Country accounts. Furthermore, in 1992 original mortgages for three mortgagors (White, Pulitano and Austra Holdings) were repaid in full.

27 Mr Cohen went overseas in mid-1996. Upon his return he found no deposits had been made to the Town & Country accounts. He spoke to Ms Paterson expressing his concerns. He received various cheques from Ideal Realty dated 2 January 1997 for "outstanding interest", but did not deposit them because Ms Paterson asked him not to do so. In July 1997 Ms Paterson gave him three personal cheques drawn by her each for $50,000 dated 21, 22 and 23 July 1997. Ms Paterson asked him not to bank the cheques until she had funds to meet them. She would advise him when to bank them. She never so advised him. In August 1997 Ms Paterson gave Mr Cohen a further cheque for $200,000 drawn by Larkfield Holdings Pty Ltd dated 7 August 1997 after he and Mrs Cohen complained about non-payment. Ms Paterson told Mr Cohen he could show the cheque to his wife to satisfy her. Mr Cohen never showed the $200,000 cheque to his wife because he did not think there were funds to meet the cheque. In October 1997 Mr Cohen found out that all of the so-called mortgage investments were fictitious. There were no mortgages and no loans.

28 These were the main claims. Other claims are referred to below.

29 Receipt of the notice of claims was acknowledged by the Board by letter dated 13 November 1997, which indicated that the matters of complaint were being examined by officers of the Real Estate Business Unit of the Ministry of Fair Trading.

30 By letter dated 7 December 1997 the Board informed the applicants' solicitors that the licensee Ideal Realty Pty Ltd ("Ideal Realty") had been struck off by the Australian Securities Commission. Ms Paterson and one Stirling had been instructed by the Board on 4 August 1997 to cease trading immediately. The statutory auditor had been instructed to conduct a termination audit of the agency as required by s 70(8) of the Act. Inquiries had been conducted in relation to the business of the agency which were continuing. The letter concluded:

"In respect of Mr Cohen's complaint, I have been informed by officers of the Major Fraud Squad that they have commenced inquiries and to avoid prejudicing their case it is not intended to commence inquiries in respect of Mr Cohen's complaint until such time as the Major Fraud Squad has completed its inquiries."

31 On 17 November 1997 the statutory auditor reported that the trust account of Ideal Realty had not been regularly and properly maintained; was not ready for examination at the appointed time; and had not been in correct order during the period of audit namely 1 January 1997 to 31 August 1997. The report also stated:

"Furthermore it is my opinion that Ideal Realty Pty Ltd has not complied with all my audit requirements in that banking and other records for one of the four bank accounts making up the trust account were destroyed making it impossible to come to a firm conclusion on the overall trust account records. I draw this matter to the attention of the Real Estate and Business Agents Supervisory Board."

32 By February 1998 it had been ascertained that Ms Paterson was bankrupt.

33 By letter dated 6 February 1998 Solomon Brothers clarified the capacity in which the various claims were made and said that the total claim was for $2,201,193.34 as set out in an attached schedule, interest as damages in accordance with Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125 and the costs of pursuing other remedies. It was noted that Mr Cohen may have a further claim for $313,000 and interest paid and costs in relation to the fraudulent mortgage over the property in Oxford Street, Leederville. It was indicated that the remedies were being pursued in relation to that property and a possible claim for $150,000 and interest paid and costs for the fraudulent mortgage over the Rockingham land. It was hoped that these losses would be recovered by other proceedings without the need to pursue a claim under the Act. The $2,201,193.34 claimed against the Fidelity Fund comprised amounts claimed against Ms Paterson in a writ which was issued, but stayed by reason of her bankruptcy. A copy of the statement of claim was enclosed. This amount did not include claims arising in relation to the Oxford Street property and the Rockingham property.

34 The applicants' solicitors also indicated that in their opinion the applicants had arguable claims against two solicitors who had been instructed by Ms Paterson and enclosed all documents in their possession supporting these claims. The applicants' solicitors requested urgent advice whether the Board would exercise its discretion to require the applicants to pursue the claims against the solicitors prior to the Board meeting a claim pursuant to s 117 of the Act, or whether the Board would agree to pay out the claims on the basis that the applicants would reimburse the Fidelity Fund for the net amount recovered in any proceedings against the solicitors.

35 By a letter dated 10 February 1998 the Board raised the question whether the applicants had yet made a formal claim on the Fund pursuant to s 117. The letter from Mr Rose on behalf of the Board said:

"My understanding is that the letter dated 11 November 1997 purported to give notice of a claim on behalf of Mr Cohen as required by section 116(2) of the Act. My further understanding is that the letter dated 6 February 1998, in addition to raising the issue dealt with above, purported to give notice of a claim on behalf of Mrs Cohen and Mrs Levy. Despite some of the language used in the letter dated 6 February 1998, it does not strike me as being the claim of Mr Cohen, Mrs Cohen and Mrs Levy.

Please find enclosed three Fidelity Fund claim forms. Please be advised that when claims are made, it is likely that the advice of Senior Counsel will be sought in relation to them. Please feel free to include with the claims any legal or other submissions which you consider will assist the claimants."

36 By letter dated 13 February 1998 the solicitors for the applicants made it clear that their clients had not made a formal claim against the Fidelity Fund at that time. They asked whether the Board required their clients to pursue their possible claims against the solicitors prior to the Board allowing a claim against the Fidelity Fund. It was indicated that claims would be lodged in due course.

37 By letter dated 16 February 1998 the Board made it clear that it was not necessary that all relevant rights of action and other legal remedies be exhausted before the Board would consider a claim on the Fidelity Fund. By letter dated 17 February 1998 solicitors for the applicants again requested an answer to the question whether the Board would require their clients to exhaust remedies against the solicitors or either of them before finalising the claims against the Fidelity Fund. By letter dated 19 February 1998 the Board made it clear that:

"The Board does not pend determination of claims whilst other legal remedies are pursued, and does not reject claims on the basis that a cause of action that would otherwise be available to it under subrogation cannot be pursued due to the expiration of a limitation period applying to that cause of action."

38 Formal claims were then made. The claims were verified by statutory declarations which are undated but were made shortly after the letter dated 19 February 1998 was received.

39 By letter dated 18 May 1998 the solicitor for the Board indicated that counsel was to be briefed to advise the Board on a number of matters. It was indicated that in the past the Board had not paid claims until the agent had been successfully prosecuted. Claims were also processed in the order in which they were received and there were some 20 claims ahead of those made by the applicants. It was indicated that it was highly unlikely that the entirety of the claims would be determined within the next six months. This prompted a substantive reply from the applicants' solicitors who threatened the issue of a writ of mandamus. Subsequently, at a meeting on 19 June 1998 the Board resolved to deal with the claims by the applicants as follows:

(1) The claims in respect of rental moneys allegedly collected by Ms Paterson, but not forwarded to Mr Cohen would be examined immediately by inspectors of the Board, with an expectation that submissions could be made to the Board within six weeks.

(2) The claims in respect of the "false" mortgages (also referred to as "fictitious mortgages") would be referred to counsel for consideration and advice in respect of:

(a) Whether the transactions in these circumstances were transactions which fell within the meaning of "real estate transaction" pursuant to the provisions of the Act.

(b) If counsel advised in the affirmative, what action needed to be taken in respect of each transaction for the Board to make a decision.

(c) That the Board required this advice within approximately eight weeks.

(3) The claims in respect of the "allegedly" forged signatures on the mortgages of the Leederville and Rockingham properties (also referred to as "the fraudulent mortgages") could not be resolved until the police were in a position to provide forensic evidence in the matter. However, the Board had asked counsel to determine if these transactions would satisfy the definition of "real estate transactions" contained in the Act.

