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[2008] WASAT 114
State Administrative Tribunal (WA)
2008-05-21
Mr CJ
Original judgment source is linked above.
ACT : REAL ESTATE AND BUSINESS AGENTS ACT 1978 (WA)
CITATION : REAL ESTATE AND BUSINESS AGENTS SUPERVISORY BOARD and LANDA
BETWEEN : REAL ESTATE AND BUSINESS AGENTS SUPERVISORY BOARD
Vocational Regulation - Real estate agent - Interest other than in capacity as agent - "Prior written consent" - Consent contained in offer and acceptance - Failure to act in best interest of principal - Reward in relation to transaction in which agent has interest other than as agent - Knowingly misled or deceived principal - Failed to exercise skill, care and diligence - Penalty - Separate and discrete penalties for each offence - Offences relating to same dealing - Regard to effect of penalties in aggregate
The Tribunal found two breaches of s 64(1) and s 64(4) of the Real Estate and Business Agents Act 1978 (WA) and a breach of articles 2, 5(2) and 7 of the Code of Conduct for Agents and Sales Representatives
The Tribunal reprimanded the agent for each breach and imposed six fines totalling $23,000
Applicant : Real Estate and Business Agent's Supervisory Board
1 The Real Estate and Business Agents Supervisory Board made 10 allegations against the agent in relation to two transactions, the Devine transaction and the Flynn transaction. In relation to the Devine transaction, the Tribunal found all six allegations to be made out.
2 In relation to the Flynn transaction, the Tribunal held two allegations to be made out.
3 In considering whether there had been a breach of s 64(1) of the Real Estate and Business Agents Act 1978 (WA), the Tribunal held that the insertion of a consent clause into the offer and acceptance itself was insufficient to constitute prior written consent for the purposes of s 64(1).
4 In relation to penalty, the Tribunal found the correct approach to be the imposition of separate and discrete penalties for each offence, having regard to the degree to which the offences relate to the same dealing, and then consideration of whether the effect of the penalties in aggregate is appropriate to the extent of the misconduct. The Tribunal reprimanded the agent for each offence, and imposed fines for six of the offences, totalling $23,000.
5 The first set of issues relate to what the Tribunal will call the "Devine transaction"'. The particular issues arising are whether Alexander Landa (the agent):
6 The second set of issues relate to what the Tribunal will call the "Flynn transaction", in particular whether the agent:
7 The agent admits the primary facts in relation to the Devine transaction alleged against him, although he denies allegations 5 and 6 concerning his conduct in relation to the rental of the subject property.
8 At all material times, the agent was the holder of a real estate and business agents licence and triennial certificate granted pursuant to the REBA Act and operated a real estate agency business under the name Alexander Landa and Associates Real Estate from 3 Fairview Place, Dianella.
9 From May 2000 until 4 November 2005, Mr and Mrs Devine were the registered proprietors of a property in Japonica Heights, Mirrabooka.
10 In April 2005, Mr and Mrs Devine entered into a selling agency agreement with the agent to sell their property for a listing price of $240,000. The agreement made provision for the payment of commission of $8,300.
11 On 23 April 2005, the agent negotiated an offer from a Mr and Mrs S to purchase the property for $240,000. Mr and Mrs Devine accepted this offer.
12 The agent told Mr and Mrs Devine that Mr and Mrs S were investors who intended to rent out the property. The agent then suggested to the parties to the transaction that his parents and grandmother (relatives) would be suitable tenants to occupy the property prior to settlement and thereafter.
13 On 4 May 2005, the agent wrote out a lease agreement for a periodic lease of the property to his relatives commencing 21 May 2005 at a rental of $170 per week.
14 The lease agreement further provided that the tenants would pay a bond of $680 and two week's rent in advance.
15 Mr and Mrs Devine signed the lease on 4 May 2005.
16 Not long afterwards, the contract of sale to Mr and Mrs S foundered as the purchaser's application for financing, approval of which the contract was subject, was rejected. The agent advised the Devines of this event.
17 In the meantime, at no time prior to 21 May 2005 did the agent's relatives as tenants of the property pay the bond of $680 as required by the lease agreement.
18 In June 2005, the agent negotiated a second conditional offer which was accepted by the Devines from a Mrs C to purchase the property for $238,000.
19 Ultimately, the Devines instructed Mr Landa to issue a 48 hour notice ending the contract. The Devines then accepted an offer from Mr MA and Mrs S to purchase the property for $236,000. This contract came to an end upon non-satisfaction of a finance condition.
20 In early August 2005, Mr and Mrs Devine wrote to the agent instructing him to issue a 60 day notice to have the tenants of their property, the agent's relatives, vacate the property.
21 On 12 August 2005, within a few days of the agent receiving these instructions, the agent negotiated a cash offer from a person described as "Irina Vladimirovna Kovaliova of 7 Woodbine Terrace, Mirrabooka" to purchase the property for $225,000.
22 On 13 August 2005, Mr and Mrs Devine accepted this offer.
23 At no time prior to Mr and Mrs Devine accepting this offer did the agent:
24 Indeed, on 12 August 2006 the agent knew that the buyer's address was not correct and that she resided with him at Fairview Place, from which address he conducted his business, and withheld that information from Mr and Mrs Devine to hide the true relationship he had with the buyer.
25 In September 2006, the agent witnessed his wife's signature on a transfer of land document.
26 On 10 October 2005, the transaction settled and Mr and Mrs Devine instructed their settlement agent to pay a commission of $7,300 from the proceeds of sale to the agent.
27 The funds used to settle the purchase of that transaction came from a joint mortgage facility in the names of the agent and his wife.
28 At no time prior to 10 October 2005 did Mr and Mrs Devine separately consent to pay the respondent agent a commission of $7,300 given his adverse interest in the transaction.
29 Subsequently on 12 April 2007, the agent refunded to Mr and Mrs Devine the commission paid of $7,300.
Tribunal's findings in relation to the Devine transaction
30 The agent, by his response to the Board's statement of issues, facts and contentions and through his counsel at the hearing, admits the first four allegations made against him. The evidence adduced in the proceedings amply supports the admissions made. Accordingly, the Tribunal finds that:
31 As to allegations 5 and 6 concerning the rental of the Mirrabooka property, the Tribunal also finds that the allegations made by the Board against the agent are made out.
32 The agent's position in relation to those allegations is that while he was at all material times the agent authorised to sell the property on behalf of the Devines, when it came to the rental of the property pending settlement to Mr and Mrs S, he merely acted as a go-between. In that capacity, he says, all he did was produce a standard form of lease and fill it out for the landlord and the tenant. Even though that standard form of lease required the "agent" to do a number of things, including receive the specified bond money of $680, and perform other duties on behalf of the landlord as specified in the lease agreement, it was not intended by the parties that he should in fact have any role in relation to the matter. Accordingly, he contended the payment of rent from time to time was a private matter between the landlord and the tenant and had nothing to do with him. He did not draw any management fee in relation to that rental transaction.
33 In the Tribunal's view, the agent's contentions in that regard lack substance. At all material times, he put the rental proposition on behalf of his relatives to his existing principal, the vendor and purchaser in relation to the transaction. There is no doubt on the material before the Tribunal that the Devines, who had instructed the agent to act on their behalf, saw the agent as their agent in relation to both the sale and the rental. The fact that the agent produced a standard form of contract which relied on the agent to undertake certain activities on behalf of the landlord only emphasises the nature of this relationship.
