//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2006] WASAT 292
State Administrative Tribunal (WA)
2006-09-22
Judge J
Original judgment source is linked above.
ACT : SETTLEMENT AGENTS ACT 1981 (WA)
CITATION : SETTLEMENT AGENTS SUPERVISORY BOARD and PARIDIS [2006] WASAT 292
Settlement agents Disciplinary proceedings Whether Settlement Agents Act 1981(WA) and Settlement Agent's Code of Conduct 1982 have been breached Breach of s 46(2)(b) and s 49(6)(d) of the Settlement Agents Act 1981 Breach of r 15 of the Code of Conduct Settlement of leasehold property Trust account to be reconciled and certified in records on a monthly basis Failure to correctly reconcile a trust account is a serious breach of public trust Members of the public should be able to proceed with the assurance that their monies will be accounted for in a consistent and meticulous way by licensed settlement agents Object of disciplinary action is one of the protection of the public by maintaining the integrity of a profession
Settlement Agents Act 1981 (WA), s 27, s 46, s 46(2)(b), s 49(6), s 49(6)(d), s 84, s 84(1), s 84(2)(c)
Settlement Agents' Code of Conduct 1982, r 4, r 6A, r 15, Sch 1
The respondent's real estate settlement agent licence suspended for 12 months
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Grljusich v Andrews [2003] WASCA 206
Jaques v Pacific Acceptance Corp Ltd [1963] SR (NSW) 1066
Johnson v Sheppard [2005] WASCA 13
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Legal Practitioners Complaints Committee and Gandini [2006] WASAT 163
Legal Practitioners Complaints Committee and Lacerenza [2006] WASAT 177
Medical Board of Western Australia and Roberman [2005] WASAT 81
Re A Practitioner; Ex Parte The Legal Practitioners Disciplinary Tribunal [2001] WASCA 204
Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1995] UKPC 4; [1995] 2 AC 378
Story v National Companies & Securities Commission (1988) 13 ACLR 225
1 The Settlement Agents Supervisory Board made 25 allegations against Katherine Marie Annette Paridis trading as Sunset Coast Settlements pursuant to s 84(1) of the Settlement Agents Act 1981 (WA) (the SA Act).
2 The 25 allegations were:
3 Ms Paridis admitted allegations 1 to 19, 20, 21, 23 and 25. She denied allegations 22 and 24.
4 The Tribunal found allegations 22 and 24 not to be made out.
5 The Tribunal viewed the admitted allegations, in particular, those relating to the settlement agent's trust account as a serious breach of the public trust for a licensed practitioner and that it warranted a suspension of her licence.
6 In the circumstances, the Tribunal:
7 By application to the State Administrative Tribunal, lodged 28 November 2005, the Settlement Agents Supervisory Board (the Board) seeks disciplinary orders against Katherine Marie Annette Paridis pursuant to s 84(1) of the Settlement Agents Act 1981 (WA)(SA Act).
8 Ms Paridis is the holder of a real estate settlement agents licence number 894 that was first issued on 4 February 1992, and is the holder of a current triennial certificate expiring on 3 February 2007. She operates as a sole trader under the name of Sunset Coast Settlements. She maintained trust account number 306-113-5418904 with BankWest from 21 March 1994 to 27 September 2004 and from 11 March 2004, has maintained trust account number 306-113-0268170 with BankWest.
9 The Board makes 25 allegations against Ms Paridis.
10 Allegations 1 to 19 are that for each of the months during the periods November 2001 to May 2002 and July 2002 to June 2003 (that being 19 months) she acted contrary to s 49(6)(d) of the SA Act in that she failed to correctly balance her trust account and certify that this had been done in records. These allegations are admitted.
11 Allegation 20 is that on or about 12 March 2004, contrary to s 46(2)(b) of the SA Act, she effected settlement of leasehold property known as Unit 22 Forest Lakes Lifestyle Village in Thornlie (Forest Village). Section 46(2)(b) prohibits a licensed settlement agent from effecting a transaction involving leasehold land (other than land under the Land Administration Act 1997 (WA)). Ms Paradis admits this allegation.
12 Allegation 21 is that, on or about 2 April 2004, contrary to s 46(2)(b) of the SA Act she effected settlement of leasehold property known as Unit 105 Forest Village in Thornlie. This is also admitted.