40 It appears that the solicitors for the applicants subsequently obtained copies of a number of bank cheques from the Western Australian Major Fraud Squad. By these cheques Mr Cohen paid money to Ideal Realty or Ms Paterson to be advanced as loans to third parties secured by first mortgage. Most of the money advanced by Mr Cohen was by bank cheques payable to the trust account of Ideal Realty. Some cheques were payable to Ideal Realty or Larkfield Holdings Pty Ltd, which was referred to on the letterhead of Ideal Realty as the proprietor of the business. In one case the advance was made directly to Ms Paterson. It was alleged that the misappropriation of the proceeds of these various cheques amounted to defalcations by a licensee. Copies of the cheques were forwarded to the Board under cover of a letter dated 3 July 1998. It was contended that the conduct of Ms Paterson or Ideal Realty in relation to these cheques and their proceeds constituted defalcation by a licensee under the Act.

41 By letter dated 6 August 1998 the Board informed the applicants' solicitors that it expected to review counsel's opinion "in the next week or so". On 14 August 1998 the Board resolved that the applicants' claims be refused. By letter dated 17 August 1998 the Board asserted that criminal conduct by a licensee did not necessarily constitute a defalcation by a licensee. Finally, in a letter dated 7 September 1998 the Board notified the applicants' solicitors as follows:

"(i) In respect of the claim concerning what can conveniently be called 'fictitious mortgages', the claim is disallowed. The basis for disallowing the claim is that mortgage finance broking or arrangements are not in the course of the business of a licensee. The extended characterisation of services 'rendered' by an agent (in s 4(3)(d)) does not assist in the context of fictitious mortgages either.

(ii) In respect of the claim concerning Guildford Road, it is disallowed. Primarily because the claim is out of time.

(iii) In respect of the claim concerning '1/83 First Avenue, Mt Lawley', there is insufficient substantion [sic]. This claim has not been formally disallowed. I will revert to you shortly with requisitions.

(iv) In respect of the claim concerning the 'fraudulent mortgages', there is insufficient substantiation. This claim has not been formally disallowed. It is expected that the Fraud Squad will ultimately provide advice in this regard.

(v) The claim for 'interest' on otherwise allowable claims is disallowed.

As previously advised, I will be seeking a meeting with you to discuss the claim concerning unpaid rents."

42 Grounds 2 to 6 each allege that the Board made a jurisdictional error of law. Ground 2 was that the Board made a jurisdictional error of law in finding that there was not a defalcation by a licensee within the meaning of the Act. This ground related to the claims made in respect of what were referred to as the "fictitious mortgages". The Board disallowed these claims on the basis that the proposed transactions by way of investment in mortgages were "mortgage finance broking or arrangements" which were "not in the course of business of a licensee". As will appear, the Board appears to have concluded that a mortgage finance broking transaction and a real estate transaction were mutually exclusive.

43 It was contended on behalf of the applicants that the failure of Ideal Realty to deposit the money received into its trust account on account of proposed investment in first mortgages of land was a breach of s 68(1) of the Act and constituted a defalcation. Section 68(1) provides that:

"Every agent who holds a current triennial certificate shall maintain one or more trust accounts, designated or evidenced as such, in the prescribed manner, with an authorised financial institution and shall, as soon as practicable, pay to the credit of that account or those accounts all moneys received by him for or on behalf of any other person in respect of transactions".

44 The term "transaction" is defined in s 4(1) of the Act as:

" 'transaction' means a real estate transaction or a business transaction, or both a real estate transaction and a business transaction".

45 It was contended that in each case the relevant transaction was a real estate transaction. The term "real estate transaction" is defined in s 4(1) of the Act as:

"(a) means a sale, exchange, or other disposal and a purchase, exchange, or other acquisition of real estate and any exclusive right whether deriving from the ownership of a share or interest in a body corporate or partnership, or otherwise, to the use or occupation of real estate including the leasing, and letting, and the acquisition under lease or letting of tenancy or occupation of real estate; and

(b) includes any sale, exchange, or other disposal and any purchase, exchange, or other acquisition of goods, chattels or other property relating to a real estate transaction of a kind specified in paragraph (a); and

(ba) includes the collection of rents or other payments for use or occupation; and

(c) also includes an option to enter into a real estate transaction".

"... land within or outside the State and includes land of any tenure and buildings or parts of buildings within or outside the State".

47 The term "land" is defined in s 3(1) of the Interpretation Act 1984 to mean:

"... any estate, interest, easement, servitude or right in or over land".

48 This definition first appeared in the Interpretation Act 1984. There was no such definition in the preceding legislation, namely, the Interpretation Act 1918.

49 At all material times since 1962 both the 1918 Act and the 1984 Act contained the definition of "estate" as it now appears in s 3(1) of the Interpretation Act 1984. The term "estate" in relation to land is defined in s 3(1) to include "any ... encumbrance in, over, to or in respect of the land". It follows that a transaction involving the loan of money secured by a mortgage of land, which constitutes an encumbrance in respect of the land, is a transaction which involves an "acquisition of real estate" for the purposes of s 4(1) of the Act. The consequence is that a transaction involving the loan of money upon the security of a mortgage over land is a "real estate transaction" as defined in s 4(1) of the Act: cf Re A Fidelity Bond given by the Colonial Mutual Fire Insurance Company Ltd [1931] SASR 173; and Schofield v Consolidated Interest Fund (1988) 49 SASR 546.

"The collection by an agent for and on behalf of another person of moneys in respect of -

(c) any rent or other payment for use or occupation; or

(d) any payments under a mortgage or other security,

relating to a transaction is deemed to be a service rendered by the agent in his capacity as an agent, and those moneys are deemed to be moneys received by the agent, in the course of his business, for and on behalf of the other person in respect of the transaction, irrespective of whether or not the agent negotiated the transaction or participated in the negotiation thereof."

51 In my opinion, it is necessarily to be implied that if the agent negotiated the mortgage transaction or participated in the negotiation of the transaction it would constitute a service rendered by the agent in his or her capacity as an agent. The term "transaction" is defined in s 4(1) of the Act as:

"... a real estate transaction or a business transaction, or both a real estate transaction and a business transaction".

52 Having regard to the definition of "real estate transaction" in s 4(1) it seems clear that the collection of moneys in respect of the consideration for the sale of land, terms payments for the sale of land, rent or other consideration for the use or occupation of land, or any payments under a mortgage or other security of land would each involve the receipt of money on account of a "real estate transaction" as defined.

53 The opinion of Mr H D Seymour of counsel dated 3 August 1998, on which the Board relied, rightly said that the first question in respect of the "fictitious mortgages" was whether the proposed advances made by Mr Cohen and the other claimants came within the words "a sale, exchange or other disposal and a purchase, exchange, or other acquisition of real estate and any exclusive right ... to the use or occupation of real estate ...". Mr Seymour concluded they did not. Counsel expressed the view that a registered mortgage under the Transfer of Land Act 1893 only operated as a charge upon land for a sum of money secured by virtue of s 106. Section 106(1) of that Act provides that:

"A mortgage and a charge under this Act shall when registered as hereinbefore provided have effect as a security but shall not operate as a transfer of the land thereby mortgaged or charged..."

54 Thus a mortgage registered under the Transfer of Land Act did not operate or take effect as a transfer of land, in contrast to a mortgage under old system land: Patridge v McIntosh & Sons Ltd [1933] HCA 38; (1933) 49 CLR 453 at 466 per Dixon J, who distinguished between an interest in land in the nature of a charge and an estate in land. See also English Scottish & Australian Bank Ltd v Phillips [1937] HCA 6; (1937) 57 CLR 302 at 321-322 per Dixon, Evatt and McTiernan JJ. Mr Seymour concluded that:

"Given that a registered mortgage operates only as a charge it is my opinion that it is not encompassed within the definition of 'real estate transaction' in section 4. Simply put, it does not involve 'a sale, exchange or other disposal and a purchase, exchange or other acquisition of real estate and any exclusive right ... to the use or occupation of real estate'."

