Court of Appeal (WA)|2010-06-10|Before: Owen JA

REAL ESTATE AND BUSINESS AGENTS SUPERVISORY BOARD -v- CAREY [2010] WASCA 109 (10 June 2010)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : REAL ESTATE AND BUSINESS AGENTS SUPERVISORY BOARD -v- CAREY [2010] WASCA 109

BETWEEN : REAL ESTATE AND BUSINESS AGENTS SUPERVISORY BOARD

Jurisdiction : STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA

Citation : CAREY and REAL ESTATE AND BUSINESS AGENTS SUPERVISORY BOARD [2008] WASAT 304

Real estate agents - Renewal of triennial certificate - Board refused renewal - Tribunal overturned Board's decision - Whether Tribunal committed error of law - Whether Tribunal's finding unreasonable in Wednesbury sense - Turns on own facts

Practice and procedure - Time for commencing an appeal from Tribunal - Whether Rules of The Supreme Court 1971 (WA) O 3 r 3 applies to an appeal from the Tribunal

Appellant : Real Estate and Business Agents Supervisory Board

Ann Street Mezzanine Pty Ltd (In Liq) v Beck (No 1) [2008] FCA 1021

Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] EWCA Civ 1; [1948] 1 KB 223

Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321

Australian Securities and Investments Commission v Carey (No 3) [2006] FCA 433; (2006) 232 ALR 577

Australian Securities and Investments Commission; In the Matter of Richstar Enterprises Pty Ltd v Carey (No 20) [2008] FCA 45

Chan v The Nurses Board of Western Australia [2007] WASCA 123

Collins v Minister for Immigration and Ethnic Affairs [1981] FCA 147; (1981) 58 FLR 407

Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196

Federal Commissioner of Taxation v McCabe [1990] FCA 389; (1990) 26 FCR 431

Hughes and Vale Pty Ltd v New South Wales [No 2] [1955] HCA 28; (1955) 93 CLR 127

Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24

Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361

Powerco Ltd v Commerce Commission [2006] NZHC 662

Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165

Simonsen v Rossi, the Registrar, Real Estate and Business Agents Supervisory Board [2005] WADC 76

Tavelli v Johnson (Unreported, WASC, Library No 960693, 25 November 1996)

Waterford v Commonwealth [1987] HCA 25; (1987) 163 CLR 54

Xie Mian Shen v Minister for Immigration and Ethnic Affairs (Unreported, FCA, 9 August 1995)

1 OWEN JA: Norman Carey (Carey) held a licence to act as a real estate agent. In 2006 Carey applied to the Real Estate and Business Agents Supervisory Board (Board) to renew his triennial certificate relating to the licence pursuant to s 31 of the Real Estate and Business Agents Act 1978 (WA) (REBA Act). After a hearing, the Board refused to renew Carey's triennial certificate on the grounds that he was no longer a fit and proper person to hold a licence.

2 Carey applied to the State Administrative Tribunal (Tribunal) for a review of the Board's decision. The Tribunal, after reviewing the evidence, set aside the Board's decision and ordered that Carey be issued with a triennial certificate on certain conditions.

3 The Board, pursuant to s 105 of the State Administrative Tribunal Act 2004 (WA) (SAT Act), now seeks leave to appeal to this Court against the Tribunal's decision on several questions of law. A question also arises as to whether the Board needs an extension of time within which to commence the appeal.

4 Carey has held a real estate agent's licence since 1979. He is the sole director of Westpoint Realty Pty Ltd (Westpoint Realty), which in 1992 was licensed pursuant to s 29 of the REBA Act. Until the appointment of administrators on 16 January 2007, Carey was recorded by the Board as the person in bona fide control of Westpoint Realty.

5 Westpoint Realty was part of a group of 157 or so related companies and trusts (which I will call the Westpoint Group) which were connected with Westpoint Corporation Pty Ltd (Westpoint Corporation). The Westpoint Group was involved in a number of property developments in Western Australia, Queensland, Victoria and New South Wales. Carey was the managing director of Westpoint Corporation and the head of the property group within the Westpoint Group.

6 Throughout 2004 and 2005 the Westpoint Group was the subject of investigations by the Australian Securities and Investments Commission (ASIC). ASIC also investigated certain so-called mezzanine companies, which were said by Carey not to be part of the Westpoint Group but which provided finance to companies within the group. In November 2005 ASIC applied to wind up two of the mezzanine companies. Shortly after those applications, a number of companies in the Westpoint Group became insolvent and receivers were appointed. The collapse of the Westpoint Group led to the likely loss of hundreds of millions of dollars by a large number of investors in the group.

7 In March 2006 ASIC commenced proceedings in the Federal Court in WAD 83 of 2006 pursuant to s 1323 of the Corporations Act 2001 (Cth). ASIC sought, among other things, the appointment of receivers to the property of certain officers and former officers of companies in the Westpoint Group. Carey was named as a defendant.

8 On 20 April 2006, French J dealt with ASIC's application. While no final determinations were made, his Honour found that the evidence tendered by ASIC was indicative of serious misconduct in the affairs of the Westpoint Group companies and the 'very real possibility' that there had been breaches of the Corporations Act and other laws by persons involved in the group: see Australian Securities and Investments Commission v Carey (No 3) [2006] FCA 433; (2006) 232 ALR 577. In his opinion, it was necessary and desirable to make orders to protect potential claimants against the defendants in respect of liabilities which may be imposed upon them for contraventions of the Corporations Act and other statutes and for breaches of common law and fiduciary duties.

9 French J made orders against the defendants, including Carey and Westpoint Realty. The orders included asset preservation orders which appointed receivers and, subject to certain exemptions, effectively froze Carey's assets. Carey, along with others, was ordered to provide detailed affidavits about his assets and liabilities, to surrender his passport and not to leave Australia or come within 100 metres of an Australian point of overseas departure.

10 The asset preservation orders were extended from time to time but were eventually allowed to lapse on 12 March 2007 when they were replaced by voluntary personal undertakings given by Carey not to dissipate assets. Those undertakings expired on 30 June 2008 and ASIC did not seek their renewal.