13 Allegation 22 is that, contrary to r 15 of the Settlement Agents' Code of Conduct 1982 (the Code), she did not settle the leasehold property known as Unit 22 Forest Village in Thornlie honestly. The dishonesty is alleged to consist of three components. The first is acting on the transaction knowing that the SA Act prohibits settlement agents from acting on leasehold transactions. The second is proceeding to act knowing that the purchaser had not consented to her acting for another party to the transaction. The third is providing misleading information to an officer of the vendor by facsimile, dated 29 June 2004, concerning cheques allegedly drawn to disburse the proceeds of the transaction. This allegation is denied.
14 Allegation 23 is that, contrary to r 15 of the Code, she did not settle the leasehold property known as Unit 22 Forest Village in Thornlie efficiently. The inefficiency alleged is that the respondent did not pay over the relevant portions of the purchase monies as directed by the vendor on settlement which took place on 12 March 2004 until about 28 June 2004. Ms Paradis admits this allegation.
15 Allegation 24 is that contrary to r 15 of the Code she did not settle the leasehold property known as Unit 105 Forest Village in Thornlie honestly. The dishonesty alleged is effectively the same as the particulars of dishonesty alleged in relation to allegation 22. The allegation of dishonesty is denied.
16 The final allegation is that contrary to r 15 of the Code she did not settle the leasehold property known as Unit 105 Forest Village in Thornlie efficiently, again by failing to pay over the settlement monies at settlement on 2 April 2004 until 28 June 2004. That allegation is also admitted.
17 At the hearing, the Tribunal received evidence in respect of the allegations denied by the respondent (allegations 22 and 24), evidence of her explanation of the circumstances that brought about her failures to balance her trust account, and submissions in respect of all allegations on the question of penalty. Subsequent to the hearing the Board and settlement agent made further written submissions as to the allegation of dishonesty and as to penalty and costs.
18 The respondent admits that she failed to reconcile her trust account in a timely way in 19 months of a 20 month period from November 2001 to June 2003. An investigation by an inspector appointed by the applicant revealed that reconciliations could be located for 16 of those 19 months, but the reconciliation report run had occurred anything from three days late (May 2002) to 306 days late (August 2002), with 11 months being in excess of 75 days late. On only one occasion was a certification as required by s 49(6)(d) of the SA Act found.
19 Ms Paridis says that she experienced a problem with the trust account computer program (Prosett) in July 2002. The program would not close off the July 2002 bank reconciliation to enable the next month to be continued. This problem was rectified by her technology consultant, but problems persisted, including the computer "crashing". In February 2003, the Prosett program experienced an error which resulted in approximately 30 transactions for the period 10 February 2003 to 14 February 2003 disappearing from the system. The respondent says it was her practice to manually backup the system every day but when she presented the backup discs to the information technology consultant, the information could not be retrieved. It was ultimately established that there was both a hardware and software failure.
20 At that point Ms Paridis says she decided to recreate the trust account manually, and while this was taking place, she also decided not to keep electronic records. During that time the monthly reconciliations were not able to be done, but she says that, on a daily basis, she would check the bank statements and check that each file had been manually reconciled. Once the missing data had been re-entered and the computer system updated with the manual records, the respondent says she attempted a reconciliation, but the Prosett program could not produce the reconciliation report.
21 The respondent said that during the rebuilding of the trust account, she was in contact with her auditor, Athans & Taylor, who advised and liaised with the Board on her behalf.
22 Ms Paridis said that eventually the situation with the Prosett program became untenable and after seeking advice she decided to change to a new system (M-Tech). As a result of introducing the new program, she decided to open a new trust bank account. The only way of finalising the old trust bank account was to start at the last reconciliation that the Prosett program had correctly performed and manually process all subsequent cheques, receipts and bank statements until a final list of bank balances and unpresented cheques was determined. Any future files would be conducted through the new trust bank account and would be isolated from the previous system. The conversion to the new system occurred in March 2004 and the old trust account was finalised and closed on 22 September 2004.
23 In her evidence Ms Paridis identified a number of factors or circumstances which she submits can help to explain the situation which led ultimately to the actions of the Board in bringing these matters to this Tribunal. She said that, from 2002 to early 2004, there were aspects of her practice and the running of her office that needed improvement and attention. She said that, during this period, her practice was extremely busy and that for the most part she had six employees under her supervision. She had experienced staff problems from around 2000 which created disharmony in the office. Her marriage broke down in 2000 and as a consequence, from then until October 2004, she experienced emotional and financial problems. The problems with the trust account computer software occurred during this time.
24 The respondent says that she did not always give matters and staff proper attention and supervision, that she lacked good judgment in the way she dealt with and addressed issues and that she made assumptions without checking the correctness of those assumptions. Because of personal and other issues, she became distracted from her work and relied heavily on her staff to carry out their tasks properly when they were not necessarily doing so.