"There is no express reference to mortgages or mortgage transactions in the definition of 'real estate transaction' in section 4 (as opposed to leasing transactions). In my opinion if the legislature had intended to include mortgage transactions with the definition it would have specified them (as it did in the context of section 4(3) of the Act)."

56 In my view, this conclusion overlooks the definition of "real estate" in s 4(1) of the Act which includes "land" which in turn is defined in the Interpretation Act to mean any "interest ... in or over land". It is apparent that a mortgage under the Transfer of Land Act falls within the definition of "estate" in relation to land as defined in s 3(1) of the Interpretation Act as being "any ... interest ... charge ... or encumbrance in, over, to or in respect of the land". As Dixon J said in Patridge at 466:

"The statutory mortgage does not upon registration effect a transfer to the mortgagee of an estate in the land ... He has, of course, an interest in the land at law, but it is in the nature of a charge".

57 A mortgage under the Transfer of Land Act creates an interest in the subject land. It is a charge and it is also an encumbrance. In the English Scottish and Australian Bank case at 324 Dixon, Evatt and McTiernan JJ said of the Real Property Act 1886 (SA) that:

"... the plan of the legislation is to treat mortgages as distinct and persisting interests capable of the same ready transfer by registration or estates in fee simple and without any discrimination or concern as to the relation of the transferee or transferor thereof to any other estate or interest in land".

58 That case was applied in Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd [1999] HCA 20 May 1999. Gaudron, Gummow and Callinan JJ said at [22] that a Torrens System mortgage under the Transfer of Land Act 1958 (Vic) had effect as a security and was an interest in but did not operate as a transfer of the land.

59 In the present circumstances, the situation under the Western Australian legislation is indistinguishable from the relevant provisions in contemplation in the Land Agents Act 1925 (SA) in Re a Fidelity Bond (supra), the first of the South Australian cases, and in Schofield (supra), the second of those cases, which concerned the Land & Business Agents Act 1973 (SA) which referred in s 6 to "any interest in land".

60 Mr Seymour found some important additional support for the view that the definition in s 4 of the Act of a "real estate transaction" did not include a mortgage broking transaction in two reports of the Western Australian Law Reform Commission ("WALRC"), namely the Report on a Review of the Land Agents Act (Project No 37) and Report on Mortgage Brokers (Project No 45); Law Reform Commission of Western Australia Reports Vol 2, 1973-1975. Both reports were published in 1974 and were followed by the enactment of the Finance Brokers Control Act 1975 and the Act. Reference to such reports and to the second reading speeches in respect of the legislation to implement them is recognised by s 19 of the Interpretation Act as appropriate in order to assist in the interpretation of the legislation.

61 In the report on the Land Agents Act 1921 the Commission noted at par 4 that a separate working paper dealing with mortgage brokers was to be prepared. The relevant report considered whether mortgage brokers (and finance brokers) should be required to take out a bond or contribute to a fidelity fund. The Commission recommended that a bond system, or a separate fidelity fund, or a common fidelity fund for both land agents and mortgage brokers should be established. A mortgage broker was defined as a person who in the course of business as an agent negotiated or arranged loans of money upon the security of mortgages of land for and on behalf of another for reward. The Commission said that there was a doubt whether the provisions of the Land Agents Act extended to a licensed land agent when acting in the capacity of a mortgage broker. At that time the definition of "land transaction" in the Land Agents Act 1921 was as follows:

a sale, exchange or other disposal, and a purchase, exchange or other acquisition - except by auction, of land and estates and interest in land ..."

62 This definition was wider than the present definition of "real estate transaction" in the Act, in that it referred to an "interest in land". As has been seen, however, the definition of "estate", which now appears in the Interpretation Act 1984 has been included in the Interpretation Act 1918 since 1962, although the definition of "land" first appeared in the Interpretation Act 1984. In the course of the second reading speech on the Finance Brokers Bill, as recorded in Hansard (1975, vols 207-210 at 4037-4038) the Minister for Works referred to the Report of the Law Reform Commission in 1974 and said:

"There is doubt whether the provisions of the Land Agents Act extend to a land agent acting in the capacity of a mortgage broker. The government therefore considers that a land agent should be required to obtain a finance broker's licence before he can act as such a broker. I think this would be in accordance with the views of most land agents who would generally regard the activities of mortgage brokers as separate from those of land agents".

63 These views were repeated in the Legislative Council in the second reading speech by the then Minister for Justice: Hansard (supra) at 4363-4364. By the time the subject Act commenced, a bond system for finance brokers, including mortgage brokers, had been established under s 35 of the Finance Brokers Control Act 1975 instead of a separate or common fidelity fund.

64 Counsel advising the Board concluded that the two reports of the Law Reform Commission, the second reading speeches relating to the Finance Brokers Control Act 1975 and the timing of the enactment of the Real Estate and Business Agents Act 1978 indicated that the definition of "real estate transaction" in the latter Act was not intended by Parliament to encompass mortgage broking transactions conducted by real estate agents. It was also concluded that the fact that Mr Cohen and the other applicants advanced a total of $2,201,193.30 in some 25 transactions to Ms Paterson through Ideal Realty over a period of six years, when taken with the definition in s 5 of the Finance Brokers Control Act 1975 of a "finance broker", suggested that Ms Paterson was conducting a business as a finance broker for Mr Cohen (albeit without a licence): cf Simto Resources Ltd v Normandy Capital Ltd [1993] FCA 293; (1993) 43 FCR 78 at 88 and 96-97. There is a clear inference from the materials that the Board adopted the advice of counsel when rejecting the claims in respect of the "fictitious mortgages".

65 Counsel for the applicants contended that the significance of the extension of the scope of a real estate agent's business to the collection of payments under a mortgage under s 4(3) is that the final words of s 4(3) expressly contemplate that the agent may have negotiated, or participated in the negotiation of, the mortgage. This implies that such negotiations would be within the course of the business of the agent, adding weight to the submission that the business of a "real estate agent" may include the negotiation of loans of money to be secured by mortgage of land: cf Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 at [69] - [71]; [1998] HCA 28; (1998) 153 ALR 490 at 509-510 per McHugh, Gummow, Kirby and Hayne JJ. It is difficult to understand how the collection of interest under a mortgage after the transaction has been entered into constitutes part of the business of a land agent, but negotiation of the mortgage itself pursuant to which the money was lent is excluded. As counsel for the applicants submitted, such a construction of the Act would be "absurd, extraordinary, capricious, irrational or obscure" and should be avoided: Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 320-322. The construction suggested by Mr Seymour and adopted by the Board would defeat that purpose and should be rejected: cf MacAlister v The Queen [1990] HCA 15; (1990) 169 CLR 324 at 330 per Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ; and Hospital Benefit Fund of Western Australia Inc v Minister for Housing and Community Services [1992] FCA 599; (1992) 111 ALR 1 at 6 per Willcox, Burchett and French JJ.

66 There was no evidence, apart from the subject transactions, that Ms Paterson or Ideal Realty was engaged in a separate business as a finance broker as distinct from a real estate agent. To the extent that the pretended and fictitious mortgage transactions were in the nature of finance broking transactions, I do not consider that this of itself would prevent them also being within the definition of "real estate transaction" in the Act. The Finance Brokers Act 1975 does not define a finance broking transaction. Section 4 of the Finance Brokers Act defines a "finance broker" as:

"means a person, who, as an agent, in the course of business negotiates or arranges loans of money for and on behalf of other persons but does not include the exceptions in section 5(1)".

67 None of the exceptions in s 5(1) are relevant in this case. There is nothing to suggest that a finance broking transaction could not also be a real estate transaction.

68 Section 68(1) of the Real Estate and Business Agents Act provides that:

"Every agent who holds a current triennial certificate shall maintain one or more trust accounts, designated or evidenced as such, in the prescribed manner, with an authorized financial institution and shall, as soon as practicable, pay to the credit of that account or those accounts all moneys received by him for or on behalf of any other person in respect of transactions."