11 On the same date as the undertakings lapsed, however, French J made asset preservation orders against Carey in separate proceedings brought by ASIC against Carey and others: see Ann Street Mezzanine Pty Ltd (In Liq) v Beck (No 1) [2008] FCA 1021. Those proceedings, VID 485 of 2008, were commenced by ASIC in the name of Ann Street Mezzanine Pty Ltd (in liquidation) pursuant to s 50 of the Australian Securities and Investments Commission Act 2001 (Cth). The practical effect of the preservation orders made by French J in VID 485 of 2008 was to extend the operation of the preservation orders (and subsequent voluntary undertakings) which had existed in relation to WAD 83 of 2006.

12 On 19 December 2006 Carey lodged an application with the Board to have his triennial certificate renewed in accordance with s 31 of the REBA Act. The legislation provides that the Board may refuse to renew a triennial certificate if the applicant does not satisfy the criteria in s 27(1), which requires that the applicant:

(a) be a person of good character and repute and a fit and proper person to hold a licence;

(b) have sufficient material and financial resources available to him to enable him to comply with the requirements of the REBA Act; and

13 The Board referred the matter to a formal hearing, which occurred on 10 and 11 May 2007. On 7 June 2007 the Board handed down its decision, refusing to renew the triennial certificate because it was not satisfied that Carey continued to be a fit and proper person to hold a licence. Nor was it satisfied that Carey fully understood his duties and obligations as a licensed agent. Further, the Board was unable to conclude that Carey had sufficient material and financial resources available to him to enable him to comply with the requirements of the REBA Act.

14 On 5 July 2007 Carey applied to the Tribunal to have the Board's decision reviewed. The Tribunal heard Carey's application for the renewal of his triennial certificate between 20 and 22 May 2008 and on 19 August 2008. On 23 December 2008 the Tribunal handed down its decision, setting aside the Board's decision and ordering the Board to issue Carey with a triennial certificate subject to certain conditions.

Tribunal's findings of fact and conclusions

15 Having recited that the Board had found that Carey was not a fit and proper person to hold a licence, the Tribunal summarised its conclusions this way:

The Tribunal reached a different conclusion. It determined that in view of the fact that Mr Carey had held a licence for 30 years without any disciplinary findings against him, that the extensive investigations into the collapse of Westpoint Group had not resulted in any findings against him by a court or even any charges being laid, and the fact that the basis of the criticisms against him was for the most part, disputed, it could not be said that Mr Carey was no longer fit to hold a licence. The Tribunal reached that view notwithstanding its concern as to the frankness of some of Mr Carey's evidence before the Federal Court and the Tribunal [3].

16 In determining whether Carey was a fit and proper person to hold a licence within the meaning of the REBA Act, the Tribunal had regard to a large number of matters which, according to the Board, established that he lacked the requisite fitness. Those matters included Carey's conduct in relation to the receivership of companies within the Westpoint Group and his alleged evasiveness, if not dishonesty, in relation to evidence given to the Federal Court and before the Tribunal.

17 One of the orders made by French J in WAD 83 of 2006 required Carey to file an affidavit setting out his asset position. Carey did so by affidavit dated 4 May 2006.

18 In his affidavit Carey deposed that he did not have any bank accounts in his name and did not exercise any control over bank accounts of which he was aware. He was examined on that assertion in proceedings before a Deputy Registrar of the Federal Court on 5 July 2006. He was asked about an account maintained in Singapore on behalf of a company called Halter Limited (Halter). He was shown an account opening authority which apparently bore his signature. Carey, however, denied conducting any transactions on behalf of Halter or having any connection with it.

19 Carey was cross-examined about the Halter account before the Tribunal. On this occasion, he admitted that the signature was his and, to that extent, he did have a connection with Halter. He explained his inconsistent answer in the Federal Court examination by saying that he understood that question to be asking whether he had control of Halter, which he said he did not have.

20 Carey also agreed that he had become aware of the fact that Halter was involved in a trust in the Channel Islands known as the Hilton Trust. Although he did not recollect the establishment of the Hilton Trust, it had been set up by an accountant who had previously done work for Carey on his personal affairs. Carey said that neither he nor his family was involved in the Hilton Trust or companies associated with it as beneficiaries, directors or shareholders.

21 Despite Carey's evidence denying involvement with Halter and the Hilton Trust, documents showed that he had had important dealings with them. Carey had received correspondence about the Halter account in 2003 and in 2005 he had authorised the payment of $500,000 from the Halter account to a company that he controlled. He could not explain the reason for the transfer of funds.

22 Further, although Carey was not initially a beneficiary of the Hilton Trust, there was a 'letter of wishes' issued in 1989 to the trustee concerning the use of the trust funds. The letter, signed by Carey, requested that the trustee take into account Carey's wishes when exercising its powers under the trust, notwithstanding the absence of any legal obligation to do so. In 2006 the trustee named Carey a beneficiary of the trust 'out of the blue'. Carey instructed solicitors to wind up the trust and pay the balance of funds (approximately $150,000) to him. Before the Tribunal, Carey acknowledged that the letter of wishes bore his signature but denied any knowledge of signing the letter or any understanding of its consequences. He maintained he had no involvement in any dealings with the Hilton Trust.

23 The Tribunal described Carey's evidence in relation to the Hilton Trust as 'troubling'. Given the correspondence that passed between Carey and the trustee and the moneys that Carey had received from the Halter account and the Hilton Trust, the level of ignorance claimed by Carey was 'very difficult to accept'. The Tribunal continued:

It is not possible in the context of these proceedings to make any findings as to the truthfulness of Mr Carey's evidence. We do consider, however, that it is reasonable to conclude that Mr Carey's evidence to the Deputy Registrar in relation to the [Hilton] [T]rust was somewhat evasive and uncooperative and his evidence to the Tribunal on this point was unreliable [25].