25 The Tribunal is required to determine the disputed issue as to whether the respondent acted dishonestly as alleged in allegations 22 and 24. The standard of proof in these matters is the balance of probabilities. In a case such as this, however, where serious accusations have been made against the respondent, which if proved may have a grave impact on her professional career, a closer scrutiny of the evidence is warranted before a decision adverse to her is made.
26 This scrutiny, often referred to the Briginsaw approach (see Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336), is such that the decision-maker must feel an "actual persuasion" of the occurrence or existence of the relevant facts before making any findings against the person against whom serious allegations of professional misconduct have been made, which question the suitability of the person to continue to be able to engage in their profession or discipline (see also Legal Practitioners Complaints Committee and Gandini [2006] WASAT 163 at [61] - [65] and Legal Practitioners Complaints Committee and Lacerenza [2006] WASAT 177 at [12].
The settlement of unit 2 and unit 105 (allegations 22 and 24)
27 On 22 December 2003, John McNicol and Margaret McNicol (Mr and Mrs McNicol) entered into a lease agreement with Forest Lakes Lifestyle Village Pty Ltd (Forest) to lease Unit 22 at the Forest Village, Thornlie. On 28 February 2004, Mr and Mrs McNicol appointed Sunset Coast Settlements to settle their transaction. The Appointment to Act document completed by Mr and Mrs McNicol expressly stated "you may not act for any other party". On or about 12 March 2004, settlement of Unit 22 was effected. On 31 March 2004, Ms Paridis advised Everard Yeo & Associates, the project managers for the Forest Village, that the sum of $170 571.39 was forwarded to Police & Nurses Credit Society. The letter from Ms Paridis also requested that Forest sign the Appointment to Act document enclosed with that letter. By a document headed Appointment and dated 2 April 2004, Forest appointed Sunset Coast Settlements to settle the transaction.
28 On 7 July 2003, Michael Geary and Janet Geary (Mr and Mrs Geary) entered into a lease agreement with Forest to lease Unit 105 at the Forest Village. On 25 March 2004, Mr and Mrs Geary appointed Sunset Coast Settlements to settle their transaction. The Appointment to Act document completed by Mr and Mrs Geary again specified that the settlement agent may not act for any other party. On 22 March 2004, the respondent advised Everard Yeo & Associates, the project managers for the Forest Village, that settlement of Unit 105 was due to be effected on 2 April 2004. The letter from the settlement agent also requested Forest sign the Appointment to Act document enclosed with that letter. By a document headed "Appointment" and dated 31 March 2004, Forest appointed the settlement agent to settle the transaction. On or about 2 April 2004, settlement of Unit 105 was effected.
The allegation of dishonesty in the settlement agent effecting a settlement of leasehold property
29 The Board alleges that Ms Paradis proceeded to effect a settlement of leasehold property, being Units 22 and 105 at Forest Village, knowing that she was not entitled to do so pursuant to s 46(2)(b) of the SA Act. The Board contends that, in so doing, Ms Paridis breached r 15 of the Code by acting dishonestly. Rule 15 requires that a licensee shall carry out all services efficiently, honestly and without concealment or any form of deception or misleading representation.
30 The respondent says that she did not know she was not permitted to settle leasehold property. She says that she was, at the time, aware of two other settlement agents who were undertaking such work and followed the practice of those other agents. She asserts that she would not have continued with the transactions had she been aware of the prohibition.
31 Under cross-examination Ms Paridis admitted that she had acted in relation to leasehold property prior to settling Units 22 and 105 at Forest Village, but said that she could not recall when she had first done so or how many such properties she had settled.
32 Ms Paridis was shown a copy of her "Statement of Academic Record" dated 7 January 1992 (Department of Technical and Further Education (WA)) and it was put to her by the Board that in meeting the course requirements of the "Certificate in Settlement Agency Procedure", she would have learnt about the ban on settlement agents settling leasehold properties.
33 The respondent was also shown copies of two editions of the "Settlement Agents News", an information bulletin from the Board. The editions were number 18 from March 2002 and number 22 from March 2003. The first of these contains an article titled "Settlement With Both a Real Estate and Business Component" which, although not referring directly to the issue of leasehold property, reprints s 46 of the SA Act. The second contains an article titled "Functions of a Real Estate Settlement Agent" which reminds settlement agents of the scope of their work as defined by s 46. The article concludes "the leasehold situation in many retirement villages is one area in which s 46(2) of the Act may be of relevance to settlement agents and SASB advises settlement agents to be aware of the provisions".