69 Section 84 provides that a breach of s 68(1) is an offence. Consequently, the failure of Ms Paterson to deposit in a trust account the proceeds of the cheques paid to her by or on behalf of the applicants for investment in mortgages of land constituted criminal conduct and a defalcation by a licensee. Details of the cheques were set out in par 23 of Mr Cohen's affidavit sworn 17 September 1998 when read with Exhibit HC28, being the letter dated 3 July 1998 from the solicitors for the applicants to the Board, to which copies of the relevant cheques were attached.

70 In my opinion, the failure to deposit any part of the moneys in the trust account of Ideal Realty was clearly in breach of s 68(1) of the Act. Such a breach constitutes an offence by virtue of s 84 of the Act. Neither counsel for the Board nor the Board appear to have considered this point. In my opinion, the Board wrongly decided that it had no jurisdiction in relation to the claims in respect of the fictitious mortgages. In my opinion, that error by the Board was a jurisdictional error. On the face of it, therefore, ground 2 has been made out and certiorari would be available to quash the decision in respect of the "fictitious mortgages".

71 Counsel for the applicants submitted that the two transactions involving the Oxford Street, Leederville property and the Dixon Road, Rockingham property, which were the subject of fraudulent mortgages, were of a different nature. Ms Paterson of Ideal Realty acted as the property manager for Mr Cohen in respect of both properties. Both of the properties were leased. As a result of her actions, the properties became encumbered by registered mortgages to the Uniting Church to secure $313,000 and to Newpark Nominees Pty Ltd to secure $150,000 respectively. Mr Cohen asserted that his signatures on the mortgage documents were forgeries and that he did not receive any of the funds advanced. He gave the duplicate certificates of title for both properties to Ms Paterson in order that she could prepare new lease documents. Assuming that neither of the registered mortgagees had any knowledge or notice of the alleged forgeries or the fraud of Ms Paterson, they would have obtained an indefeasible title: Frazer v Walker [1967] AC 569. Counsel accepted that it was arguable that the registration of a mortgage on the two properties by Ms Paterson in the course of Ideal Realty managing the properties and more specifically, managing the tenancies thereon, fell within the course of business of the licensee as defined, so as to constitute a "real estate transaction" for the purposes of s 4(1) as well as within the extended definition of "business" in s 4(3) of the Act.

72 In my opinion, on the basis that the leasing of real estate and the collection of rents under a lease of real estate is clearly part of the business of a real estate agent, the fraudulent registration of a mortgage upon such real estate during the managing and leasing or re-leasing of it would constitute a "defalcation by a licensee" in the course of the business of the licensee. The term "defalcation by a licensee" is defined in s 4(1) of the Act as:

"includes criminal or fraudulent conduct ... in the course of the business of the licensee and from which arises pecuniary loss or loss of property to any other person".

73 If, as in this case, the licensee is a firm or a body corporate the term "defalcation by a licensee" includes criminal or fraudulent conduct "of any one or more of the directors, officers, servants or agents of the body corporate". At all material times Ms Paterson was a servant or agent of the licensee company. This claim was dealt with in par (iv) of the Board's letter to the applicants' solicitors dated 7 September 1998. The Board did not disallow the claim, but took the view that there was "insufficient substantiation", saying that it "expected that the Fraud Squad will ultimately provide advice in this regard". It is implicit in this decision that the evidence before the Board that Mr Cohen's signature on the mortgage documents and other documents had been forged was regarded by the Board as insufficient to make a finding of forgery and that the Board wished to have the benefit of the results of a forensic investigation by the Fraud Squad.

74 None of grounds 2 to 5 of the grounds appear to apply to the two transactions involving the "fraudulent mortgages". Ground 1 alleges a denial of natural justice and ground 6 alleges a jurisdictional error of law in failing to give reasons for the decision. In the case of the fraudulent mortgages there was no refusal of the claim, the only decision made was to defer consideration of it. The order nisi is only directed to the decisions of the Board to "refuse" claims made by the applicants. In my opinion, the applicants are not entitled to any relief from this Court in respect of the claims concerning the "fraudulent mortgages".

"Further or alternatively, the Board made a jurisdictional error of law in holding that the first-named applicant's (in his capacity as trustee of the Cosmer Syndicate) claim could not be determined because it was made out of time when the evidence before the Board shows that it was plainly made within time."

76 This ground relates to the disallowance by the Board in par (ii) of the letter from the Board dated 7 September 1998 of "the claim concerning Guildford Road ... Primarily because the claim is out of time".

"A person shall not have a claim against the Fidelity Fund, unless notice of the claim is given in writing to the Board within one year after the claimant has become aware of the defalcation."

78 Section 117(1) of the Act relevantly provides that:

"The Board may receive and settle any claim against the Fidelity Fund at any time after the defalcation in respect of which the claim arose has occurred ..."

79 In par 4 of his affidavit sworn 17 September 1998 Mr Cohen refers to and exhibits a copy of a letter dated 11 November 1997 from the applicants' solicitors to the Board giving notice of his claim against the Fidelity Fund. There was enclosed with that letter a statutory declaration which exhibited two lever arch files of documents in support of his claims. The letter dated 11 November 1997 gave notice in relation to the "fraudulent mortgages" and the "fictitious mortgages", as well as a number of other business investments. Neither this letter nor the accompanying statutory declaration makes reference to the subject claims.

80 In par 9 of his affidavit sworn 17 September 1998 Mr Cohen refers to a letter from his solicitors to the Board dated 6 February 1998 by which his solicitors:

"... also notified the Board of my claim, as trustee of the Cosmer Syndicate, which the Board had not been previously notified of. I had only become aware of my claim as trustee of the Cosmer Syndicate after Mr James Ride, a solicitor I had formerly engaged, delivered documents to Solomon Brothers following a demand by Solomon Brothers. Although I am unaware of the exact date of receipt of those documents by Solomon Brothers, I informed by Solomon Brothers and do believe that they received those documents shortly after receipt by Solomon Brothers of a letter from James Ride dated 13 January 1998."

81 Details of the claim, which was for $24,193.34, were set out in the letter dated 6 February 1998. The essence of the claim was that in 1991 Ideal Realty represented by Ms Paterson was the agent of the applicant as trustee of the Cosmer Syndicate for the sale of a property at 150 Queens Road, Guildford for $240,000. It was alleged Mr Cohen was to provide $140,000 by way of vendor finance and that $110,000 was to be provided by a mortgagee on the basis that the vendor would have priority. It was alleged that Ms Paterson fraudulently instructed the vendor's solicitors to postpone the vendor's priority to the proposed mortgageee.

82 In my opinion, the alleged conduct of Ms Paterson, if proved, would constitute fraudulent conduct, and so constitute a "defalcation by a licensee" within the meaning of the Act. The difficulty which Mr Cohen has with reference to this claim is that the letter dated 6 February 1998, which gave notice of the claim, did not state when he first became aware of it. The letter was being written six to seven years after the alleged defalcation.

83 The claims lodged shortly after the Board's letter to the applicants' solicitors dated 19 February 1998, by way of the undated statutory declaration by Mr Cohen, include a statement by Mr Cohen that:

"I first became aware of the defalcation giving rise to the loss of money(s) now claimed in or about October 1997."