24 In a report to the Federal Court dated 24 November 2006, the receivers of four Westpoint Group companies complained that Carey had not cooperated with them and had often been confrontational. They said that there had been insufficient disclosure of the assets and liabilities of each of the companies the subject of receivership. They alleged that they had been denied access to books and records and that electronic data had been deleted. They said that they had been subjected to defamatory comments, unfounded accusations of wrongdoing and threats of litigation.

25 A further criticism made by the receivers was that there had been a failure to disclose a guarantee made by Westpoint Realty (along with Carey and 18 other guarantors) with respect to a liability of another Westpoint Group company to a financier (QBE) on a facility for $10 million. The receivers only became aware that Westpoint Realty had given the guarantee when QBE made a demand on the guarantee. The receivers said that in failing to declare the guarantee, Carey did not accurately disclose the liabilities of Westpoint Realty.

26 The QBE guarantee was also considered by the Tribunal in a somewhat different context. In an affidavit sworn 10 May 2007 in relation to the proceedings before the Board, Carey annexed a statement of assets and liabilities. He included a contingent liability in the sum of $200,000, said to represent the claim by QBE against him under the guarantee. A note in the statement explained that QBE was seeking to recover $3,600,000 against him and 18 other guarantors under the guarantee, but the claim was being defended. The contingent liability of $200,000 was calculated on the basis that QBE's claim was successful and the liability was shared between the guarantors. The Board had criticised the way in which the liability was shown, arguing that some of the other guarantors had been wound up and they could not be expected to make a pro-rata contribution to any payment due under the guarantee.

27 In relation to the complaint that Carey had not cooperated with the receivers, the Tribunal said:

It is unsurprising that a level of tension existed between Mr Carey and the receivers.

...

Nor can we make any reasoned findings as to whether the claims of lack of co-operation made by the receivers were fairly made. It is, however, apparent that, in response to the criticisms, Mr Carey took steps to clarify what information was sought by the receivers, and to provide that information through his solicitors. In those circumstances we do not consider that Mr Carey could be said to lack fitness to hold a real estate agent's licence on the basis of non-cooperation with the receivers [31] - [32].

28 The Tribunal did not consider that Carey's failure to disclose the guarantee provided by Westpoint Realty amounted to a deliberate ploy to mislead the receivers. It said:

[W]e accept that Mr Carey held a view that the requirement to provide details of liabilities of the company did not extend to potential liabilities under a guarantee where the creditor had made no call on that guarantee. We do not consider that Mr Carey's failure to disclose the existence of the guarantee to the receivers of Westpoint Realty provides the basis to conclude that he is not fit to hold a real estate agent's licence [36].

29 Similarly, the Tribunal found that Carey's estimate of his contingent liability was not inaccurate or misleading. It said:

In our view, the note to the accounts made clear the basis upon which the sum of $200,000, which was expressed as an estimate, had been arrived at. In a context where there may or may not be any ultimate liability, and if there is liability, then considerable uncertainty as to the ultimate proportion of the guaranteed amount that Mr Carey might have to bear, we would not consider that the way the 'contingent liability' was expressed, explained as it was, can be said to be misleading [40].

Discharge of responsibilities as a person in bona fide control

30 As I mentioned earlier, Carey was at all times prior to the appointment of administrators the person recorded by the Board as being in bona fide control of the real estate business carried on by Westpoint Realty.

31 Section 132 of the REBA Act requires that where a licensee of a business is a body corporate, the person in bona fide control of the business give substantial time and attention to the business. Rule 6(2) of the Code of Conduct for Agents and Sales Representatives (Code of Conduct), made pursuant to s 101 of the REBA Act, requires that a person in bona fide control of an agency business carried on by a corporation properly supervise the business and take reasonable steps to ensure that the sales representatives and employees of the business comply with the REBA Act and the Code of Conduct. Rule 6(5) of the Code of Conduct requires that a person in bona fide control of an agency business carried on by a corporation personally manage the business full-time, carry out the principal managerial duties of the business and frequently attend at the offices at which the business is conducted.

32 The Board argued before the Tribunal that Carey did not meet the obligations of a person in bona fide control of an agency business carried out by a body corporate. The Board relied on evidence given by Carey during his examination in the Federal Court, in which he said that the financial systems in the Westpoint Group were very sophisticated and run by senior accountants upon whom he was reliant. Carey had said that the group had 350 employees in four states, many of whom reported to general managers or financial managers other than him. He spent a large amount of time travelling to the eastern states and dealing with the affairs of the other companies in the Westpoint Group. He said he had little to do with the accounting in Westpoint Realty. As a consequence, he was unable to explain certain irregularities in the Westpoint Realty accounts in relation to GST liabilities.

33 A further matter relied upon by the Board concerned a compliance report prepared by Dibbs Abbott Stillman (DAS report). The DAS report was prepared at Carey's request in order to demonstrate that Westpoint Realty had a 'strict compliance culture' and was held out by Carey as an example of 'systematic compliance reporting'. Despite Carey claiming to have commissioned the DAS report, the report itself only mentioned Carey's name a few times and recited that it had been prepared in accordance with 'instructions received from Mr Brian Letts of Westpoint Realty'. The DAS report referred to a file which was provided to the authors which contained outdated policies and procedures applicable to the control of both licensed and unlicensed personnel. The DAS report suggested that it was unlikely that any of the information in the file had been communicated to employees. The Board maintained that the failure by Carey to convey the information to his employees indicated an abrogation of his obligation to supervise the business properly.

34 The Tribunal found that Carey had not met all of his obligations as the person in bona fide control of the real estate business carried on by Westpoint Realty, saying:

The matters relied upon by the Board support a conclusion that the day-to-day operations of Westpoint Realty were substantially in the hands of [other managers]. To the extent that Mr Carey suggested that he personally managed the agency business full-time as required by r 6(5) of the Code of Conduct, we do not accept that evidence. With Mr Carey's other obligations in relation to the operations of the Westpoint Group, in respect of which he was obviously heavily engaged personally, it would have been virtually impossible for him to 'manage the agency business full-time'. We accept, however, Mr Carey's evidence that he initiated that commissioning of the DAS report as a response to concern with compliance in all areas of the Westpoint Group's activities. We also accept that (aside from his failure to meet all the requirements of bona fide control) he was concerned to put in place procedures and systems directed to ensuring that the operation in Westpoint Realty complied with its statutory and regulatory obligations. We also accept that he maintained a general supervisory role as managing director of Westpoint Realty [63].