34 Furthermore, when the conditional sale from the Devines to Mr and Mrs S foundered over due to non-satisfaction of the finance clause, the Devines immediately wrote to the agent instructing him to cause a 60 day termination notice to be given to his relatives. Plainly, they believed and understood that the agent was their agent for the purposes of that leasing agreement, as well as for the sale.
35 The fact that the agent, by reason of his personal relationship with the tenants, chose not to take an active part in the management of the lease agreement is neither here nor there. He was at all material times the agent, had responsibilities in relation to the lease agreement, and failed to exercise them. He did not cause the collection of the bond money and did not otherwise take appropriate steps in relation to the lease.
37 Unlike the position in relation to the Devine transaction, the parties are not fully in agreement in relation to the facts surrounding the Flynn transaction and the proper characterisation of the respondent agent's conduct in this case.
38 At the hearing, Mr Flynn and Mr Landa gave evidence. Mr Flynn and Mr Landa had previously provided statements to an inspector of the Board when Mr Flynn's earlier complaint was investigated under the REBA Act.
39 At the hearing, Mr Flynn was unsure or confused about aspects of the facts, and some of the details of things that had occurred, although he was emphatic about certain matters.
40 In the circumstances, the Tribunal finds it most helpful to have regard to the earlier statements of the witnesses made for the purposes of the Board's investigation, as well as documentary material created on behalf of the parties either contemporaneously or much closer to the time of the material events.
41 At material times Mr Flynn was a semi-retired registered painter who lived in Morley and owned a property in Lark Mews, Ballajura. It is generally agreed that the Ballajura property was an underdeveloped vacant block that had subdivision potential because of its area of 1,142 square metres.
42 Mr Flynn over a number of years had been approached by several real estate agents about selling the land but had resisted those approaches because he planned to hold the land as an investment for the future for his son and daughter. One of those agents was Mr Landa.
43 The particular event that gives rise to allegations 7 - 10 set out earlier occurred on 5 January 2006 when Mr Flynn signed a contract for the sale of land, by offer and acceptance prepared by the agent, by which Mr Flynn agreed to sell the land to the agent's wife. The purchaser was described in that contract as follows:
"Irina Vladimirovna Landa
Of 15 Japonica Heights Mirrabooka
and/or nominee"
44 Three special clauses or conditions were added in handwriting by the agent and initialled by Mr Flynn, as follows (the wording is as appears in the original):
"4 The owner agree to sign all necessaraly documents, which require for subdivision. Any cost associated will be at purchaser expence.
45 The contract for sale specified a purchase price of $250,000, of which a deposit of $1,000 was to be paid within five days of acceptance, and the settlement date was "on or before 15 July 2006". The offer was a cash offer.
46 Both the vendor and the purchaser signed the contract on 5 January 2006.
47 Also, on 5 January 2006, Mr Flynn signed a selling agency agreement (residential) prepared by the agent, by which he gave the agent an exclusive agency period until midnight on 21 July 2006.
48 It is apparent from the terms of the offer made that the purchaser anticipated the subdivisional development of the land.
49 It is apparent that at no time, despite the selling agency agreement, did the agent intend to list the property for sale for the purpose of testing the market.
50 In the selling agency agreement the agent indicated, and Mr Flynn accepted, that there would be no marketing charges or expenses and there would be no selling fee.
51 On 5 January 2006, Mr Flynn also completed an owner's disclosure statement.
52 While, at the hearing, Mr Flynn was unwilling to say whether the various signatures and initials on these three documents dated 5 January 2006 that appeared to be his were in fact his (except to say that he did sign his name once on at least one of the documents), the Tribunal finds, and counsel for the Board did not contend otherwise, that the various signatures and initials that purport to be those of Mr Flynn are in fact those of Mr Flynn and were made on 5 January 2006.
53 In the written statement signed by Mr Flynn and dated 15 April 2007 (approximately a year before the hearing in the Tribunal) and provided to the Board, Mr Flynn said that he had known Mr Landa for about five years and during that time Mr Landa had approached him on a number of occasions about selling the property, always saying "he could get me a good price".
54 Mr Landa in his evidence said that Mr Flynn had been positive and, while putting him off on the occasions he had approached him about selling the land, Mr Flynn had said words to the effect that if Mr Landa were to produce an offer for $250,000 he would or might be interested.
55 The Tribunal finds, having regard to the facts as a whole and on the balance of probabilities, that Mr Flynn at some stage close to the time when he signed the offer in early 2006, did mention the sum of $250,000 as a price he would consider.
56 Mr Flynn in his statement said that in late December 2005 he had a further discussion with Mr Landa about the sale of the Ballajura property. He also added that at that time he also had a discussion about a painting contract in respect of a property that had been just built for Mr Landa's parents in Dianella.
57 Mr Flynn says that Mr Landa said that he had some prospective buyers, although all along Mr Flynn thought Mr Landa wanted to buy the property for himself.
58 Mr Landa denies that there was any mention of a painting contract at this point. Rather, he says that on 5 January 2006, Mr Flynn called at his home/office and signed the offer and other papers. Mr Flynn was dressed in his painting clothes and this was the first time Mr Landa realised Mr Flynn was a painter and they discussed the question of painting Mr Landa's parent's house in Dianella once the contract had been signed.
59 Mr Landa otherwise accepts that following discussions with his motherin-law, who was selling a property in the Ukraine and migrating to Australia, he visited Mr Flynn at his Morley home. He said that he indicated that one of his relatives might be interested in buying the property. He mentioned that there was a prospect that his mother-in-law might be coming to Perth to live. The Tribunal considers that the evidence of Mr Landa is generally consistent with that given by Mr Flynn to this point.
60 Mr Landa then says that Mr Flynn told him that he, Mr Landa, "knew the price and that if [he] had someone who would pay $250,000 then [he] would have a deal".
61 Mr Landa says that later - it is not clear whether it was later that day or relatively soon after - during a telephone conversation with Mr Flynn, he advised Mr Flynn that his relative was interested in buying the property and it was agreed that they would meet after New Years Day to sign the papers.
62 Mr Landa says that he next spoke with Mr Flynn on 4 January 2006 and Mr Flynn then telephoned to ask what was happening. Mr Landa says that he told Mr Flynn that the transaction could be done as a "private dealing". However, Mr Flynn said he would like it to be done through the real estate agency because that would mean the proper documentation would then be in place. Mr Landa says he then agreed to have the selling agency agreement signed.
63 Mr Landa says that he then went to Mr Flynn's house on the morning of 5 January 2006 and Mr Flynn signed a selling agency agreement. He says that it was then agreed that Mr Flynn would come to his house that afternoon so that the offer could then be presented to him.
64 That all seems to make sense in that the agent would, ordinarily, want to have the authority to sell before proceeding to attract an offer.
65 While Mr Flynn does not have any clear recollections about signing the three documents referred to earlier, and appears to deny that Mr Landa attended at his home in the morning of 5 January 2006 for the purpose of signing the selling agency agreement, the Tribunal, on the balance of probabilities, accepts the evidence of Mr Landa. To say the least, Mr Flynn's recollection of the detail of these events is scant. The statement provided by Mr Flynn to the Inspector in April 2007 is no clearer on these points.