34 Under cross-examination Ms Paridis admitted that she would have received the bulletins produced by the Board, but could not remember having read the articles in question.
Findings in relation to the allegation of dishonesty by effecting a settlement of leasehold property
"A licensee shall carry out all services efficiently, honestly and without concealment or any form of deception or misleading representation."
36 In Johnson v Sheppard [2005] WASCA 13 it was said (at [12]) that the word "honestly" as used in s 5(1) of the Code of Conduct for Agents and Sales Representatives made pursuant to the Real Estate and Business Agents Act 1978 (WA), does not bear any special meaning that would take it outside of its ordinary English meaning. The respondent submitted that, in that context, to find a failure to act honestly, it is necessary to find "a conscious or deliberate plan or purpose to mislead or deceive or to take an improper advantage of another person" (Jaques v Pacific Acceptance Corp Ltd [1963] SR (NSW) 1066), or conscious impropriety (Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1995] UKPC 4; [1995] 2 AC 378). It was submitted that recklessness or carelessness is not enough (Story v National Companies & Securities Commission (1988) 13 ACLR 225 and Royal Brunei Airlines v Tan at 378). The applicant did not argue against that construction of the rule, and it was on that basis that the case proceeded. While we would not accept that recklessness in the sense of "turning a blind eye", or deliberately not asking questions that may reveal the true position, does not amount to dishonesty, that is not how the case against Ms Paridis is put.
37 The basis of the Board's case is the contention that Ms Paridis should have known that she was not permitted to effect a settlement of leasehold property and therefore she did know. Put another (slightly different) way, there are aspects of knowledge that should be so obvious to a person who is licensed to practice a profession or discipline that it could not reasonably be contended that it is not known and understood by that person. In the case of Ms Paridis, she has undertaken study and obtained a qualification in settlement agency procedure in which she would have learnt of the prohibition; she has held a real estate settlement agents licence since February 1992 and from time to time the Board's information bulletin, which she receives, has made mention of the issue of leasehold property.
38 The respondent maintains simply that she was not conscious of the prohibition, and effected settlements of leasehold property on the basis that she was allowed to do so. She says that she was aware of other real estate settlement agents also undertaking this work which, if accepted, would give a context supportive of her mistaken belief that conveying leasehold property was acceptable. It may also suggest that there may be a more widespread failure within the industry to appreciate the limit of a settlement agent's authority than the Board suggests.
39 In our view, the Board has not demonstrated to the required standard that Ms Paridis knew she was not permitted to effect settlement of leasehold property at the time she did so with Units 22 and 105 of Forest Village. The fact that the settlement agent should know the law is made clear in the SA Act (s 27) and the Code (r 4), but that of itself does not establish actual knowledge of the law on Ms Paridis' part at the relevant times. The Board's reference to its information bulletins would perhaps have carried more weight if they were from a period contemporaneous with the relevant settlements rather than the 12 months and two years previously, but, in any event, the evidence as to whether they actually came to the respondent's notice falls short of establishing her knowledge.
40 The argument that the prohibition on effecting settlement of leasehold property is such fundamental knowledge for a real estate settlement agent to hold that they could never say they do not know, does not account for the variability of knowledge, understanding and practice that no doubt exists in the industry (or any industry, licensed or not). In the case of Ms Paridis, we are not satisfied that her evidence as to the state of her knowledge should be rejected. Her ignorance of her obligations under the SA Act is of greater import to the question of the quality of her practice, and how capably or efficiently she acted in respect of the relevant transactions, than it is to the question of whether she embarked on those transactions honestly.
41 Ms Paridis has admitted to inefficiency in relation to these transactions, but the allegations of inefficiency were limited to the delay in paying over settlement proceeds. We have little doubt that acting on the settlements without appreciating that the SA Act prohibited that conduct could have amounted to inefficiency, but that is not the allegation that the respondent was called upon to meet.
The allegation of dishonesty by acting for the vendors contrary to the purchaser's direction
42 As regards to acting for both the purchasers and sellers of Units 22 and 105, the respondent submitted that the situation at Forest Village was different from other real estate transactions in that the real estate agent was looking after both the seller and purchaser, the latter in respect to things such as colour preferences and variations to the units. In the case of Units 22 and 105, the real estate agent was "Seniors Own Real Estate" in which her former husband was involved.