Westpoint Realty and other Westpoint Group entities

35 The relationship between Westpoint Realty and other Westpoint Group entities was advanced by the Board as a matter indicating that Carey was not a fit and proper person to hold a licence.

36 The Board adduced evidence which it claimed showed that Westpoint Finance had control of the overall marketing of the Westpoint Group properties and earned commission revenue by finding prospective purchasers. When Westpoint Finance found prospective purchasers, it would refer those purchasers to Westpoint Realty to sign a purchase agreement. Westpoint Realty would then earn a commission on the sale of the property, most of which would then be paid over to Westpoint Finance in consideration for the referral. Carey did not accept that description of the process. He was vague, however, about the relationship between Westpoint Finance and Westpoint Realty.

37 Another matter raised by the Board was that sales representatives who procured sales for Westpoint Realty and who had signed declarations saying that they were employed by Westpoint Realty were in fact paid by Westpoint Corporation. The Board argued that those representatives were, in truth, employed by Westpoint Corporation rather than Westpoint Realty. To the extent that the representatives carried out real estate transactions as employees of Westpoint Corporation, the requirements of the REBA Act had not been met. Carey maintained that the sales representatives were employees of Westpoint Realty and the fact that they were paid by a separate entity did not alter that position.

38 The Tribunal did not find anything particularly improper about the relationship between Westpoint Finance and Westpoint Realty. It said:

The precise arrangements in relation to the financial relationship between Westpoint Realty and [Westpoint] Finance ... remain somewhat unclear. ... In the context of these proceedings, it is not necessary for us to reach any concluded view as to the precise arrangements which existed between companies within the group. It is sufficient to conclude, as we do, that the activities of Westpoint Realty were inextricably linked to the activities of the group generally, and its finances were managed through the treasury operations of the group carried out by Westpoint Corporation. It is apparent that the marketing functions in relation to the sale of units developed by companies within the Westpoint Group did not fall within any well-defined responsibility of any particular company within the group. The evidence suggests to us that it is fair to conclude that there was something of overlapping responsibilities and a fuzziness in the defined roles of different participants in the process [71].

39 The Tribunal did not accept that the mere fact that the arrangements for the payment of employees were made through a third party, namely Westpoint Corporation, meant that those employees were employed by Westpoint Corporation rather than Westpoint Realty. The Tribunal considered the propriety of the relationships between the different companies within the Westpoint Group more generally, saying:

Where, as here, there was an endeavour to provide a 'suite of products to the same clients' (to use Mr Carey's words) it is almost inevitable that different entities will be involved at different stages of the process from initial approaches to the public to the ultimate completion of a sale and management of the investment. Whether the division of responsibilities and the financial arrangements in place within the Westpoint Group successfully met the regulatory requirements in relation to the REBA Act is a relatively complex question. We do not consider that we can determine that question on the basis of assertions in affidavits in other proceedings which are untested before us except to the extent of Mr Carey's cross-examination. That cross-examination revealed that there is a dispute as to the correctness of at least some of those assertions. What is of significance, to us, however, is that none of the matters raised in the Federal Court appear to have resulted in any findings against Mr Carey by any court in relation to any of the alleged irregularities. In particular, no specific complaint has been made against Mr Carey in relation to any breaches of the REBA Act or the Code of Conduct, accordingly no findings have been made against him in that respect [74].

Carey's actions as controller of Silkchime

40 In Australian Securities and Investments Commission; In the Matter of Richstar Enterprises Pty Ltd v Carey (No 20) [2008] FCA 45 French J made an observation concerning a joint venture proposed by Silkchime Pty Ltd, a company controlled by Carey, and Richstar Enterprises Pty Ltd, a company controlled by Carey's sister. The proceedings before French J involved an application by a receiver of Silkchime for directions from the court in relation to whether he ought to consent to the joint venture. In his judgment, his Honour referred to a notice issued by Carey threatening to terminate the joint venture as a piece of 'cosmetic nonsense'. He also said that he did not consider that the proposed joint venture was in the best interests of the preservation of Silkchime's assets or those who might have claims against Silkchime.

Whilst Mr Carey was asked some questions in relation to this issue during the course of the hearing before the Tribunal, we are not in a position to analyse and investigate the proposed agreement. The proceedings obviously took part in the context of constant, ongoing, and relatively complex litigation following the collapse of the Westpoint Group. To the extent that French J was impliedly critical of Mr Carey in the comments to which the Board has drawn our attention, we do not consider that that criticism can fairly be used to support a conclusion that Mr Carey is not a fit and proper person to hold a real estate agent's licence. Without a full investigation and understanding of the context in which the remarks were made, to elevate the implied criticism to a basis for a conclusion of unfitness is simply not open [81].

42 The Tribunal noted that Carey had given undertakings in WAD 83 of 2006 not to dissipate his assets but those undertaking had lapsed on 30 June 2008. It did not mention that Carey was the subject of asset preservation orders in VID 485 of 2008. The Tribunal also noted that Carey was pursued in proceedings by QBE under the guarantee and by the liquidators of Ann Street Mezzanine Pty Ltd (in liquidation). Those proceedings were being defended.

Whether or not Mr Carey ultimately has a liability which would render him unable to fulfil the requirements of s 27(1)(c) of the REBA Act is a matter which may not be determined for some years. In the meantime, we do not consider that the fact that he is being sued in respect of liabilities which he denies is a basis to conclude that he does not any longer meet the requirements of s 27(1)(c) of the REBA Act [84].

Understanding the duties and obligations imposed by the REBA Act

44 The Board argued that the matters it had raised in relation to Carey's fitness to hold a licence demonstrated that he did not understand his duties and obligations under the REBA Act. The Tribunal took a different view saying:

Having seen Mr Carey cross-examined at very considerable length before us, we are satisfied that he has a firm understanding of the requirements of the Act and the Code of Conduct. The focus of the Board's criticisms of Mr Carey were, in substance, not that he did not understand the obligations of the Act, but rather he did not properly observe those obligations, thus rendering him not fit and proper to hold a licence [86].