66 Mr Landa says that at the meeting at his home in the afternoon of 5 January 2006, he told Mr Flynn that the person actually making the offer was his wife, although he also mentioned that one of his relatives, his mother-in-law, might actually be the person who finished up buying the property. In that regard, special condition 6 of the contract, as noted earlier, identifies the fact that the owner is aware that the real estate agent is related to the purchaser. It is also noted that the purchaser identified is Ms Landa "and/or nominee". The terms of the contract as signed by the vendor and purchaser are, in the view of the Tribunal, consistent with the account of events provided by Mr Landa.
67 The account of Mr Landa indeed provides some explanation for Mr Flynn's conduct in accepting an offer of $250,000, although subsequent to signing the contract, and at the hearing in the Tribunal, Mr Flynn was at pains to say he did not really know why he signed a contract on that day. While it is fair to conclude that he evidenced some confusion about his reasons, the account provided by Mr Landa provides the reasons. It may be that Mr Flynn felt worn down a little by real estate agents, including Mr Landa, pursuing him to sell the property, but in the end the Tribunal accepts that the figure of $250,000 was what was suggested by Mr Flynn, not one plucked entirely out of thin air by the agent or his wife for the purpose of putting the offer forward on 5 January 2006.
68 In his evidence to the Tribunal, Mr Flynn mentioned that he believed that the contract was also subject to what he called a "get out clause". That type of clause was never fully explained by Mr Flynn although it seems to have amounted to this: He would be entitled, should he change his mind, to withdraw from the contract. Mr Flynn says that this was discussed with Mr Landa on the day the contract was signed and Mr Landa agreed to that proposal, but said there was no need to insert it into the contract.
69 The Tribunal is unable to conclude, having regard to all of the evidence, that any such "get out clause" was agreed. It would in effect be tantamount to an agreement that the offer and acceptance was not a binding contract. There is nothing about the particular circumstances which suggests the parties had that arrangement in mind. Indeed, it is instructive to look a little further down the line to July 2006, when solicitors for Mr Flynn wrote to Mrs Landa, the purchaser, by letter dated 12 July 2006 in which they claimed, on the basis of their client's instructions, that as a result of a meeting between Mr Flynn and the agent on 20 April 2006 at 1.30 pm, the parties verbally agreed to cancel the contract.
70 While that particular claim was not accepted at the time by Mrs Landa or Mr Landa, the fact remains that the solicitor was not instructed by Mr Flynn that there was an earlier agreement at the time the contract was signed that Mr Flynn could pull out of it at any time. The Tribunal tends to think, in light of the solicitor's letter dated 12 July 2006, that Mr Flynn has confused his belief that there was a verbal agreement to cancel the contract made on 20 April 2006, with a belief that there was an earlier agreement that he could walk away from the contract any time of his choosing. As we say, the Tribunal is not satisfied that Mr Flynn ever had the benefit of a "get out clause".
71 Rather, what appears to have happened is that during April 2006, Mr Flynn experienced what is generally known in the industry and community as "seller's remorse". The evidence here suggests that around the time of 20 April 2006, Mr Flynn had formed the view that he no longer wished to proceed with the sale. While he denies that his proposed sale of the property came to the attention of his daughter and she encouraged him to cancel the contract, Mr Landa says that the day before 20 April 2006 he received a telephone call from Mr Flynn who asked to see him. They then met on 20 April 2006. Mr Flynn told him that his daughter had seen the contract at his house and was angry with him and told him not to sell.
72 Mr Flynn also agrees there was a meeting on 20 April 2006. Mr Flynn believed that at the meeting Mr Landa agreed that the contract would be cancelled. However, Mr Landa says that he did not so agree. Rather, he indicated, after Mr Flynn explained why he wanted to get out, that he, Mr Landa, had no particular interest in the question of whether the sale went ahead or not but that he would consult with the purchaser.
73 It is unclear exactly what communications, if any, happened after that meeting. It does appear, however, that Mr Flynn was left with the impression that Mr Landa or his client was not going to press the sale. It seems that Mr Landa and the purchaser did not take any active steps at that point to communicate their position to Mr Flynn.
74 The next thing that seems to have happened is that, by letter dated 7 July 2006, Mrs Landa wrote to Mr Flynn and forwarded a stamped transfer of land document for him to sign, confirming that she was ready, willing and able to proceed with the settlement as soon as he returned the document. The letter indicated he should send the document to the Japonica Heights, Mirrabooka address, as disclosed on the transfer - even though Mrs Landa lived with her husband at Fairview Place, Dianella.
75 What is quite clear is that when Mr Flynn received this letter and the transfer document he was stunned and immediately took legal advice. His solicitors then wrote the letter referred to above, dated 12 July 2006, to Mrs Landa. That letter made the following salient points on the instructions of Mr Flynn:
76 The point has already been made that there was no allegation made in this letter about a "get out clause".
77 It is also worth noting that this letter does not claim that the painting work referred to was in any way used to induce Mr Flynn to enter into the contract to sell his Ballajura property. In any event, on any reasoning process, it is hard to see how the offer of some painting work which, in the end, had a value of about $5,000 to Mr Flynn, could have induced him to sell a property thought to be worth $250,000.
78 The substantive complaints made in the letter - apart from the allegation that the contract had been cancelled - was that the contract was induced through undue influence and in circumstances where the agent had a conflict of interest.
79 Following receipt of the solicitor's letter, Mr Flynn made a complaint to the Board which was investigated by an inspector under the REBA Act from about the end of July 2006.
80 By letter dated 1 August 2006, Mr Landa responded to the complaint and:
81 In the event, Mr Landa and his family decided not to press the contract. Settlement did not take place and the Ballajura property is still owned to this day by Mr Flynn.
82 While there are some discrepancies between the account of events provided by Mr Landa in this letter and subsequent accounts given to the inspector in an interview and in his witness statement in the Tribunal - for example, as to whether or not the listing authority was signed at Mr Flynn's house or at Mr Landa's house - the substance of the account given by Mr Landa over the whole period is largely consistent.
83 The Tribunal notes, in particular, the evidence of Mr Landa concerning the meeting on 20 April 2006. It is difficult to imagine why Mr Landa would fabricate the substance of an explanation provided to him by Mr Flynn as to why he wanted to cancel the contract. Mr Flynn agrees that he called and wished to cancel the contract. His reasons for doing so are confused to say the least. He denied in the hearing that it had anything to do with his daughter putting him under pressure. He insisted that his daughter and son knew nothing about the transaction. The Board at no time seems to have enquired of the daughter or son of Mr Flynn as to their knowledge in the matter. In other words, no attempt was made to disprove or corroborate the truth of the assertion made by Mr Landa as to what he was told by Mr Flynn as to his reason for wanting to pull out of the contract. Of course, it is quite possible that Mr Flynn's daughter knew nothing of the sale and Mr Flynn simply used her as an excuse for his decision to pull out of the contract.
84 Indeed, this point was raised by the President of the Tribunal during the hearing with counsel for the Board. Counsel for the Board frankly indicated that the same issue crossed his mind and, in balance, he had decided not to pursue the matter. This was because the complainant, Mr Flynn, was insistent that he did not want his daughter or son contacted in relation to the matter.
85 In all of these circumstances, the Tribunal is inclined, on the balance of probabilities, to accept that what Mr Landa says Mr Flynn told him about the reason for wanting to pull out of the contract is true, whether or not the substance of what Mr Flynn said was true.
86 Other evidence before the Tribunal, accepted on behalf of the Board as well as put forward on behalf of the agent, is that the property market had begun to rise considerably after January 2006 and that by, say, July 2006, the value of the property probably was about $400,000.