43 Ms Paridis states that the purchasers were referred to her by Seniors Own Real Estate and each signed an appointment form; Mr and Mrs McNicol (Unit 22) on 28 February 2004, and Mr and Mrs Geary (Unit 105) on 25 March 2004. On the appointment form the purchasers had directed the settlement agent not to act for any other party to the transaction. The respondent had provided the purchasers with a "Disclosure of Interest" form stating that there was a business relationship between the settlement agent and Senior's Own Real Estate, which the purchasers signed as having been received and read. Ms Paridis requested the seller sign an appointment to act form for Unit 22 on 31 March 2004 (after settlement) and for Unit 105 on 22 March 2004 (just prior to settlement).
44 Ms Paridis says that she did not read or check the appointment documents; she says the files for Units 22 and 105 would have been handled by more than one person and the authorities to act would simply have been placed on the relevant files. She says that she assumed that, as the purchasers had been referred by the seller's real estate agent, and the purchasers were not to pay a settlement fee to her, the purchasers were aware and consented to her acting for the seller. The matter was not brought to her attention by anyone until it was investigated by the Board and referred to this Tribunal.
The findings in relation to the allegation of dishonesty by acting contrary to the purchasers' directions
45 The respondent said that the particular circumstances of the transactions lead her to the assumption that the purchasers were aware of and consented to her also acting for the seller. The Board argues that the authority to act was clear and specified that the purchasers directed the settlement agent not to act for any other party to the transactions. Thus, the Board argues, Ms Paridis was not entitled to assume anything different, and her claim that she did not read or check the appointment documents should not be accepted. The Board submits that an agent starts from the premise of acting for one party only, with the prospect of conflict to be explored when it is suggested the agent act for both sides. It submits that such a situation requires positive enquiry and positive satisfaction, and anything less is dishonest.
46 The Board's case again raises serious issues about how efficiently Ms Paridis carried out her work, and the carelessness of her practices, but does not provide sufficient evidence to displace what she says was her state of mind at the time. The appointment document upon which the Board relies appears to be modelled on the form set out in Schedule 1 of the Code as is required by r 6A of the Code. However, the particular document signed by purchasers of Units 22 and 105 contains an additional statement relevant to the question of who the settlement agent was acting for. This statement, which is not in the form of an option for the purchaser, (that is, to strike out if not applicable), is as follows: "I/We hereby confirm that I am aware that you are also acting on behalf of the Vendor". It is further into the document that the purchaser is given the option of directing that the settlement agent not act for any other party. Although not addressed in submissions, the conflicting statements on the appointment form are not helpful to the Board's case as they show the document to be internally inconsistent in its message about the identity of the settlement agent's client or clients. The acknowledgement that the settlement agent was to act for the vendor is consistent with the context that lead to the assumption upon which Ms Paridis said she was acting.
47 Although we consider that the carelessness with which Ms Paridis approached the question of authority to act is quite damning of her approach to her responsibilities, we are not satisfied that she had actual knowledge of the direction such that her conduct can be categorised as dishonesty.
The allegation of dishonesty in relation to the settlement of units 22 and 105 in Forest Village
48 On 22 March 2004, the respondent wrote to Everard Yeo & Associates, the project manager for Forest Village, advising that settlement of the lease of Unit 105 was set to take place on 2 April 2004 and that the net amount due to Forest Village was $172 437.36. The settlement statement enclosed with the letter shows that a payment of $7082 was to be made in relation to variations to the contract. That payment was to be made to Summit Projects. On or about 2 April 2004, settlement of Unit 105 was effected.
49 On 31 March 2004, the respondent wrote to Everard Yeo & Associates confirming that the sum of $170 571.39, representing the net proceeds of the lease of Unit 22 had been forwarded to Police and Nurses Credit Society. Settlement of Unit 22 had been effected on or about 12 March 2004.
50 It is common ground that the letter of 31 March 2004 was inaccurate, and that the settlement amounts were ultimately paid into the Police and Nurses Credit Society on 29 June 2004. The amount paid to the Police and Nurses Credit Society for Unit 105 was $165 355.36, the difference of $7082 from the amount stated in the letter of 22 March 2004, being paid to Summit Projects for variations on the contract.
51 The Board called Vicki Lorraine Chantry (Ms Chantry), who is engaged by the owners of Forest Village to maintain the financial records of the project and to assist with various other matters relating to the project. She works from the offices of Everard Yeo & Associates for whom she also does contract work.
52 Ms Chantry gave evidence that between 29 April 2004 and 11 June 2004, she had contacted the respondent's office on three occasions advising that contract variation costs of $7082 on Unit 105 had not been received by Summit Projects. She says that on two of those occasions the respondent advised that the cheques had been issued. Payment was ultimately received and banked by Summit Projects on 16 June 2004.