45 The Tribunal concluded that there was insufficient evidence to establish that Carey was no longer a fit and proper person to hold a licence. It noted that there were factors which militated for and against a finding that Carey lacked the requisite fitness, saying:

We have expressed concern in relation to the frankness of the evidence given concerning the Channel Island trust and Halter. We have rejected Mr Carey's evidence that he personally managed the agency business full-time, as required by the Code of Conduct, albeit that he did exercise a general supervisory role. A consequence of not providing full-time services to the company was that the formalities in relation to the monthly reconciliation of the monthly trust account were not always met. We also have a concern as to the lack of clarity in the definition of roles and responsibilities of Westpoint Realty exercising its functions under the REBA Act, as distinct from the roles and operation of other companies within the Westpoint Group.

Against those concerns, there are several important factors. The first is that Mr Carey has held a real estate licence for some 30 years without any disciplinary issues having arisen. The second is that, despite very exhaustive investigations going back as far as 2003, and considerable litigation concerning the receiverships and liquidations of companies within the Westpoint Group, there have been no final determinations against Mr Carey of any breaches of legislation or other illegal conduct. Allegations about nondisclosure of assets, or failure to cooperate with receivers or liquidators have been disputed and have not become the subject of any findings against Mr Carey. The initial preservation orders, or the undertakings which replaced them, have expired and no longer apply. Notwithstanding that it is now several years since investigations were commenced, the only proceedings against Mr Carey concern certain civil claims. Those claims are being defended [91] - [92].

In order to decline to renew Mr Carey's triennial certificate, the Board, and in its place the Tribunal, must be satisfied that Mr Carey is no longer a person of good character and repute, or is no longer a fit and proper person to hold a licence.

...

None of the conclusions we have reached in these proceedings would, in our view, provide a basis to cancel Mr Carey's licence and any triennial certificate in respect of it. Despite the concerns which we have expressed, we do not consider that it can be fairly determined, on the basis of the materials before us, that Mr Carey is not fit and proper to hold a real estate agent's licence. It may be that, as a result of what we assume are ongoing investigations into the Westpoint Group (although the extent of ongoing investigations is unclear) that action might be taken against Mr Carey in future. Conditions which require him to report any such action are appropriate. However, until such time as there are adverse findings made against Mr Carey in proceedings which have been already commenced or specific allegations of serious conduct are made against him, all of which may never occur, there is no basis to decline the renewal of Mr Carey's triennial certificate [94]-[95].

47 The Tribunal set aside the Board's decision and ordered that the Board issue a triennial certificate to Carey subject to certain conditions.

48 The appellant advances four grounds of appeal. Three of those grounds are supported by particulars. The grounds of appeal, excluding the particulars, are:

1.1 The [Tribunal] erred in law in holding that [Carey] remained a person of good character and a fit and proper person to hold a licence under the [REBA Act], which holding was not reasonably open on the undisputed facts found by the Tribunal and the undisputed evidence and material before the Tribunal, which should have led the Tribunal to conclude that [Carey] was not a person of good character and repute and not a fit and proper person to hold a licence.

...

2.1 The Tribunal erred in law in holding that ASIC did not seek any renewal of undertakings freezing the assets of [Carey] which expired on 30 June 2006 (Reasons at [8] & [82]) and in further holding (implicitly) that no allegations of serious misconduct were made against [Carey] (Reasons at [95]) in that those determinations were not reasonably open to the Tribunal on the evidence.

...

3.1 The Tribunal erred in law in holding that the findings and observations of French J in Australian Securities & Investment Commission: In the Matter of Richstar Enterprises Pty Ltd v Carey (No 20) [2008] FCA 45 could not be fairly used to support a conclusion that [Carey] was not a fit and proper person to hold a real estate agent's licence and should have held that those findings could be taken into account and should have taken them into account so as to conclude that [Carey] was not a person of good character and repute and not a fit and proper person to hold a licence.

4.1 The Tribunal erred in law in holding that [Carey] remained a person of good character and a fit and proper person to be licensed under the REBA Act, which holdings were not reasonably open having regard to [the matters before the Tribunal].

49 Although much of what I am about to say is well travelled ground, the circumstances of this case render it desirable to remind a reader of some basic principles that govern the review process by the Tribunal and appeals from the Tribunal to this Court.

50 A party to a proceeding before the Tribunal may appeal from a decision of the Tribunal, but only if the court to which the appeal lies grants leave to appeal: s 105(1) SAT Act.

51 Unless the Tribunal's decision has the effect of depriving a person of the person's capacity to pursue his vocation lawfully, an appeal may only be brought on a question of law: s 105(2) SAT Act. An appeal on a question of law is narrower than an appeal which merely 'involves' a question of law: Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361 [53]. An appeal involving a mixed question of law and fact is not an appeal on a question of law within the meaning of s 105(2) of the SAT Act: Paridis [53].

52 Given that appeals from the Tribunal are limited to questions of law, it is essential that errors of law be distinguished from errors of fact. The Tribunal does not commit an error of law simply because it finds facts incorrectly or upon a doubtful basis: Waterford v Commonwealth [1987] HCA 25; (1987) 163 CLR 54, 77. Similarly, the Tribunal does not commit an error of law if its decision is against the evidence or against the weight of the evidence: Collins v Minister for Immigration and Ethnic Affairs [1981] FCA 147; (1981) 58 FLR 407, 410. The Tribunal will err in law, however, if it makes an ultimate finding of fact for which there is no material before the Tribunal upon which that finding could be based: Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, 355 - 356.

53 A ground of appeal which alleges that the Tribunal has failed to take into account a consideration which, in the circumstances, it was bound to take into account alleges an error of law: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24, 39 - 40. A Tribunal will not err in law, however, merely because it fails to take into account a particular piece of evidence which is relevant to a consideration which it is bound to take account: Xie Mian Shen v Minister for Immigration and Ethnic Affairs (Unreported, FCA, 9 August 1995), 15 - 16. Similarly, a Tribunal will not err in law merely because it fails to place 'adequate weight' upon a consideration which it is bound to take into account: Peko-Wallsend (41).