87 At the same time, the Board in these proceedings does not assert at all that the $250,000 value put on the property at the time of the contract on 5 January 2006 was an undervalue. The Board obtained and provided to the Tribunal a copy of a Valuer General's estimate of value as of the relevant date which confirmed the value of $250,000. While some might think that the Valuer General's valuation might be conservative, there is no evidence before the Tribunal to suggest that the $250,000 was not more or less around market value at the relevant time.
88 The Tribunal should mention another factual allegation made, to the effect that Mr Landa effectively brokered a painting contract with Mr Flynn for Mr Flynn to supervise the painting of Mr Landa's parents' house in Dianella as an inducement to Mr Flynn to sign the sale agreement. Mr Landa and his father were to help with that painting and Mr Flynn was going to also paint and supervise. In the end, an hourly fee was agreed and an account of $5130 was eventually submitted by Mr Flynn.
89 There is also an allegation that there was an agreement that $1000 of this sum was to be applied or held aside to cover either commission, or marketing fees, or for the settlement and related fees on the sale of the property.
90 In the event, these allegations are not supported by any reliable evidence.
Tribunal's findings in relation to the Flynn transaction
91 The Tribunal now turns to the particular allegations made and its findings in relation to each.
92 Allegation 7: The first main allegation in respect of the Flynn transaction is that the respondent, as an agent under the REBA Act, had an interest otherwise than in his capacity as an agent in a transaction in which he acted as an agent without the prior written consent of his principal, contrary to s 64(1) of the REBA Act.
93 Through counsel, the agent accepts that he had an interest otherwise than in his capacity as an agent in the transaction but says that he had the prior written consent of his principal and therefore acted in conformity with s 64(1) of the REBA Act.
94 In this regard, the agent contends that the prior written consent is constituted by condition 6 of the contract which specified:
"Owner is aware that real estate agent is related to the purchaser."
95 The Tribunal accepts that prior to the contract being signed, the agent, Mr Landa, had made it abundantly clear to Mr Flynn that a relative would be buying the property. On the balance of probabilities, as explained earlier, the Tribunal accepts that Mr Landa explained that a relative in the Ukraine would probably be buying the property, that the offer was being made by his wife "and/or nominee" and that the final identity of the purchaser would be ascertained later. The Tribunal accepts that Mr Flynn perhaps would not have taken in all of this detail. For example, when he gave evidence at the Tribunal, he did not have any idea where the Ukraine was. As the Board's counsel suggested, to Mr Flynn the Ukraine may well have been an outer suburb of Perth.
96 The Tribunal considers, again on the balance of probabilities, that Mr Landa probably did explain something of the convoluted family arrangements and that he did make disclosure of the interest that he had in it. In fact, according to Mr Flynn, both in his April 2007 statement to the inspector of the Board and in his evidence to the Tribunal, he at all times thought that, in substance, Mr Landa was buying the property for himself.
97 Therefore, in a practical sense, there is little doubt in the mind of the Tribunal that the agent, Mr Landa, did disclose his interest otherwise than as an agent in the transaction before the offer was accepted.
98 However, the relevant question for the purposes of s 64(1) is whether the transaction was then concluded without the "prior written consent" of Mr Flynn in light of that knowledge about Mr Landa's interest.
99 In that regard, counsel for the agent says that it is sufficient, for the purposes of complying with s 64(1) of the REBA Act, that the consent appears in the document constituting the transaction which has been signed by the principal. In other words, it is not necessary for there to be a separate document, signed by the principal before the contract was signed, to comply with that requirement, even though such a procedure is desirable, recommended and usual.
100 In support of this submission, counsel for the agent draws attention to two decisions, O'Leary v Bettella [2000] WASCA 378 per Miller J in the Supreme Court of Western Australia, and the earlier decision of O'Kenny v The Real Estate and Business Agents Supervisory Board (1996) 17 SR (WA) 6 by Commissioner Greaves in the District Court. Counsel submits that Miller J in the Supreme Court, in effect, approved the approach to this question suggested by Commissioner Greaves in the earlier District Court action. As I will explain shortly, counsel neglected to mention that the decision of Miller J was reviewed by the Full Court in Betella v O'Leary [2001] WASCA 266 and that the issue has been referred to in a spate of other relevant decisions. Counsel for the Board failed to provide this Tribunal with any authority at all on the proposition of law.
101 In O'Kenny v The Real Estate and Business Agents Supervisory Board, condition 6 of the relevant offer and acceptance provided:
"The vendors hereby acknowledge by accepting this offer, they are aware that the purchaser is a licensed real estate salesperson."
Commissioner Greaves concluded at 14, that the purchaser, being a sales representative in the employ of the vendors' agent, had an interest as the proposed purchaser. The case against him was that the vendor had not given prior written consent to him acting in the transaction. Commissioner Greaves expressed the opinion that the admitted facts established that by accepting the offer to purchase:
"The vendor gave its written consent to the first appellant having an interest as purchaser in the proposed transaction as a sales representative prior to any completion of that transaction."
102 In O'Leary v Bettella, O'Leary was employed as a sales representative of an agency, Realty Executives. For a certain period, while he was so employed, he was also a director and sole shareholder of a company called Sure Sale Systems (Australasia) Pty Ltd (Sure Sale), a company that was not licensed under the REBA Act. Sure Sale carried on a business in the course of which, for a "contribution", it offered a prospective vendor a guarantee that the sale of a house would be achieved at not less than an agreed valuation. Mr and Mrs Smith saw a Sure Sale brochure and spoke with O'Leary. O'Leary and another sales representative of Realty Executives called at their home and handed them an exclusive agency agreement form providing for the appointment of the agent as their agent, together with some documents from Sure Sale, including a form of contract with Sure Sale signed by O'Leary on behalf of Sure Sale. The Smiths signed all these documents.
103 The arguments of the parties centred upon the terms of the Sure Sale agreement involving the Smiths. This was made between them as the principals (described as "Vendor"), Realty Executives (described as "Agent") and Sure Sale (described as "Guarantor"). It recited that "the Vendor has appointed the Agent to sell the Property" and that the Guarantor "warrants that the Vendor shall receive not less than the Market Value for the Property". By cl 2.1 the "Vendor engages the Agent to offer the Property for sale by auction under the Sure Sale system". By cl 3.1 the "contribution" was to be paid by the Vendor to the Guarantor at settlement. Clause 3.1 further provided for the application of the contribution towards the payment or reimbursement of costs of advertising, auctioneers expenses, a selling fee and "guarantee" fees or other expenses incurred by the Guarantor in respect of the Sure Sale system. Clause 4.3 expressly provided:
"The Vendor authorises and consents to the Guarantor and parties associated with the Guarantor bidding at the auction. The Vendor shall not bid at the auction"
104 In O'Leary v Bettella, Justice Miller on appeal against a magistrate's decision convicting O'Leary, considered the requirements of s 64(1)(ii) of the REBA Act. His Honour noted that the definition of the word "transaction" used in s 64(1) is defined in the REBA Act as follows:
"'transaction' means a real estate transaction or a business transaction, or both a real estate transaction and a business transaction."
His Honour further noted that the expression "real estate transaction" is relevantly defined by the REBA Act:
"(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;".