84 Mr Seymour dealt with this claim in his opinion as follows:

"It is alleged by Messrs Solomon Brothers that Paterson instructed Mr Ride to postpone Mr Cohen's priority behind that of the mortgagee in order to ensure that the sale proceeded (and that she received her commission). In their letter Messrs Solomon Brothers allege that Ride took instructions from Paterson despite being retained by Mr Cohen. However, I note that amongst the documentation provided is a letter, apparently signed by Mr Cohen and dated 11 October 1991, to Mr Ride agreeing to the postponement of his interest. This may be an answer on Ride's part to any allegation of negligence if it was received by Ride prior to settlement. Even if such a letter is alleged to have been forged by Paterson, it would be difficult to contend that a solicitor in Ride's position was negligent in not detecting it was a forgery. This transaction settled on 11 October 1991. I note that Messrs Solomon Brothers allege in their letter of 10 February 1998 at paragraph 3 that the 11 October 1991 letter purportedly signed by Mr Cohen was not, due to the facsimile imprint, received by Ride until 15 October 1991. I cannot discern any facsimile imprint on my copy. This particular aspect requires clarification."

85 The Board's expressed reason for rejection of the claim was that it was out of time. In the result Mr Cohen and his solicitors were not given any opportunity to deal with these matters before the claim was rejected.

"Given that this transaction involved a sale of real estate by Mr Cohen it may well have been a transaction coming under the Act. However, some further examination of the transaction, including the signature of Mr Cohen on the 11 October 1991 letter, and perhaps an interview of Mr Ride (if that is feasible), is necessary before it can be decided whether Paterson's actions constituted a "defalcation by a licensee". However, in addition it would appear that this transaction is probably well out of time in that the loss suffered by Mr Cohen would presumably have been apparent to him in 1992 (even though his statutory declaration is silent in this respect). Thus, the one year time limit imposed by section 116(2) of the Act may apply to bar the claim. (I also note that this claim is also inconsistently presented. The statutory declaration by Mr Cohen and the letters by Solomon Brothers, do not contend it to be part of the claim. However, it is formally included in the Notice of claim at tab 8)."

87 Again, the only reason for rejection communicated by the Board to the applicants' solicitors was that the claim was made out of time. No basis was set out by Mr Seymour for the presumption that the loss suffered by Mr Cohen "would presumably have been apparent to him in 1992". The circumstances were that Mr Cohen had stated that he was unaware of the circumstances giving rise to the claim until his solicitors received the relevant documents in January 1998.

88 That statement does not appear to have been challenged or disputed in any way. That being so, notice of the claim was given within one year after Mr Cohen became aware of the defalcation. However, I note that in the minutes of the Board meeting on 14 August 1998 it was recorded that Mr Seymour advised that the claim was out of time because:

"... the loss suffered by Mr Cohen was likely to have been apparent to Mr Cohen in 1992, but notification of the claim was not received by the Board until November 1997."

89 Notification of the claim was not given in November 1997 but in February 1998. What the evidence was, if any, which gave rise to the presumption and advice by Mr Seymour is not apparent from the materials before the Court. Mr Cohen's assertion that he was not aware of the alleged defalcation was not challenged by the Board, nor was he given an opportunity to give any explanation in respect of the evidence apparently relied on by Mr Seymour. These circumstances are relevant to the denial of natural justice relied upon in ground 1.

90 It was contended by counsel for the applicants, however, that the finding by the Board that notice of the claim had been given out of time was so unreasonable as to give rise to a jurisdictional error of law: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 41-42 per Mason J; Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223 at 228 per Lord Greene MR. No basis was expressed for the presumption made by Mr Seymour that the loss would "presumably have been apparent to Mr Cohen in 1992".

91 It was also submitted that the decision that the notice of claim was out of time was an arbitrary and improper exercise of power. Counsel for the applicants referred to Singh v Minister for Immigration and Ethnic Affairs (1987) 15 FCR 4 at 10 per Forster J, but that case offers no authority for the proposition. The proposition seems to involve an additional reason to say that the decision was unreasonable. While expressed as a further alternative, it was also submitted that the decision was made without any realistic consideration of the merits of the case: Khan v Minister for Immigration and Ethnic Affairs [1987] FCA 457; (1987) 14 ALD 291. The disallowance of the claim as being out of time involved the acceptance as a fact of a presumption made by counsel, apparently unsupported by any basic facts and the rejection of Mr Cohen's statutory declaration that he first became aware of the defalcation in or about October 1997. In my opinion the decision of the Board so made constituted a clear example of an arbitrary and improper exercise of power made without any realistic consideration of the merits of the case. In my opinion the decision was so unreasonable as to give rise to a jurisdictional error of law. It was an arbitrary and capricious decision. Such a decision is necessarily unreasonable: Weinberger v Inglis [1919] AC 606; R v Barnet and Comden Rent Tribunal; Ex parte Frey Investments Ltd [1972] 2 QB 342.

92 It was also submitted that, in the circumstances, the disallowance of the notice of claim as being made out of time was a decision made in breach of the requirements of s 20 of the Act. As has been seen s 20 contains the familiar provisions requiring the Board to act according to equity, good conscience, and the substantial merits of the case. In my opinion, the giving of notice of claim, the making of the claim and its consideration, admission or disallowance by the Board constitutes "proceedings before the Board" within the meaning of s 20(5) of the Act. For the reasons already expressed the disallowance of this particular claim as being out of time was made without any realistic consideration of the substantial merits of the case.

94 Ground 4 of the order nisi was that the Board made a jurisdictional error of law in refusing the applicants' claim for interest as damages made in accordance with the principles enunciated in Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125.

95 On 14 August 1998 the Board declined the claim for interest on the basis that:

"... loss suffered by way of interest is not a loss for the purpose of a claim against the Fund."

"no amount shall be charged or be chargeable to the Fidelity Fund as interest on the amount of any judgment obtained or of any claim admitted against the Fidelity Fund."

97 Counsel for the applicants contended that this did not exclude a claim for economic loss in the form of damages for interest forgone on the money the subject of the alleged defalcation. On this basis the interest was part of the claim which would be included in any judgment obtained as distinct from interest on the amount of the judgment or the claim: Hungerfords v Walker (supra).

98 The opinion of counsel who advised the Board refers to s 116(1) of the Act which provides that the Fund shall be held and applied for the purpose of reimbursing persons who suffer pecuniary loss or loss of property by reason of any defalcation by a licensee:

"... but reimbursing only to the extent of the defalcation of the licensee."

99 The view expressed in the opinion which appears to have been adopted by the Board was that s 116(1) limits claims to the extent of the defalcation at the time the defalcation was made. As counsel put it:

"This would exclude any claim for interest foregone on the monies stolen or misappropriated up until the time that the claim upon the Fund was accepted. Central to this interpretation is the use of the word 'reimbursement'. It has been held in Canada, in a taxation context, that the word reimbursement in its ordinary meaning does not include damages awards - Westcoast Energy Inc v Her Majesty the Queen [1991] 3 FC 302 at 320-322; affirmed by the Canadian Federal Court of Appeal in Her Majesty the Queen v Westcoast Energy Inc 92 DTC (Dominion Tax Cases) 6253. See also Dixon v Calcraft [1892] 1 QB 458.

60. The argument of the claimant in support of a claim for interest as damages is based on Hungerfords v Walker [1989] HCA 8; (1990) 171 CLR 125. That case was concerned with interest payable upon damages arising as a result of breach of contract or negligence. It was not concerned with a statutory scheme for reimbursing persons dealing with licensed real estate agents. Further, the word damages does not appear anywhere within Part VIII of the Act.

61. This same question has been considered in the context of the South Australian Land and Business Agents Act 1973 in Schofield v Consolidated Interest Fund (supra) at 546. The South Australian Act, as previously noted at paragraph 25, included mortgage transactions within its ambit. The South Australian legislation also referred to the actual pecuniary loss suffered from a fiduciary default, by section 72. It was held by Olsson J that a claim of interest was not an actual pecuniary loss as required by the South Australian Act. Olsson J referred to Dobcol PL v Law Institute of Victoria [1979] VicRp 42; [1979] VR 393, which also concerned a statute requiring actual pecuniary loss to be suffered, and similarly concluded that a claim for interest did not come within the actual pecuniary loss suffered. He also referred to Re Vassis; ex parte Leung [1986] FCA 21; (1986) 9 FCR 518 at 526-7 in recognising the clear distinction between the nature of claims for the actual trust monies misappropriated and other consequential claims for damages which may arise from a breach of trust.