Ground 1 - finding of fitness not reasonably open

54 In ground 1 the Board alleges that the conclusion reached by the Tribunal that Carey was a fit and proper person to hold a licence was 'not reasonably open on the undisputed facts'. Another formulation of the complaint advanced by the Board is that 'no decision maker acting reasonably could have been satisfied' that Carey was a fit and proper person to hold a licence.

55 The argument raised by the Board in substance contends that the Tribunal's conclusion that Carey was a fit and proper person was 'unreasonable' within the meaning of Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] EWCA Civ 1; [1948] 1 KB 223. In that case Lord Greene MR said:

It is true to say that, if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it, then the courts can interfere. That, I think, is quite right; but to prove a case of that kind would require something overwhelming (230).

56 Another formulation of the principle is that a decision may be invalidated on the ground of unreasonableness if, taking into account the reasoning process leading to it, it was a decision to which no reasonable decision maker would have come: Federal Commissioner of Taxation v McCabe [1990] FCA 389; (1990) 26 FCR 431, 438 (Davies J).

57 A ground of appeal that alleges that a decision maker's decision was unreasonable in the Wednesbury sense alleges an error of law rather than an error of fact: Paridis [56].

58 It is important to bear in mind the limited nature and scope of review of decisions on the basis of Wednesbury unreasonableness. A review of a decision on the ground of unreasonableness cannot become 'merits review in drag': Powerco Ltd v Commerce Commission [2006] NZHC 662 [24]. It is both legally and intellectually incorrect to 'dress up' an allegation that an administrative decision maker made incorrect findings of fact or findings against the weight of the evidence as an allegation that the decision was unreasonable in the Wednesbury sense and constituted an error of law. It should also be borne in mind that fact-finding cannot be challenged on the basis of Wednesbury unreasonableness; only decision makers' discretionary decisions are amenable to review on this ground: Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 [73] (McHugh and Gummow JJ) and [143] (Kirby J).

59 In this case, the Board submits that the Tribunal's finding that Carey was a fit and proper person to hold a licence was manifestly unreasonable, in the sense that no decision maker acting reasonably could have come to that conclusion. It relies on various findings by the Tribunal which it says demonstrates that Carey lacks the requisite fitness, including his breach of the Code of Conduct, his alleged lack of cooperation with the receivers of Westpoint Group companies, his allegedly dishonest and evasive evidence about his dealings with the Halter account and the Hilton Trust and the comments of French J about the allegations of misconduct in relation to the management of some of the Westpoint Group companies. The Board says that when the facts as found by the Tribunal are considered as a whole, it was not open to the Tribunal to conclude that Carey was a fit and proper person to hold a licence. In light of the findings of fact, the Board says, the Tribunal's decision was manifestly unreasonable and constituted an error of law.

60 It is unsurprising that the Board, and indeed the Tribunal (as evidenced by the summary of its conclusions), harboured concerns about Carey's activities and about some of his evidence. But it does not follow that a finding as to fitness and propriety in those circumstances will, necessarily and relevantly, be unreasonable. The question now before this Court is whether the Tribunal erred in law in one or more of the ways contended for by the Board.

61 The authorities concerning the meaning of 'fit and proper' in the context of real estate and similar licences are well known, and I do not intend to discuss them in any detail. When deciding whether a person is 'fit and proper' to hold a licence, many factors may be considered by the decision maker, including character (Bond), reputation (Bond), honesty (Simonsen v Rossi, the Registrar, Real Estate and Business Agents Supervisory Board [2005] WADC 76) and previous convictions (Tavelli v Johnson (Unreported, WASC, Library No 960693, 25 November 1996)). What is clear, however, is that the purpose of the words 'fit and proper' is to give to the decision maker the widest possible scope for judgment: Hughes and Vale Pty Ltd v New South Wales [No 2] [1955] HCA 28; (1955) 93 CLR 127, 156.

62 The Tribunal came to its conclusion that Carey was a fit and proper person to hold a licence after considering the matters raised by the Board. It understood that, for example, French J had made comments that were critical of Carey and which pointed to possible misconduct in the affairs of the Westpoint Group. It noted that Carey had given evasive evidence in relation to the Halter account and the Hilton Trust. The Tribunal concluded, however, that there was insufficient evidence to find that Carey was unfit to hold a licence. It reasoned that there had been no final determination that Carey had breached the Corporations Act or his duties under the general law. While his evidence in the Federal Court and to the Tribunal may have been evasive or vague, the Tribunal could not be satisfied that Carey had been dishonest. The Tribunal took the view, in essence, that until concrete findings of misconduct or dishonesty were made against Carey, he ought to be entitled to earn a living. The Tribunal stressed that it is a serious matter to deprive a person of his capacity to pursue a vocation lawfully, and it was not satisfied that Carey ought to be deprived of his livelihood when most of the allegations made against him were disputed and had not yet been finally determined.

63 It is not for this court to conduct a merits review and to determine whether the Tribunal's decision was right or wrong in a substantive sense. It is not the role of this court to substitute its own decision for that of the Tribunal. The only question before this court is whether the Tribunal's decision was so unreasonable that no decision maker, acting reasonably, could have come to the same conclusion. There is certainly some force in the Board's contention that Carey is not a fit and proper person to hold a licence. But the Tribunal reviewed the evidence and came to a different conclusion. The Tribunal had in mind the principle that a person should not be deprived of his right to earn a living before final determinations have been made about his conduct and honesty. It is for the Tribunal, not the court, to balance the various considerations that militate for and against the proposition that Carey is a fit and proper person to hold a licence. There is a temporal aspect to the Tribunal's conclusion. Investigations and litigation concerning the Westpoint Group and Carey's role in it are ongoing and the Board will be at liberty to use the powers it has under the REBA Act if and when final determinations are made that reflect on the fitness and propriety of Carey to hold a licence.