105 As to whether or not an acknowledgement in a schedule to the relevant contract of the relationship between the Vendor and the Agent constituted "prior written consent" for the purposes of s 64(1) and s 64(2), Miller J, at [21], stated:
"The words 'prior written consent' should, in my view, be interpreted as meaning that a vendor must in these circumstances have given written consent prior to the sale or the purchase of real estate and not after that sale or purchase has been effected. Thus, it would be no defence to a salesman or employee of an agent to say that after a sale has been effected, the vendor upon being told of the interest which the salesman or employee had in the transaction, thereupon gave a written consent to the salesman or employee having such interest. Here, the vendors on the day upon which they signed the Sure Sale contract clearly understood whatever interest it was that the appellant had in the transaction. The appellant signed 'on behalf of the guarantor' and clearly represented the guarantor. It is not to the point that the appellant failed to disclose his directorship or shareholding in Sure Sale. What he did disclose was that he was acting on behalf of Sure Sale and in my view the vendors, by their signatures contained within the schedule to the Sure Sale contract, clearly consented prior to any transaction (as that word is defined in the Act) to the appellant acting in the capacity in which he did and holding whatever interest it was that he held."
106 Justice Miller at [22] further noted that there was authority that "prior written consent" for the purposes of the section does not necessitate a separate document setting forth in precise terms the relevant conflicting interest, and referred to Duncan-Cooper Nominees Pty Ltd v Langley Investments Pty Ltd (Unreported, Supreme Court of WA, Library No 950357, 26 July 1995) and O'Kenny v The Real Estate and Business Agents Supervisory Board. His Honour noted that each of these cases was concerned with a different factual scenario, but in the first of them the "prior written consent" was found in the exclusive authority given by an agent and in the latter the "prior written consent" was constituted by acceptance of an offer to purchase.
107 Miller J, at [23], then concluded that it would be unrealistic to expect in relation to the Sure Sale contract under review in that case, that there needed to be a separate and distinct form of consent executed by the vendors and appellant prior to the execution of the contract itself. His Honour expressed the view that:
"The contractual document contained in my view all of the necessary written consents (should they be required) and clearly prior to any real estate transaction as that term is defined in the Act."
108 On further appeal to the Full Court of the Supreme Court of Western Australia in Betella v O'Leary, Burchett AUJ (with whom Wallwork J and Wheeler J agreed) explained the approach of Miller J in these terms, at [10]:
"On the footing that the relevant transaction was thus the 'sale' the agent, Realty Executives, was engaged to effect, the judge held the respondent [O'Leary], through Sure Sale, did not have any interest 'in' it, but in a guarantee of it."
"The Sure Sale agreement and the agency agreement were intertwined. Each affected the operation of the other. They were entered into at the same time and in association with each other. Very importantly, the Sure Sale agreement modified the right to commission under the agency agreement so as to give Sure Sale an interest in the one amount of ... to be paid, and a right to negotiate (pursuant to cl 6.2) with the agent for a share of it."
"In any case, I agree with counsel for the appellant that cl 7 also provides a relevant interest. That clause operates directly upon the sale price (as the commission would normally do, if not affected by the Sure Sale agreement)."
"It was not argued that the definition of 'transaction' was not here applicable because a sale was not actually achieved. That view of the effect of the definition would detract severely from the operation s 64 was obviously intended to have, and would be contrary to the reasoning of the Full Court in Real Estate and Business Agents Supervisory Board v Hajac Nominees Pty Ltd (Murray, Parker and Wheeler JJ, 17 November 2000, Butterworths Unreported Judgments - BC200006980)."
109 Burchett AUJ also endorsed the approach taken in Kehoe v Porter [1957] SR Qd 480, where Stanley J (with whom Townley J agreed), at 485, discussing a Queensland provision forbidding an agent from purchasing a property placed in his hands for sale "without having obtained a consent in writing of the principal to such a purchase", stated that:
"I do not think the Legislature used the word 'purchase' in the sense that there was no purchase until the last legal technicality necessary to complete the transaction was fulfilled. The section is intended to prevent an agent from acquiring by way of sale and purchase an enforceable right to the ownership of - or title to - any property entrusted to him as a commission agent unless the principal has used in writing such words as indicate that he consented to the acquisition of such right to ownership by the agent and has signed such writing before the agent has acquired such right."
"In my opinion, consistently with the view taken in Real Estate and Business Agents Supervisory Board v Hajac Nominees Pty Ltd, from the time Realty Executives entered into an agency agreement with Mr and Mrs Smith, the purpose of which was to effect a sale of their property, there was a transaction within s 64 in which Sure Sale had an interest insofar as it stood to gain a reward if the sale was completed, and it stood to suffer a financial disadvantage if the sale was completed on terms unfavourable to it. As a consequence, the respondent, [O'Leary], who was its director and sole shareholder, also had an interest: City of London Electric Lighting Company, Limited v London Corporation [1903] AC 434. Indeed, counsel for the respondent did not mount an argument that, if Sure Sale had a relevant interest, the respondent nevertheless did not."
111 The primary issue then was whether O'Leary was protected by the words "unless the agent's principal has given prior written consent thereto" which appear in s 64(2). In the opinion of Burchett AUJ, the short answer to this was that there was nothing in the Sure Sale agreement in the nature of the relevant consent. He noted that what the respondent had sought to do was construct a written consent out of oral evidence that Mr or Mrs Smith knew of his involvement in Sure Sale, combined with the fact that the signatures of Mr and Mr Smith appeared on the document. Burchett AUJ then observed, at [20]:
"But Mrs Smith (or Mr Smith, for that matter) may have known about the involvement without appreciating either its practical or its legal effect. They might not have known their consent was required, from the respondent's point of view, or could be withheld, from their own. A major objective of the legislation is to ensure openness, and to shine into hidden corners of self-interest of agents the light of an understanding on the part of the principal. It is only a fully informed and actual written consent that will suffice to serve the purposes of the Act."
112 The finding that there was no relevant consent was enough to resolve the appeal. However, Burchett AUJ also raised the question, had there been a consent in the Sure Sale agreement, whether it would have met the requirements of s 64(2). At [22] his Honour observed:
"Since there was no consent in the agreement, it is unnecessary to consider whether the signing of the agreement by Mr and Mrs Smith could have been "prior ... thereto", that is, to the sales representative having an interest in the transaction. See Kehoe v Porter [1957] SR Qd 480."
113 Although the Court did not need to decide whether there was a prior written consent, the special reference made to the decision of the Queensland Supreme Court in Kehoe v Porter is relevant, if not significant. As explained above, in Kehoe v Porter the clear view was expressed that a provision such as s 64(1) or s 64(2) will not be satisfied "unless the principal has used in writing such words as indicate that he consented to the acquisition of such right to ownership by the agent and has signed such writing before the agent has acquired such right." (emphasis supplied).
114 The view that the insertion of a consent to an agent or sale representative having an interest in a transaction in the document that itself constitutes the transaction, can constitute the relevant "prior written consent" for the purposes of s 64(1) or s 64(2), was rejected in Kehoe v Porter and seems, in the context, to have been doubted by the Full Court in Betella v O'Leary. It seems that only the decision of Commissioner Greaves in O'Kenny v The Real Estate and Business Agents Supervisory Board, supported by the obiter dicta of Miller J in O'Leary v Bettella support the proposition.
115 Since the Full Court decision in Betella v O'Leary, a number of decisions have emphasised that a "prior written consent" for the purposes of s 64 must be executed before an offer and acceptance is signed: see for example Wakka and Brewer and Banning [2004] REBASB 17 of 2002; Page and I & D Nominees t/as Roy Western Bassendean and Wellstead [2004] REBASB 21 of 2001.