62. In my view the wording of section 72(1) of the Land and Business Agents Act 1973, namely, 'The amount of a claim made pursuant to this Part shall not exceed the actual pecuniary loss suffered by the claimant in consequence of the fiduciary default ...' is similar in its intention and in its effect as the wording in section 116(1) 'but only reimbursing to the extent of the defalcation of the licensee', notwithstanding the absence of the word 'actual' in the Western Australian Act.

63. In my opinion, the reasoning in that decision, together with the use of the words 'reimbursement' and 'reimbursement only to the extent of the defalcation of the licensee', supports the conclusion that interest is not claimable from the Fidelity Guarantee Fund. Accordingly, in my opinion any loss suffered does not include any component for 'expectation' or 'reliance' losses, and therefore the claim for interest as damages in the sum of $498,609.09 from the Fidelity Guarantee Fund is not allowable."

100 This advice appears to have been adopted by the Board at its meeting on 14 August 1998 when it declined the claim for interest.

101 In Hungerfords v Walker at 149, Mason CJ and Wilson J distinguished between interest on the amount of a claim and interest as damages. In their concurring judgment Brennan and Deane JJ said at 152:

"There is, in our view, a critical distinction between an order that interest be paid upon an award of damages and an actual award of damages which represents compensation for a wrongfully caused loss of the use of money and which is assessed wholly or partly by reference to the interest which would have been earned by safe investment of the money or which was in fact paid upon borrowings which otherwise would have been unnecessary or retired. On the one hand, there is no common law power to make an order for the payment of interest to compensate for the delay in obtaining payment of what the court assesses to be the appropriate measure of damages for a wrongful act. If such interest is to be awarded at common law, it must be pursuant to statutory authority. On the other hand, there is no acceptable reason why the ordinary principles governing the recovery of common law damages should not, in an appropriate case, apply to entitle a plaintiff to an actual award of damages as compensation for a wrongfully and foreseeably caused loss of the use of money."

102 Counsel for the applicants submitted that the interpretation adopted by the Board was inconsistent with s 117(2) of the Act and, in particular, with the provision that:

"A person is not entitled to recover from the Fidelity Fund an amount greater than the balance of the loss suffered by him ..." (my italics).

103 It was submitted that "loss" in this context includes damages by way of interest forgone or on money misappropriated by way of defalcation. Loss of income by way of interest is precisely the type of loss which would be caused by such a defalcation. Reference was made to Chappel v Hart [1998] HCA 55; (1998) 72 ALJR 1344 at [8-10] per Gaudron J; at [34] per McHugh J; and [91] per Kirby J. While I accept the submission, the paragraphs relied on in Chappel v Hart are of no assistance in relation to it. It is significant that s 117(2) uses the phrase "loss suffered by him" as does s 82 of the Trade Practices Act 1974 (Cth). In Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 73 ALJR 12 at [41-42], McHugh, Hayne and Callinan JJ said that:

"The question presented by s 82 is not what would be allowed in deceit, it is what loss or damage has been caused by the conduct contravening the Act.

[42] It follows, then, that a comparison must be made between the position in which the party that allegedly has suffered loss or damage is and the position in which that party would have been but for the contravening conduct. And even this inquiry may not conclude the question. Analysing the question of causation only by reference to what is, in essence, a 'but for' test has been found wanting in other contexts [see March v Stramare (E & M H) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506] and it may well be that it is not an exclusive test of causation in this area either. But that is not a question which we need to consider in this case. For the moment it is enough to say that s 82 requires identification of a causal link between loss or damage and conduct done in contravention of the Act. [Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 525, per Mason CJ, Dawson, Gaudron and McHugh JJ]"

104 Counsel for the applicants relied upon what was said at [42], in particular, to suggest that their Honours appeared to hold that "by" gives rise to a "but for" test. It was then submitted that but for Ms Paterson's fraud the applicants would have earned interest income on the amounts lost by Ms Paterson's fraud. This became part of the applicants' loss. In my opinion, however, where the claim is in respect of an amount of money misappropriated, s 117 when read with s 116(1) have the effect that the claim is limited to that amount and does not extend to any loss of interest on the amount by reason of the misappropriation. For these reasons ground 4 has not been made out.

105 Ground 5 was that the Board made a jurisdictional error of law by its failure to consider Mr Cohen's claim for costs in addition to the $313,000 required to discharge the fraudulent mortgage on the Oxford Street, Leederville property. Section 110 provides for expenditure from the Fidelity Fund of "(a) the amount of all claims, including costs, allowed or established against the Fidelity Fund". It appears that the costs were claimed as damages, as was interest. The claim was not quantified. It comprised the costs required to discharge the fraudulent mortgage as well as the costs of an action for pre-action discovery and an action against the solicitor who acted in relation to the Guildford Road property and:

"... future institution of claims (required because of limitation periods) for recovery of this sum and other sums referred to in annexure B and all solicitor/client costs of and incidental to the making of this claim."

106 It is asserted in the submission by counsel for the applicants that, "The Board has now refused to consider the claim for costs" and that this refusal amounts to a refusal by the Board to perform its functions. There is no evidence that counsel pointed to which establishes a specific refusal to consider the claim for costs. It is, however, implicit in the Board's response to the claim in respect of interest forgone that the Board would regard legal costs incurred as falling within the same category. Be that as it may, it does appear, on the face of it, that the Board has not made a decision on the claim for costs. Its failure to do so is manifestly an act of innocent omission. Nonetheless, a failure to act when the Board is required to do so will entitle the aggrieved parties to relief by way of mandamus: Re Media Entertainment and Arts Alliance; Ex parte Hoyts Corp Pty Ltd [1993] HCA 40; (1993) 178 CLR 379 at 394 per Maxon CJ, Brennan, Dawson, Toohey, Gaudron and McHugh JJ.

107 The requirement of natural justice is a requirement of procedural fairness. As Mason J said in Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at 584:

"The law has now developed to the point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to a clear manifestation of a contrary statutory intention."

See also Haoucher v Minister for Immigration and Ethnic Affairs [1990] HCA 22; (1990) 169 CLR 648 at653 per Deane J; and Annetts v McCann [1990] HCA 57; (1990) 170 CLR 596 at 598 per Mason CJ, Deane and McHugh JJ.

108 In FAI Insurances Ltd v Winneke [1982] HCA 26; (1982) 151 CLR 342 at 360 Mason J said:

"The fundamental rule is that a statutory authority having power to affect the rights of a person is bound to hear him before exercising power ..."

109 In this context, rights and interests include livelihood and financial interests: FAI Insurances Ltd v Winneke (supra); and Kioa v West (supra) at 618-619. The requirement to give a person whose rights or interests may be affected is that they should be heard, although an oral hearing is not always necessary. As Mason J put it in Kioa v West at 582:

"It is a fundamental rule of the common law doctrine of natural justice expressed in traditional terms that, generally speaking, when an order is to be made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case sought to be made against him and to be given an opportunity of replying to it ..."

See also Re Minister for Mines; Ex parte Roberts (1997) 18 WAR 408 at 416-418 per Steytler J (with whom Malcolm CJ and Kennedy J agreed).