53 Ms Chantry says that around 28 June 2004, Garry Cossill of Everard Yeo & Associates advised her that the funds from the settlement of Units 22 and 105 at Forest Village had not been deposited into the Police and Nurses Credit Society account. Ms Chantry advised Mr Kim Rodgers, the company accountant for Van der Meer and Associates Pty Ltd, consulting engineers, of this matter. Mr Rodgers was also the accountant for the corporate trustee of the Forest Village project.
54 The Board also called Mr Rodgers. He says that around 29 June 2004 he was told by Ms Chantry that the settlement proceeds for Units 22 and 105 had not been received from the settlement agent.
55 Mr Rodgers telephoned Ms Paridis on the morning of 29 June 2004 to enquire about the settlement proceeds and asked her why the missing funds had not shown up as outstanding or unpresented cheques in the monthly bank reconciliation of her agency trust account. Mr Rogers says that the respondent said to him that the cheques had, to her knowledge, been properly and promptly drawn on completion of settlement and had obviously gone astray. The reason this was not reflected in the monthly bank reconciliation and so alerting her to the problem, was that her agency had been experiencing computer software problems. She said the Board was fully aware she had been experiencing computer problems. Ms Paridis said that she would investigate the matter and make further contact with him.
56 On the afternoon of 29 June 2004, Mr Rogers sent Ms Paridis a facsimile in which he requested details of the trust account entries for the settlement of Units 22 and 105 or the entire Forest Village account in the trust ledger (if consolidated). He also asked for details of the Forest Village transactions that appeared on the trust account certified bank reconciliation for the month ending on 31 May 2004, specifically any outstanding cheques relating to the Forest Village and copies of bank cheques.
57 On the afternoon of 29 June 2004, Mr Rodgers received a facsimile from Ms Paridis. The facsimile acknowledged telephone contact with Ms Chantry, and with a person in the Police and Nurses Credit Society on 28 June 2004, and telephone contact with Mr Rodgers on 29 June 2004.
58 In respect of Unit 22, the facsimile states that two cheques were drawn on 12 March 2004; No 201 for $170 571.39 to Police and Nurses Credit Society and No 202 for $2098.61 to Seniors Own Real Estate. These amounts were "resent" as cheque no 206 to Seniors Own Real Estate on 19 April 2004 and as cheque no 1337 to Police and Nurses Credit Society on 28 June 2004.
59 In respect of Unit 105, the facsimile states that two cheques were drawn on 2 April 2004; No 266 for $165 355.36 to Police and Nurses Credit Society and No 267 for $7082 to Summit Projects. The amount to Summit Projects was "resent" as cheque no 780 on 26 May 2004 and again as cheque no 1172 on 16 June 2004. The amount to Police and Nurses Credit Society was "resent" as cheque no 1336 on 28 June 2004. A cheque for $1535 was sent to Mr and Mrs Geary on 19 April 2004 (cheque no 205).
60 The facsimile, which the settlement agent confirms was sent to Mr Rodgers, concludes:
"As mentioned over the last five months we have been changing computer programs and trust accounts and our previous computer program has suffered a very large amount of data corruption and we have lost and had to reprocess information and have been unable to print information. We apologise that because of this we did not discover the unrepresented cheques as we would have previously."
61 The cheques referred to were produced in evidence and it is clear, as is now accepted by the respondent, that the payee on cheques numbered 201 and 266 was not Police & Nurses Credit Society and, they were not for $170 571.39 and $165 355.36 respectively, but were different amounts. They were not related to this transaction. The payee on cheque number 202 was not Seniors Own Real Estate. The payee on cheques numbered 267 and 780 was not Summit Projects.
62 It is the facsimile of 29 June that the applicant relies upon in its complaint of dishonesty. It contends that Ms Paridis knowingly gave false information to Mr Rodgers concerning the cheques relating to the settlements.
63 Ms Chantry says that she was asked by Everard Yeo & Associates to calculate the interest cost incurred by the sellers of Units 22 and 105 due to the delay in receiving the settlement cheques. She says she calculated the interest cost, and on 9 September 2004 a cheque for an amount of $3099.42 was received from Sunset Coast Settlements as part payment of the interest due. On 28 September 2004, a further cheque for $3985.03 was received from the settlement agent, being the balance of the interest amount.
64 Ms Paridis says that around July or August 2004, she telephoned either Ms Chantry or Mr Rodgers, apologised for the delays in the settlements of Units 22 and 105, and offered to pay the sellers any lost interest as a consequence of those delays. She says that Forest provided her with the interest calculation which she duly paid. Under cross-examination, Ms Chantry could not remember whether Ms Paridis had first suggested that she would compensate Forest for the lost interest.