116 It also appears that Commissioner Greaves did not subsequently necessarily consider the decision in O'Kenny v the Real Estate and Business Agents Supervisory Board to stand for the proposition that counsel for the agent in this case submitted it established. In Gray v Italiano [2004] WADC 50, Commissioner Greaves, at [6], said that, in his opinion, s 64(1) of the REBA Act required the appellant to obtain the written consent of the vendor to the purchase by the appellant of the vendor's property prior to the execution to the offer and acceptance. At [7], Commissioner Greaves stated:
"In my opinion, the Board was wrong to conclude that the decision in O'Kenny precluded the Board in this case from deciding that s 64(1) required the appellant to obtain the written consent of the vendor prior to the offer and acceptance. No such submission was made or considered in O'Kenny."
117 The Tribunal considers that what was said by the Board in Page and I & D Nominees t/as Roy Western Bassendean and Wellstead at [103] is a correct statement of the legal requirements falling upon agents or representatives who have an interest in a transaction for the purposes of s 64(1) or s 64(2):
"we believe that it does violence to the provisions of s 64 of the Act to suggest that the initialling of the special condition ... before the execution of the acceptance ... in any way satisfies the requirements of s 64."
118 The situation in the present case is undoubtedly, as accepted on behalf of the agent, that Mr Landa had a relevant interest in the transaction, being the proposed sale of Mr Flynn's interest to the wife of the agent and/or nominee. At the very least, as the husband of the disclosed purchaser, he had an indirect interest in the transaction. Given the evidence that Mr Landa had said his family, including his mother-in-law, who was soon to arrive in Australia, wished to acquire and develop the land, Mr Landa's interest may be said to be quite direct. Either way, he was required by s 64(1) to have the "prior written consent" of his principal, Mr Flynn, to the maintenance of that interest. In no way can it be said that the insertion of a clause in the transaction document itself can constitute the principal's prior written consent to the holding of that interest for the purpose of s 64.
119 As the authorities recited above explain, the whole point of s 64(1) and s 64(2) is that, before a principal signs up to a transaction negotiated by an agent or sales representative, the principal must have provided their "prior written consent" to the agent or sales representative maintaining a disclosed interest in the transaction. The decision in Betella v O'Leary makes it clear that there cannot be a relevant consent unless it is a fully informed consent. A principal must know exactly what it is he, she or it is consenting to when they give their consent.
120 The point of s 64(1) and s 64(2) is that, even if the prior written consent is only provided a very short time before a transaction document is signed, the principal has their attention drawn quite expressly to the fact that the agent or representative has a relevant interest and thereby has the opportunity separately to consider and consent to the maintenance of that interest before they proceed to sign the transaction document.
121 It really goes without saying that if the purported "consent" is in the transaction document itself, mixed up with the substance of the transaction and other special conditions and the like, the whole point of the principal having the opportunity discretely to decide whether or not to grant the prior consent to the agent or representative maintaining their interest would be lost.
122 Section 64, therefore, is a fundamental provision which requires careful attention by an agent or representative in every case in which there is a relevant interest. It is not a mere technicality for agents and representatives to honour in the breach, but is a bedrock consumer protection provision of the REBA Act.
123 It follows that in the circumstances of this case, the agent Mr Landa did not have the "prior written consent" of his principal to his having an interest in the transaction in question, namely, the offer and acceptance.
124 In these circumstances, allegation 7 is made out.
125 Allegation 8: The allegation is that the agent demanded valuable consideration in relation to a transaction in respect of which he had an interest in contravention of s 64(4) of the REBA Act, namely, negotiation of the sale of the Ballajura property.
126 As noted earlier, the Tribunal was unable to identify any relevant evidence that Mr Landa demanded any valuable consideration in relation to the transaction as alleged.
127 The substance of this allegation seems to be that Mr Landa agreed with Mr Flynn that a sum of $1,000 would be hived off from the painting fee to be paid in respect of the Dianella property of his parents, and applied to a commission, or marketing fees, or other expenses, or entitlements to which Mr Landa was not otherwise entitled.
128 The evidence simply does not support this allegation.
130 Allegation 9: This allegation is that the agent failed to act in the best interests of Mr Flynn in his negotiation of the sale of the Ballajura property contrary to article 2 of the Code.
131 The Tribunal considers this allegation made out.
132 The simple facts, essentially those admitted by the agent on his own account, are that he had an interest in promoting his or his family's interest in acquiring the Ballajura property and in developing it. He says, on his own account, that he told the vendor that his mother-in-law would probably finish up being the registered proprietor of the land but in the meantime his wife would be the purchaser.
133 As noted earlier, a condition of the contract was that the vendor would do what was necessary to assist in obtaining any subdivisional development approvals. This particular condition confirms that the agent or his family were always intent on acquiring the land.
134 This, in turn, reflects the fact that, having pressed over some time to obtain the listing of the property and then having taken an authority to sell the property, the agent took no steps to test the market as to what the proper selling price should be. His self-interests prevailed over his duty to his principal.
135 In circumstances such as these, it is no excuse for the agent to say that the vendor said that $250,000 was the price he was looking for. The whole point of a vendor consulting a real estate agent is so that, amongst other things, the client can obtain considered advice from the agent as to value and the state of the market.
136 While the agent says that he orally provided some sales information to Mr Flynn, the fact is that he provided no documentation at all, not one skerrick, to Mr Flynn to confirm the sale price.
137 The simple fact of the matter is that the agent, for himself or his family, was keen to acquire the property. When Mr Flynn indicated he was ready to move on a sale, then the agent's family quickly accepted the offer made. There was no attempt made by Mr Landa other than to prefer the interest of his family in obtaining a quick purchase.
138 Not only that, but the terms of the sale were highly advantageous to the purchaser. It was a cash sale, but the settlement date was more than six months after the date of the contract, namely, 15 July 2006. This effectively provided a finance period. In ordinary circumstances, one would expect an agent in relation to a proposed sale on such terms to advise the vendor that such terms were extremely generous. Nothing was built into the agreement in the event of any movement in the market or the like. Nothing was put into the contract by way of a clause requiring the purchaser to match a better cash offer should one be received during the exclusive selling period, or to such effect.
139 The Tribunal finds that the allegation that the agent failed to act in the best interests of Mr Flynn in his negotiation of the sale of the Ballajura property contrary to article 2 of the Code is made out.
140 Allegation 10: This allegation is that the agent knowingly misled or deceived Mr Flynn as a party to the transaction contrary to article 5(2) of the Code.
141 The essence of the allegation of the Board in this regard is that by using the Japonica Heights, Mirrabooka address for the purchaser, the agent thereby misled and intended to mislead Mr Flynn into thinking that the relationship between the purchaser and himself was more remote than it actually was.
142 In light of the Tribunal's findings, the balance of probability is that Mr Landa indeed, one way or another, disclosed to Mr Flynn that the purchaser was his wife. This finding gives the allegation little substance. The fact that Mrs Landa's address was noted as in Mirrabooka seems to the Tribunal, in the circumstances of this case, neither to be here nor there. The substance of the information conveyed by Mr Landa to Mr Flynn was that his relatives were interested, and that the transaction was being concluded in the name of his wife, "and/or nominee". We do not think that, in these circumstances, it can be said the agent knowingly misled or deceived Mr Flynn in any material respect.