110 In the present case, Mr Cohen was not given the opportunity to reply to or otherwise deal with the suggestion in Mr Seymour's opinion that Mr Cohen was likely to have been aware of the relevant circumstances in relation to the Guildford Road property in 1992 rather than at the time stated by him in his statutory declaration in support of the relevant claim. The Board failed to give the applicants the opportunity to respond to any of the points made adverse to their claims either in the brief to counsel or the opinion of counsel. It was submitted on behalf of the applicants that they were denied natural justice because the Board failed to provide the applicants with access to the documents put before the Board or considered by the Board when the Board made its various decisions including, in particular, the opinion obtained from Mr Seymour. It was submitted that once the Board decided to consider counsel's opinion, it weighed any privilege attaching to the opinion and was required to provide the applicants with a copy of the opinion. In support of this proposition counsel for the applicants relied upon the decision of McHugh J in Giannarelli v Wraith [No 2] [1991] HCA 2; (1990) 171 CLR 592. In that case McHugh J considered a number of questions referred to him by the Registrar of the High Court sitting as a taxing officer. The second question concerned the right of respondents to refuse to produce documents, including an opinion of counsel, on the ground that they were the subject of legal professional privilege. The third question concerned the power of the taxing officer to compel the production of such documents. The fourth question concerned the right of the taxing officer to give the other party to the taxation copies of any documents which the respondents produced. McHugh J held that a party applying for taxation could refuse to produce documents on the ground that they were the subject of legal professional privilege: Baker v Campbell [1983] HCA 39; (1983) 153 CLR 52. It was also held that the taxing officer was not entitled to refuse to tax a bill on the ground that the party seeking taxation had refused to produce privileged documents: cf Pamplin v Express Newspapers Ltd [1985] 1 WLR 689; and Goulburn v Hesper [1988] 1 WLR 1238. Finally, it was held that a party who produced documents, whether privileged or not, could not object to the taxing officer showing them to another party: Pamplin v Express Newspapers Ltd (supra). In Hobbs at 117 Stevenson J said:

"There is, however, an abundance of authority in support of a proposition that once legal professional privilege attaches to a document ... that privilege attaches for all time and in all circumstances."

111 In Pamplin, an appeal was still pending and Hobhouse J was conscious of the need to maintain confidentiality in those circumstances. His Lordship said at 698:

"In the most extreme case, the claimant may have to ask for an adjournment of the taxation (or review) of some items until a time when the privileges become academic, for example, the disposal of a pending appeal in the litigation."

"In this passage his Lordship was not suggesting that, once the litigation had come to an end, privilege can no longer be claimed in the taxation of costs. Rather, he was suggesting that, at that late stage, a party would usually have no interest in maintaining the confidentiality of his or her privileged documents."

112 In my opinion, there is nothing in the judgment of McHugh J which suggests that in the present circumstances the Board was bound to provide either the brief to counsel or counsel's opinion. The Board, however, was bound to inform the applicants of the case made against them in relation to each of the claims so that a response could be provided. It was contended by counsel for the applicants that the approach adopted by the Board was the equivalent to withholding an oral hearing and taking submissions from counsel assisting in writing. What is significant is that the approach adopted by the Board deprived the applicants of the opportunity of answering the case made against them as stated in the opinion of counsel. Thus, while the Board was not bound to disclose the opinion, it was bound to give the applicants the opportunity to answer any of the points made in the opinion which were adverse to their claims, including, in particular, the reasons why the Board considered that the claim in respect of the Guildford Road property was made out of time. In this respect, ground 1 is made out with respect to the claim regarding the Guildford Road property.

113 It is at this point that the preliminary issue raised on behalf of the Board becomes relevant. It was submitted on behalf of the Board that the proper remedy for the applicants, once their claim had been refused, was to commence an action against the Board to pursue their claim against the Board. As has been seen, the main contention by counsel for the Board was that, if successful, the present proceedings could only result in a reconsideration of the claims by the Board. This, of course, is frequently the result of the issue of a writ of certiorari to quash a decision by an administrative tribunal. In my opinion, the applicants were entitled to have the claim made against the Fund determined by the Board in accordance with law.

114 It was also submitted on behalf of the Board that, in the absence of any grounds of challenge based upon lack of good faith, unlawful conduct or abuse of power, the Court ought to refuse prerogative relief as a matter of the exercise of discretion. Counsel relied on Gudgeon v Black (1994) 14 WAR 158 at 177-178 per Malcolm CJ in support of that submission. That case acknowledged that the grant of certiorari could be withheld as a matter of discretion. The relevant passage in the judgment was concerned with the significance for the exercise of discretion of the existence of a right of appeal from the relevant decision. The general discretion to grant or refuse a prerogative remedy was considered in Gudgeon v Black at 178-179 per Malcolm CJ as follows:

"The question is 'whether the Royal prerogative has been encroached upon by reason of the prescribed order of the administration of justice having been disobeyed': see Worthington v Jeffries (1875) LR 10 PP 379 at 382, per Brett LJ. Where the remedy is sought not by the Crown but by a mere stranger, the court has a discretion to refuse relief, if it considers that no good would be done to the public: see London Corporation v Cox (at 279), per Willes J; R v Surrey Justices (1870) LR 5 QB 466; R v Speyer [1916] 1 KB 595. Where, however, the remedy is sought by a person who has a particular grievance, whether as a party or otherwise and the grounds are established, the remedy lies ex debito justitiae; see R v Thames Magistrates' Court; Ex parte Greenbaum (1957) 55 LGR 129; R v Surrey Justices; R v Paddington Valuation Officer; Ex parte Peachey Property Corporation Ltd [1966] 1 QB 380 at 400, per Lord Denning MR; R v Russell; Ex parte Beaverbrook Newspapers Ltd [1969] 1 QB 342. When it is said that the remedy lies ex debito juistitiae, this means that the court will normally exercise its discretion in the applicant's favour. It does not mean that the court has no discretion to withhold the remedy. Clearly, the court has such a discretion if there has been undue delay: see, eg, R v Stafford Justices; Ex parte Stafford Corporation [1940] 1 KB 33."

115 Counsel for the Board also relied upon Macksville and District Hospital v Mayze (1987) 10 NSWLR 708 at 721-722 per Kirby P. That case was primarily concerned with the question whether certiorari should be refused in the execise of discretion because the relevant statute provided a statutory right of appeal both upon fact and law: Gudgeon v Black (supra) per Malcolm CJ at 183-184. Reference was also made in that case at 186-188 to Bingham, Should Public Law Remedies be Discretionary? (1991) Pub LJ at 71-73 where the then Master of the Rolls, now Lord Chief Justice, supported the principle that an applicant for judicial review should be denied relief, if he has not exhausted other available and equally efficacious remedies, including a full right of appeal. In Gudgeon v Black an appeal had been instituted, but adjourned pending the outcome of the application for certiorari. The appeal was calculated to give the appellant substantial relief on the merits. Certiorari merely quashes the decision for error of jurisdiction or error of the law on the face of the record. In Gudgeon v Black certiorari was refused. Although it was established that there had been an error of law on the face of the record by way of a mistaken interpretation of a statutory provision, there was no want of good faith. While grounds had been made out, certiorari was refused in the exercise of discretion. It was not a case of abuse of power or unlawful conduct in the relevant sense. The applicant in that case was simply the victim of a mistaken interpretation of a statutory provision, in respect of which an adequate remedy was available by way of appeal, which he had chosen to exercise. Certiorari was refused in the exercise of discretion.

116 In the present case the position taken by the Board was that there was no right of appeal from its decision to disallow the claims. Somewhat ironically, counsel for the applicants contended that there was a right of appeal under s 23 of the Act against the refusal by the Board to admit the claims. Section 23 provides that:

"(1) Any person aggrieved by a decision or order of the Board in proceedings to which the person was a party shall, subject to this section, be entitled to appeal to the District Court against the decision or order of the Board.

(2) The appeal shall be instituted within one month of the making of the decision or order appealed against, but the District Court may, if it is satisfied that it is just and reasonable in the circumstances to do so, dispense with the requirement that the appeal shall be so instituted.

(3) The District Court may, on the hearing of the appeal, do one or more of the following, according to the nature of the case -

(a) affirm, vary, or quash the decision or order appealed against, or substitute, and make in addition, any decision or order that should have been made in the first instance;

(b) remit the subject matter of the appeal to the Board for further hearing or consideration or for re-hearing;

(c) make any further or other order as to costs or any other matter that the case requires."