64 I am not satisfied that the Tribunal's decision is so unreasonable that no decision maker, acting reasonably, could have made the same decision.

66 In the second ground the Board alleges that the Tribunal erred in law in holding that ASIC did not seek any renewal of the undertakings freezing Carey's assets which expired on 30 June 2008.

67 As I have mentioned, Carey gave undertakings freezing his assets in relation to WAD 83 of 2006, which was initiated by ASIC pursuant to s 1323 of the Corporations Act. Those undertakings expired on 30 July 2008 and ASIC did not seek an extension. On the same day that the undertakings expired, however, ASIC obtained asset preservation orders against Carey in VID 485 of 2008, which was initiated by ASIC in the name of Ann Street Mezzanine Pty Ltd (in liquidation) pursuant to s 50 of the Australian Securities and Investments Commission Act.

68 In the reasons for decision, the Tribunal mentions Carey's undertakings in relation to WAD 83 of 2006. The Tribunal notes that the undertakings expired on 30 June 2008 and that ASIC had not sought their renewal. The Tribunal did not mention that ASIC had sought and obtained asset preservation orders against Carey in VID 485 of 2008, which had the practical effect of extending the regime of protecting potential claimants from the depletion of Carey's assets. The Board contends that the failure to state in the reasons that ASIC had obtained asset preservation orders in VID 485 of 2008 constituted a finding that ASIC had not sought the renewal of the undertakings and amounted to an error of law.

69 In my opinion, this ground of appeal is misconceived. I will leave to one side the question whether the omission of the fact that asset preservation orders were obtained in VID 485 of 2008 amounted to a finding of fact that ASIC did not seek any renewal of undertakings not to dissipate assets. I repeat that, aside from an exception which does not apply in this case, an appeal from the Tribunal can only be brought on a question of law. The substance of the Board's complaint, despite it being expressed as an error of law, is that the Tribunal made a finding which was wrong on the facts. The ground of appeal, in truth, alleges an error of fact and no amount of 'linguistic gymnastics' will transform it into a ground alleging an error of law: Paridis [53]. As Brennan J said in Waterford (77), '[t]here is no error of law simply in making a wrong finding of fact'. The ground advanced by the Board does not allege an error of law and cannot properly be raised before this court.

71 In ground 3 the Board contends that the Tribunal erred in law in holding that the findings and observations of French J in Australian Securities and Investments Commission; In the Matter of Richstar Enterprises Pty Ltd v Carey (No 20) could not be fairly used to support a conclusion that Carey was not a fit and proper person to hold a licence. The Board submits that the Tribunal should have held that the observations and findings in Richstar could be taken into account and should have taken them into account so as to conclude that Carey was not a fit and proper person to hold a licence.

72 Richstar involved an application by the receiver of Silkchime and the supervisor of Richstar seeking directions as to whether he ought to consent to a proposed joint venture between the two companies. The joint venture transaction involved the development of land owned by Silkchime using money provided by Richstar. Carey was one of three directors of Silkchime and he was its secretary. Carey's sister was the sole director of Richstar.

73 French J came to the view that the proposed joint venture should not go ahead, and gave directions accordingly. His Honour said this of the proposed transaction:

It is a transaction which is not entered into at arms length. It is effectively between Mr Carey, who controls Silkchime, and his sister who controls Richstar. I am not satisfied that she acts or has acted independently of Mr Carey or other than at his direction in connection with this transaction. The faintly ridiculous correspondence referred to earlier in which Mr Carey, on behalf of Silkchime, threatened to terminate the transaction leading Ms Carey to write a letter to Mr McMaster on Richstar letterhead, provides a recent basis for these concerns [49].

...

I am not satisfied that as proposed or as it might be effected it is, or is likely to be, in the best interests of the preservation of Silkchime's assets or the interests of those who may have claims against Silkchime [51].

74 The comments of French J were relied on by the Board as showing that Carey's involvement in the proposed transaction between Richstar and Silkchime was inappropriate and (or) dishonest. The Tribunal, however, did not think that French J's findings necessarily supported that conclusion, saying:

Whilst Mr Carey was asked some questions in relation to this issue during the course of the hearing before the Tribunal, we are not in a position to analyse and investigate the proposed agreement. The proceedings obviously took part in the context of constant, ongoing, and relatively complex litigation following the collapse of the Westpoint Group. To the extent that French J was impliedly critical of Mr Carey in the comments to which the Board has drawn our attention, we do not consider that that criticism can fairly be used to support a conclusion that Mr Carey is not a fit and proper person to hold a real estate agent's licence. Without a full investigation and understanding of the context in which the remarks were made, to elevate the implied criticism to a basis for a conclusion of unfitness is simply not open [81].

75 The Board contends in this appeal that French J's comments bore directly on Carey's character and demonstrated a disregard for interests that, as a fiduciary, he was obliged to protect and they show that Carey was willing to manipulate others to achieve his ends. The Board submits that, acting reasonably, the Tribunal should have taken French J's observations into account and, relying on them, should have found that they demonstrated that Carey was not a fit and proper person.

76 Although not explicitly stated in the ground of appeal or the submissions, the argument advanced by the Board seems to raise the allegation that the Tribunal did not take into account a consideration that, in the circumstances, it was bound to take into account. If established, this would constitute an error of law. But if the true nature of the challenge relates to the weight to be afforded to the consideration, no error of law arises.

77 I do not accept that the Tribunal erred in law in relation to its treatment of French J's observations. I will leave to one side the issue of whether the comments of French J amounted to a matter which the Tribunal was bound to take into account. On my reading of the Tribunal's reasons, it is clear that it did take French J's comments into account and, having considered the content of the observations and the context in which they were made, concluded that they did not support the conclusion advocated by the Board. The Tribunal did not say that, as a matter of law, it could not have regard to the comments or that they were irrelevant to the matters then before it. The Tribunal said, in substance, that it was not comfortable in drawing serious conclusions against Carey's character on the basis of comments which were made in the context of complex litigation. The Board cannot now complain that, having taken the matter into account, the Tribunal did not give the matter the weight which the Board thinks it deserved. The weight to be given to French J's comments was properly a matter for the Tribunal. This Court ought not to revisit this aspect of the Tribunal's reasoning process. No error of law has been demonstrated.