144 In summary, the Tribunal makes the following findings:
145 In relation to the Devine transaction the Tribunal finds that the agent, Alexander Landa:
146 In relation to the Flynn transaction, the Tribunal finds the agent, Alexander Landa:
147 The Board submits that in circumstances such as these, where the agent has twice preferred his own interests (indirect or direct) to those of his principal, and in the first case of the Devine transaction, knowingly deceived his principal into believing the transaction was an arms length transaction and claimed and received his commission for the transaction, that the agent should at the very least suffer a period of suspension of his licence to practise as a real estate agent.
148 Counsel for the agent, on the other hand, whilst acknowledging that in many circumstances a finding or findings of the type now made against an agent, whereby he has preferred his or her interests to those of his or her principal, will result in a penalty such as suspension of the right to practise as a real estate agent for a period or even, in some cases, permanent disqualification, the particular circumstances of this case are such that a reprimand and the imposition of a fine would be appropriate to maintain industry standards and protect the community.
149 It is accepted by both counsel for the Board and the agent that the Tribunal has the power under the REBA Act to impose a fine in respect of each of the separate allegations or findings of misconduct (disciplinary offences) made against the agent, and that the Tribunal is not limited to imposing a single "global" fine in respect of the first set of allegations in respect of the Devine transaction and a single or "global" fine in respect of the second set of disciplinary offence allegations in respect of the Flynn transaction. The Tribunal considers this to be correct.
150 The issue as to whether or not the Tribunal would commit an error in imposing a single penalty for a number of offences, rather than separate and discrete penalties for each offence, was mentioned in Paridis v Settlement Agents Supervisory Board [2007] WASCA 97 (Paridis). Buss JA (with whom Wheeler JA and Pullin JA agreed) questioned whether it would be an error for the Tribunal to impose a "global order" instead of separate and discrete penalties for each offence, in exercising its disciplinary powers under s 84(1) of the Settlement Agent's Act 1981 (WA). That provision is in identical or quite similar terms to s 103 of the REBA Act.
151 While not finding it necessary to resolve the issue in that case, Buss JA, at [22], noted the observations of Owen J in Jemielita v the Medical Board of Western Australia (unreported, WASC, Library No 920584, 13 November 1992) (Jemielita) at 137 140, in the context of s 13 of the Medical Act 1984 (WA), and the approach of the Tribunal in Settlement Agents Supervisory Board and Strand Settlements Pty Ltd [2005] WASAT 350.
152 In the view of this Tribunal, the question in each case where a disciplinary offence is found against an affected person, is what disciplinary outcome is appropriate in respect of that finding. Thus, on the face of it, separate and distinct penalties in respect of each offence would ordinarily, logically, be expected. However, in some cases, because a number of offences might relate to the same dealing or transaction, or otherwise overlap, the appropriate penalty in respect of some offences might be imposed having regard to the penalty imposed in respect of what might be considered in the circumstances of the case, the lead or primary offence. The Tribunal is entitled, in an appropriate case, to have regard to the extent to which particular findings relate to a common transaction. The Tribunal is also entitled, in its discretion, to regard whether the effect of the penalties, in aggregate, is proportionate to the extent of wrongdoing or misconduct identified by the offences. In these senses, a "global" penalty may be seen as relevant, but only at the end of the penalty assessment process. In the Tribunal's view, to approach the question of penalty where there are a number of findings on the basis of what seems to be the appropriate "global" order without first considering the discrete possible penalties, would constitute a failure to exercise the power to impose a penalty in the correct manner.
153 That this is the right approach is also suggested by the observations made by Owen J in Jemielita. In Jemielita the Medical Board had imposed a variety of penalties, including removal of the practitioner's name from the register. Owen J, at 142, noted that the most severe penalty of removal of name from the register had been imposed by the Board without differentiating between the six charges it had found were made out. His Honour said that the Board gave no indication, by imposing this single penalty, as to the reasoning process which drove it to the conclusion that striking off was the appropriate disposition. This had left the court in a position, on appeal, where it was necessary to engage in a process of speculation to ascertain what motivated the Board to do so and whether there had been an error in the process. His Honour further pointed out that given the Board retained the power, subsequently, to restore the practitioner's name to the register in appropriate circumstances after striking him off, it would always remain useful for a later Board to understand what the process of reasoning had earlier been if a restoration application were later to be considered.
154 As indicated, the Tribunal does not doubt that the proper approach is to consider what penalties are appropriate in respect of each disciplinary offence, but bearing in mind the extent to which the offences relate to one dealing or transaction and reveal, as it were, distinct acts of wrongdoing or misconduct; as well as taking into account the overall appropriateness of the penalty outcome in respect of the various findings made.
155 The Tribunal notes, however, that the position in some proceedings may require a different approach where there is but a single allegation which is supported by particulars of numerous cases of misconduct, incompetence or whatever. In such a case, if the allegation is made out, it would not be open to impose separate penalties to each particular wrongful act, but rather appropriate to impose a single penalty for the offence found.
156 In relation to the question of penalty, it is well established that the purpose of a vocational disciplinary penalty provision is to ensure that the public is appropriately protected and proper professional standards are maintained. The maintenance of proper professional standards is conducive to the protection of the public. Disciplinary proceedings are not designed to punish the person affected. See generally Paridis at [25] and the authorities there cited.
157 In this case the most serious findings made against the agent in relation to the Devine transaction related to the first four allegations. The agent consciously went out of his way to prefer his own interests to those of his principal. He took advantage of the inability of the principal to obtain an enforceable sale of the property by making a cash offer pitched at a price that he believed the principal would be very likely to accept, and which the principal did accept. Not only did he do all of that, but he concealed the relationship between himself and the purchaser, who in fact was his wife. To this end, he used his wife's maiden surname, different from his; and he used an address for her different from his. He claimed and received a commission following the settlement of the sale.
158 It is said on behalf of the agent that the purchase price paid of $225,000 was market price. The reality is that it was about $11,000 or $12,000 less than the best conditional sale previously concluded. The agent's conduct, in failing to obtain the prior written consent of his principal to the maintenance of his interest in the transaction, meant that the principal did not have the opportunity to consider whether the offer of $225,000 was truly a market offer, and whether or not a better offer could be elicited, including from the wife of the agent, if the principal was prepared to proceed with the transaction in light of the agent's disclosed interest.
159 In such cases, the Tribunal would ordinarily ask why a period of suspension or disqualification from practice should not be imposed, and that is the question here. The public is entitled to have confidence that real estate agents they deal with will not have a propensity to prefer their own interests to those of their principal. Maintenance of professional standards in this regard helps to give the public confidence that their agent will act for them, strictly in conformity with the law and the industry code of conduct. Conduct such as that of the agent here only serves to give the real estate industry a bad name and weaken public confidence in it.
160 That said, it is also true, as counsel for the agent submits, that while the agent breached his duties, he did not act in a way, as some have in the past, that involved him mercilessly exploiting a vulnerable person for his own monetary gain. Rather, this was a case when the offer to purchase was made in circumstances where the agent's parents and grandmother, having taken up residence in the principal's home as tenants, were required to move out at a time when the grandmother was not well and needed to resolve their housing needs. Thus, the decision was made to make the offer, albeit an offer at the best possible price for the purchaser.
161 When confronted with his misconduct, the agent accepted he had acted wrongly and refunded the commission he had received, without debate.
162 The events of the Devine transaction were followed reasonably soon after by those of the Flynn transaction - although they were not discovered by the Board until later. Again, while we have dismissed two of the allegations made against the agent, we have found that the agent has again failed to act strictly in conformity with s 64(1) of the REBA Act, and has also failed to act in the best interest of his principal.