117 Section 23 is contained in Pt II of the Act which is concerned with the constitution of the Board, its functions, including its powers of investigation and inquiry, proceedings before the Board, the provision of reasons for its decisions and other matters. Under s 13 of the Act the Registrar on the Board has the power to make an investigation or inquiry that the Registrar on the Board considers necessary or expedient for the purpose of "(a) determining any application or other matter before the Board,". As has already been seen the Registrar or an inspector are given wide powers to obtain information and documents.

118 In Cocks v The Real Estate Agents Supervisory Board (1988) 5 SR (WA) 154 at 156 Barlow DCJ held that there was no appeal to the District Court under s 23 from a decision of the Board under s 117(1). This decision was based on two reasons. First, it was held that a claim against the Fidelity Fund was not a proceeding before the Board to which the claimant was a party. Secondly, it was held that because there was a right to bring an action against the Board, no appeal lay from a decision of the Board under s 117.

119 As to the first of these reasons, given the role of the Board under s 107, s 111, s 116(2) and s 117 of the Act, I am compelled to the conclusion that a claim against the Fidelity Fund is a proceeding before the Board to which the claimant is a party for the purposes of s 23(1) of the Act. As to the second reason, it does not follow from the existence of a right to bring an action against the Board that no appeal lies to the Board from the disallowance of a claim under s 117 of the Act. Section 21 of the Act is concerned with the costs of proceedings before the Board and the enforcement of orders for the payment of a fine or costs. Section 21(2) provides that if a fine or costs are not paid within the time fixed by the Board, the Board may suspend the licence of the licensee or sales representative concerned until payment. Section 21(3) provides that:

"The power conferred on the Board by subsection (2) is in addition to and not in derogation of the powers conferred on the Board by Part VII."

120 This clearly envisages that where the Board has made an order against a licensee under Pt VII it may, in addition, exercise its powers under s 21(2). Such an interpretation is consistent with the language and purpose of the Act: Commissioner for Railways (NSW) v Agalianos [1955] HCA 27; (1955) 92 CLR 390 at 397 per Dixon J. It follows from this that an appeal would lie to the District Court from a decision of the Board to refuse a claim made under s 117 of the Act.

121 In my opinion, however, Gudgeon v Black is distinguishable from the present case for three reasons. First, the Board itself had successfully contended in Cocks (supra) that there was no appeal to the District Court from a decision of the Board under s 117(1). The Board did not resile from that position in the present case. Secondly, counsel for the Board contended that the provisions of Pt II Div 3 of the Act had no application to proceedings under Pt VIII including the rejection of a claim under s 117. Thirdly and, on the contrary, it was contended that the appropriate remedy for a party whose claim had been refused by the Board was to commence an action against the Board and the Board had given leave for this purpose. In these circumstances and given the nature of the jurisdictional error which has been established in relation to the decision of the Board, I consider that it would be appropriate to grant the applicants the relief by way of certiorari which they claim.

122 It was submitted by counsel for the Board, however, that s 116 to s 120 of the Act compel the inference that the Fidelity Fund provides redress of last resort to persons who suffer loss of the kind defined by s 116(1). Because the Fund provides indemnity for such loss, the position of the Board is analogous to that of an insurer. Section 119 subrogates the Board to the extent of any payment of a claim to all rights and remedies of the claimant against the licensee in relation to whom the claim arose. In my view, this does not detract from the duty of the Board to determine claims made against it according to law.

123 It was further submitted by counsel for the Board that in the sense that the Board administers and is responsible for the Fidelity Fund, its position is analogous to that of a trustee. So much may be accepted for the purposes of considering the submission. However, it was also submitted that neither insurers nor trustees are appropriately the subject of prerogative proceedings in respect of the discharge of their functions. The answer to this submission is that the Board is a statutory body set up as an admininstrative tribunal. The jurisdiction of the Board extends to the consideration, admission or rejection of claims against the Fund. That is a jurisdiction which it is bound to exercise in accordance with law.

124 It is true that the procedure envisaged is that a claim is made against the Fidelity Fund and that the Board is empowered to receive and settle any claim against the Fund. For the reasons already expressed, however, I am unable to accept that the making, receipt and settlement or rejection of a claim do not constitute "proceedings" before the Board, the subject of Pt II Div 3 of the Act. I am likewise unable to accept that it follows from the nature of the Board's role as administrator of the Fund, that decisions with respect to the admission or refusal or claims do not involve "proceedings" within the meaning of the Act. In my opinion this conclusion is not inconsistent with the exercise of the two distinct heads of regulation making power under s 145(2)(a), s 145(2)(i) and s 145(2)(j) of the Act. Section 145(2)(a) provides that the Governor may make regulations to "prescribe the procedure of the Board". Section 145(2)(i) provides that the Governor may make regulations that:

"prescribe the manner of making claims against the Fidelity Fund and the manner of verifying any claim ...".

125 Section 145(2)(j) provides for the making of regulations that:

"prescribe generally for other such matters as may be considered necessary for the purposes of protecting the Fidelity Fund or giving full effect to the intent of the provisions of this Act relating to the Fidelity Fund."

126 It was contended on behalf of the Board that s 110, s 117 and s 118 of the Act indicate that Parliament intended that disputes regarding the entitlement to indemnity of the Fund would be resolved by:

"... proceedings asserting that entitlement, rather than by way of collateral proceedings challenging the procedures followed by the Board in refusing the claim."

127 This contention does not go so far as to suggest that the Board does not have a duty to determine whether or not to admit or refuse a claim in accordance with law. Unless the remedy is effectively excluded by statute, any statutory authority on which Parliament has conferred statutory powers and duties, which when exercised may lead to the detriment of a person who may have to submit to its jurisdiction, is subject to supervision by the courts by way of the prerogative writs and certiorari, in particular: R v National Joint Council for Dental Technicians; Ex parte Nate [1953] 1 QB 704 at 707 per Lord Goddard CJ.

128 It was also submitted on behalf of the Board that the decision of the Board that the claims of the applicants to indemnity from the Fund had either not been made out, were outside the scope of the Act or had been made out of time, did not relevantly affect any right, interest or legitimate expectation of the applicants. It was acknowledged, however, that the applicants either had an enforceable claim or they do not; but it was contended that the Board does not in any sense "determine" or affect rights in this context. I am unable to accept this last contention. The admission of a claim against the Fidelity Fund clearly affects rights. It confers a right of indemnity against the Fund. The rejection of a claim denies a right of indemnity, unless and until it has been established by action commenced with the leave of the Board. The rejection of a valid claim on the basis of an error of law constituting a jurisdictional error of the kind referred to in Craig v South Australia likewise affects rights.

129 It follows from the above that the claims made in respect of the "fictitious mortgages" were wrongly dismissed for the reasons already stated. I note that the claims made in respect of the "fraudulent mortgages" were not dismissed. Consideration of them was deferred. In a letter to the applicants' solicitors dated 7 September 1998 the Board indicated that there was "insufficient substantiation" and that it was "expected that the Fraud Squad will ultimately provide advice in this regard".

130 In the result, for the reasons I have expressed I consider that the applicants are entitled to have the order nisi for a writ of certiorari made absolute to the following extent:

(1) ground 2 has been made out in respect of the claims regarding the fictitious mortgages; and

(2) grounds 1 and 3 have been made out in respect of the Guildford Road property.

(1) grounds 1 and 6 have not been made out with respect to the fraudulent mortgages;

(2) ground 4 has not been made out in respect of the claim for interest as damages;

(3) ground 5 has not been made out in respect of costs as damages, but the Board has failed to make a decision and the applicants are entitled to have the order nisi for a writ of mandamus made absolute.

131 PIDGEON J: I agree with the reasons of the Chief Justice and with the orders proposed.

132 WALLWORK J: I agree with the reasons for judgment of Malcolm CJ and to the orders proposed by his Honour.