Ground 4 - findings of fitness unreasonable in light of other grounds

79 In this ground the Board alleges that the finding of the Tribunal that Carey was a fit and proper person was not reasonably open on the evidence having regard to the matters raised in ground 1 of the appeal, as well as the finding of fact the Tribunal ought to have made about the extension of the asset preservation orders (the subject of ground 2) and the comments of French J in Richstar that the Tribunal ought to have considered (the subject of ground 3). This ground is really a 'catch all' provision intended to cover an argument that the Tribunal's decision was manifestly unreasonable in light of all the matters advanced by the Board in the other grounds of the appeal.

80 Taken individually, grounds 1, 2 and 3 do not justify intervention by this Court. It seems to me that this is not a case where the whole is greater than the sum of its constituent parts. To reach that conclusion, this Court would have to come to the view that individual findings, which are not themselves unreasonable, are, when taken together, so unreasonable that no reasonable decision maker could have made them. In my view, accumulating the grounds does not advance the Board's cause.

82 Although it is not strictly necessary to do so, I should say something about the question of an extension of time within which to apply for leave to appeal.

83 Rule 26(2) of the Supreme Court (Court of Appeal) Rules 2005 (WA) provides that an appeal to this court must be commenced within 21 days of the date of the decision the subject of the appeal, unless another written law expressly provides otherwise. Order 3 r 3 of the Rules of the Supreme Court 1971 (WA) (Rules) provides that in calculating time limits under the Rules or order or direction the period between 24 December and 15 January is to be excluded.

84 Section 105(5) of the SAT Act provides that an application for leave to appeal against a decision of the Tribunal must be made in accordance with the rules of the Supreme Court and within 28 days of the date of the decision. The SAT Act is silent as to whether the period between 24 December and 15 January is to be included or excluded when calculating the time limit. It does, however, provide that the court may extend the time within which to apply for leave fixed by s 105(5): s 105(7).

85 The decision of the Tribunal was delivered on 23 December 2008. The Board's appeal notice was lodged on 6 February 2009. While the appeal was lodged within the time limit prescribed by the Court of Appeal Rules r 26(2) and O 3 r 3 of the Rules, it was not lodged within 28 days of the date of the decision.

86 The Board contends that it does not require an extension of time within which to apply for leave because the SAT Act, in using the words 'in accordance with the rules of the Supreme Court', adopts in relation to the 28 day limit the exclusion of the time period between 24 December and 15 January which is contained in O 3 r 3 of the Rules. Further and alternatively, it argues that if an extension of time is needed, it ought to be granted. The Board says that the length of the delay was minor, the delay has not caused Carey prejudice and the delay was caused by the erroneous application of O 3 r 3 of the Rules by its solicitor. Carey, on the other hand, argues that an extension of time is required and it ought not be granted.

87 In my opinion, the Board does require an extension of time within which to apply for leave to appeal. The SAT Act requires that an application for leave to appeal be initiated in accordance with the rules of the Supreme Court and within 28 days of the Tribunal's decision. In my view, on a proper construction of the SAT Act, the 28 day time limit is intended to 'cover the field' in relation to the period within which an application can be lodged. Order 3 r 3 of the Rules is expressed as applying to time limits prescribed by 'these Rules or by an order or direction'. It does not purport to apply to time limits imposed by other statutes. I do not think that the exclusion of time contained in O 3 r 3 of the Rules should be taken as applying to time limits specifically imposed by statutes, notwithstanding the reference to applications for leave being made 'in accordance with the rules'.

88 Having determined that the Board requires an extension of time within which to apply for leave to appeal, the next question is whether an extension should be granted. In Chan v The Nurses Board of Western Australia [2007] WASCA 123 Buss JA (at [12]) set out the four principal considerations in determining whether an extension of time ought to be

granted. Those factors are the length of the delay, the reason for the delay, whether there is an arguable case and the extent of any prejudice to the respondent. Where the failure to file an application is attributable to the appellant's solicitor rather than the appellant itself, that is a material consideration in the exercise of the court's discretion: Esther Investments Pty Ltd v Markalinga Pty Ltd (1989) 2 WAR 196, 199 (Kennedy J), 204 (Rowland J).

89 In this case I am satisfied that the length of the delay was minimal and that the delay was caused by the erroneous interpretation of O 3 r 3 of the Rules by the Board's solicitor. I do not see how Carey would suffer any prejudice by reason of allowing the Board to file an application for leave out of time; indeed, Carey does not assert that he would suffer any prejudice. However, I am not satisfied that the appeal has sufficient merit to justify the grant of an extension of time. For this reason I would refuse the application for an extension of time within which to apply for leave to appeal.

90 In this appeal the critical questions relate to the identification of errors of law and an appreciation of the respective roles of the Board, the Tribunal and this Court. Responsibility for determining the merits lies with the Board and the Tribunal. I have not been persuaded that in its review of the merits, the Tribunal erred in law in a way that would justify intervention by this Court.

91 I would refuse the application for an extension of time within which to seek leave to appeal. Strictly speaking, this is the only order that is necessary. But it follows that I would dismiss the application for leave to appeal and dismiss the appeal against the Tribunal's decision.

Administrative Tribunal Act 2004

Estate and Business Agents Act 1978

Securities and Investments Commission Act 2001

Court (Court of Appeal) Rules 2005

REAL ESTATE AND BUSINESS AGENTS SUPERVISORY BOARD -v- CAREY [2010] WASCA 109 (10 June 2010)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (140 paragraphs)

REAL ESTATE AND BUSINESS AGENTS SUPERVISORY BOARD -v- CAREY [2010] WASCA 109 (10 June 2010)

Discharge of responsibilities as a person in bona fide control

Westpoint Realty and other Westpoint Group entities

Carey's actions as controller of Silkchime

Understanding the duties and obligations imposed by the REBA Act

Legislation Cited (4)

Cases Cited (10)