163 In this case, as explained in some detail above, the agent was keen, for his own or his family's purposes, to acquire the property of Mr Flynn, which had subdivision potential. On his own account, the agent says that he caused an offer to be made which reflected only the expectations of his principal. At no time did he put the property to market. He was intent on buying the property for his own family.
164 At no stage, even though he accepted the request that he act as Mr Flynn's agent, did he obtain the prior written consent of his client to his having an interest in the transaction.
165 As explained above, while Mr Flynn seems always to have understood that Mr Landa was "buying the property for himself", the giving of the formal prior written consent of the principal to his having an interest in the transaction serves the express purpose of reminding a principal what is at stake and whether or not a principal wishes to proceed with the agent in such circumstances. Even if one doubts whether the obtaining of a formal prior written consent in this case would have made any difference to Mr Flynn's decision to proceed, that is not the point.
166 Moreover, the agent here was so intent on obtaining Mr Flynn's property that no real consideration was given, or intended to be given, to putting the property to market. While the Board does not suggest that the price of $250,000 was not in market range at the relevant time at the beginning of 2006, by not giving proper advice in that respect, and by having the principal sign a contract that was in terms highly advantageous to the purchaser, the agent did nothing by way of considering the best interests of the principal.
167 On the part of the agent, his counsel suggests that once again the transaction does not reveal any particular avaricious nature on the part of the agent. He was seeking to look after the interests of his family. Be that as it may, the fact is that in the Flynn transaction, as in the Devine transaction, the agent was intent entirely on advancing the interests of his family, and not his principal. An agent's responsibility at all times is to advance and protect the interests of his principal, and not to prefer his own interests in any way.
168 The Tribunal is concerned, having regard to these two transactions and the findings made in respect of them, that the agent does not fully appreciate the extent of these duties. He seems to think that so long as he is not acting out of personal greed, deviation from his direct duties can be justified. It cannot be.
169 Nonetheless, the question here is whether, in all of the circumstances of the two cases, and the fact that there have been two important transgressions from duties owed by him as agent to his principals, a period of suspension of the agent from practice as a real estate agent is called for. In the event, while the Tribunal is of the view that the starting assumption is that at least a period of suspension would ordinarily be called for here, having regard to the fact that, in the Devine transaction, the agent readily admitted his guilt and refunded the commission; and in the Flynn transaction the dealing did not proceed to settlement once the complaint concerning his involvement in the transaction was brought to light, the Tribunal considers the interests of the public in being protected against sharp practices by the agent, and in ensuring professional standards are maintained, may be met by the imposition of appropriate reprimands and fines.
170 As noted earlier, it is open as a matter of law for the Tribunal to consider the imposition of penalties in respect of each of the findings made. However, the other tempering considerations discussed earlier also need to be taken into account.
171 In relation to the Devine transaction, the Tribunal would therefore impose the following penalties:
172 As noted above, the Tribunal considers that, in the particular circumstances of this case explained above, a reprimand and a fine is appropriate in respect of each of these four allegations. A fine of $8,000 in respect of allegation 1 marks the seriousness with which the Tribunal views the failure of an agent to obtain the prior written consent when required under s 64 of the REBA Act. The maximum penalty that can be imposed is $10,000. A fine of $8,000 is close to that ceiling.
173 The fine of $5,000 imposed in respect of allegation 2 reflects the fact that this misconduct in taking a commission when not entitled to is also serious misconduct, which happens quite independently, although as part of a broader scheme of conduct, and requires separate censure.
174 The fine of $1,000 imposed in respect of allegation 3 reflects the fact that the finding that the agent failed to act in the best interests of his principal is closely related to, or overlaps to some extent, the conduct of the agent in failing to obtain the prior written consent the subject of allegation 1.
175 The fine of $1,000 imposed in respect of allegation 4 also reflects the fact that the finding that the agent knowingly deceived the vendors also overlaps or is entwined with the findings made in respect of allegations 1, 2 and 3.
176 In relation to allegations 5 and 6 the Tribunal would order as follows:
177 Allegations 5 and 6 are, generally speaking, tied up with the conduct the subject of allegations 1 - 4. An additional fine is not required and a reprimand is sufficient in the circumstances. The conduct of the agent in relation to the rental of the property was subsidiary to his misconduct in relation to the sale of the property.
178 The Tribunal considers the total fines imposed for allegations 1 - 6 of $15,000, to be proportionate to the disciplinary misconduct involved.
179 In relation to the Flynn transaction, the Tribunal would impose the following penalties:
180 The Tribunal considers that a fine of $5,000 in respect of allegation 7 is appropriate, especially when compared with the disciplinary offence the subject of the finding on allegation 1 in the Devine transaction. In this case, while the agent did not have a prior written consent of the principal to act notwithstanding his interests, as a matter of fact the principal was well aware that the agent was wanting to buy the property for his family or himself. In that sense, the breach of duty, whilst real, is less significant than in the Devine transaction.
181 So far as the fine of $3,000 is concerned, for failing to act in the best interests of his principal in relation to allegation 9, the fact is that there is no allegation by the Board that the property was not sold for market value. The facts found by the Tribunal suggest that the agent in fact nominated a figure suggested by the principal. Whilst this does not excuse the agent's behaviour, it shows that it is less culpable than in other cases where an agent has exploited the interests of a vulnerable person.
182 The Tribunal considers that the overall penalty fine in respect of the Flynn transaction of $8,000 is proportionate to the disciplinary misconduct involved, and, in light of the findings and penalties already made in respect of the Devine transaction, to be appropriate.
183 The overall result then is that the agent will be the subject of reprimands for his misconduct and fines totalling some $23,000, as well as an order that he pay the costs of the Board in bringing these proceedings, to be fixed by the President if not otherwise agreed by the parties.
184 The Tribunal therefore finds and orders as follows:
(a) Had an interest, otherwise than in his capacity as an agent, in the Devine transaction without the prior written consent of his principal, contrary to s 64(1) of the Real Estate and Business Agents Act 1978 (WA) (REBA Act) (allegation 1); and reprimands the agent and imposes a fine of $8,000;
(b) Received a reward by way of commission in relation to the transaction, contrary to s 64(4) of the REBA Act (allegation 2); and reprimands the agent and imposes a fine of $5,000;
(c) Failed to act in the best interests of his principal in the Devine transaction, contrary to article 2 of the Code of Conduct for Agents and Sale Representatives (the Code) (allegation 3); and reprimands the agent and imposes a fine of $1,000;
(d) Knowingly misled or deceived the vendors as parties to the Devine transaction, contrary to article 5(2) of the Code (allegation 4); and reprimands the agent and imposes a fine of $1,000;
(e) Failed to act in the best interests of his principal in the rental of the premises the subject of the Devine transaction prior to the sale and settlement of the property, contrary to article 7 of the Code (allegation 5); and reprimands the agent; and
(f) Failed to exercise skill, care and diligence in the rental of those premises, contrary to article 7 of the Code (allegation 6); and reprimands the agent.
(a) Had an interest, otherwise than in his capacity as an agent in the transaction in which he acted as an agent, without the prior written consent of his principal, contrary to s 64(1) of the REBA Act (allegation 7); and reprimands the agent and imposes a fine of $5,000; and
(b) Demanded valuable consideration in relation to a transaction in respect of which he had an interest, namely, the negotiation of the sale of the premises, contrary to s 64(4) of the REBA Act (allegation 9); and reprimands the agent and imposes a fine of $3,000.
I certify that this and the preceding [184] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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