65 The respondent says that the system in her agency at the time of the settlement of Units 22 and 105 was that an employee called Jacquie, whose job it was to draw and send cheques, would be given the settlement file and instructed to draw and send cheques necessary to effect the settlement. At that time two people in the agency, in addition to the settlement agent, were authorised to sign cheques on the trust account. Ms Paridis said that it was not then her practice to check a settlement file to confirm if cheques had been sent. It was her usual practice to ask Jacquie if a cheque had been sent before writing or signing a letter such as the one dated 31 March 2004 (in respect of Unit 22). Even if she had not asked Jacquie, she says she would have assumed that the cheque would have been sent because it was Jacquie's job to do so.
66 Ms Paridis says that it was possible that Jacquie drafted the letter of 31 March 2004, in which case she would have relied on Jacquie's statement that the cheque had been sent.
67 The respondent agrees that she had a telephone conversation with Mr Rodgers on 29 June 2004 at which he queried the whereabouts of the settlement proceeds for Units 22 and 105. Her response, she says, was that she thought the cheques had been drawn and this was consistent with her belief, at that time, that the relevant cheques had been forwarded to the Police and Nurses Credit Society. She also agrees that Mr Rodgers asked for a printout of the trust account ledger and that she told him that she could not comply with his request because of the trouble with the computer system. Mr Rodgers in his evidence denies that Ms Paridis made reference in that conversation to the computer problems in respect of the trust account ledger printout.
68 The respondent says that, prior to writing and signing the letter (sent by facsimile) to Everard Yeo & Associates on 29 June 2004, she had asked Jacquie to give her details of the cheques that were issued in respect of Units 22 and 105, that is, the cheque number, the date it was drawn, the amount and the payee. These details, provided in the letter of 29 June, were the ones supplied by Jacquie. When "resent" is mentioned in relation to cheque, Ms Paridis says her understanding was that the initial cheques had to be replaced because, for one reason or another, they had not reached the payees.
69 According to Ms Paridis, she had been having difficulties with Jacquie from around January to July 2004. Jacquie was not listening to her, was not following orders and became rude to her. The respondent said that around May/June 2004, Jacquie began telling her that she did not want her to supervise or check her work. Jacquie walked out of the agency in July 2004.
The allegation of dishonesty in the settlement agent settling units 22 and 105 in Forest Village
70 The Tribunal does not agree with the Board's submission that the evidence of Ms Chantry and Mr Rodgers demonstrates that the respondent had a "hands on" role in the settlements of Units 22 and 105 and in the resolution of the problems that arose. We accept that Mr Rodgers was very concerned to determine the whereabouts of the settlement proceeds and that he wanted to know what had occurred, hence his request for trust account details from the settlement agent. Mr Rodgers said that Ms Paridis was definite in her advice that the cheques had been drawn and had "obviously" gone astray.
71 The respondent's evidence is that she told Mr Rodgers she thought the cheques had been drawn and that something may have happened to them. She said that she mentioned to Mr Rodgers, in that conversation, that she had been experiencing problems with her trust account computer software program.
72 Ms Chantry says that she contacted Ms Paridis on three occasions between 29 April 2004 and 11 June 2004 to tell her that the $7082 due to Summit Projects as part of the settlement of Unit 105 had not been received. On two of those occasions the respondent is alleged to have said that cheques had been issued.
73 The evidence of Ms Chantry and Mr Rodgers is not necessarily inconsistent with Ms Paridis' account of events. Ms Paridis' explanation that she was relying on advice about the transactions from her employee would equally explain her responses to both Mr Rodgers and Ms Chantry.
74 There are, however, some troubling aspects with the submissions and evidence of the respondent. The first relates to her stated reliance on the person Jacquie to complete the settlement process by drawing and sending the necessary cheques when, at the relevant time, Ms Paridis says that Jacquie was not listening to her, not following orders and refusing supervision. She was cross-examined as to why she would rely upon a particular employee (Jacquie) to do the right thing, and give her the correct information on significant matters (settlements/drawing cheques on the trust account), when that employee was recognised as being troublesome.
75 Ms Paridis explained this situation with reference to the personal and work problems she was experiencing at the time. She submits that the applicant could have called Jacquie to test her evidence but did not so. On the basis of the rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, the respondent submits the Tribunal should infer that Jacquie would not have assisted the Board's case. The Tribunal does not accept, however, that the rule in Jones v Dunkel assists the respondent. There may be an explanation for the Board's failure to call Jacquie, namely that, in the documents filed by the respondent prior to hearing, the reference to this person was only by the description "an employee", without any name. In the respondent's witness statement, exchanged about two weeks prior to hearing, only the first name was used. The actual full identity of the employee was not revealed even at the hearing. The Board may not have been in a position to call the witness on the information it had. It would have been equally open for Ms Paridis to call Jacquie, and if any inference is to be drawn, fairness might suggest that the proper inference is that her evidence would not assist either party.
76 The second matter of concern is the respondent's explanation of the problems with her trust account, and how she dealt with files until the implementation of the new computer software program. Around the time of settlement for units 22 and 105, she was in receipt of weekly statements from her bank. Her auditor, Athans & Taylor, had advised the Board by letter, dated 29 September 2004, that conversion to a new computer system for the trust account occurred in March 2004, and reconciliations since that date indicated that the new system was operating appropriately. The Board contends the successful computer conversion would have enabled Ms Paridis to provide trust account ledger details requested by Mr Rodgers on 29 June 2004.
77 In her evidence the respondent says that, at a point in time when it was found that a software and hardware problem existed with the trust account computer system, she decided to recreate the trust account manually. Although the monthly reconciliations were not able to be done, she would check the bank statements and check that each file had been manually reconciled on a daily basis. It is not clear from the evidence precisely the period during which manual reconciliation occurred, although in a letter to the Board from the respondent's auditor, Athans & Taylor, dated 4 February 2004, they state that there was still corruption in the computer system, a decision had been made to change to a new software system and "in the interim the agent has reverted to manually checking client cards to ensure their reconciliation on settlements".
78 On her own evidence then the settlement agent was, for an unspecified time from mid February 2003 (when the software program lost approximately 30 transactions), personally dealing with files to the point of reconciliation. At the time of the settlements of Units 22 and 105 (March and April 2004), the settlement agent is saying that she was relying almost exclusively on Jacquie and that it was not her practice to check a file and confirm cheques had been sent.
79 A third aspect of concern is the letter of 29 June 2004 to Mr Rodgers at Everard Yeo & Associates. In this letter Ms Paridis states that she had spoken with Ms Chantry, and an officer of the Police and Nurses Credit Society "yesterday" which could only mean, 28 June 2004. This statement is suggestive of the possibility that the settlement agent knew on 28 June that the settlement proceeds had not been paid, and is consistent with the cheque numbers 1336 and 1337 being drawn on that day prior to her conversation with Mr Rodgers on the morning of 29 June.
80 The final matter which impacts on the respondent's explanation of the events is her evidence that the conversion to the new trust account system took place in March 2004 which is around the time the settlements of Units 22 and 105 occurred and which might therefore have received the benefit of the new system. There remained an issue with the old trust account which the settlement agent says was finalised and closed on 22 September 2004, however Athans & Taylor reported to the Board on 29 September 2004 that "the 'conversion' occurred in March 2004 and I am pleased to comment that a review of the trust account reconciliations since that date indicated the new system is operating appropriately and that reconciliations are being performed in a timely manner".
81 These concerns cause some unease about accepting Ms Paridis' contention that she relied on a particular employee to provide her with the correct financial information about certain transactions. However, accepting that was the employee's role in the agency, it cannot be said that Ms Paridis' claim that she relied upon her for information is inherently implausible. The fact that an employee is troublesome does not of itself mean they are incapable, or worse, that they would deliberately provide the wrong information. The somewhat chaotic nature of the agency at the time, the staff disharmony, the technical problems with the computer software and the settlement agent's personal issues are not inconsistent with the view that she did not in fact have a handle on things.
82 The respondent's conduct in relation to the information given to Mr Rodgers in the facsimile of 29 June easily satisfies a test of inefficiency, and involves a "form of ... misleading representation", so that had the Board chosen to bring a complaint of a breach of r 15 on that basis, it is likely that the allegation would have succeeded. The disputed proceedings before us, however, have involved an allegation of dishonesty, involving a deliberate misleading. That is the allegation that Ms Paridis was called upon to meet.
83 Despite the disquiet the Tribunal has about the respondent's conduct, it is the finding of the Tribunal that the Board has not demonstrated to the required standard that the settlement agent did not settle the leasehold properties, Units 22 and 105 at Forest Village, honestly. The allegation is therefore not made out.
84 Ms Paridis has admitted to the following allegations:
85 The power of this Tribunal to decide disciplinary action against settlement agents is contained in s 84 of the SA Act. That section reads:
(1) If, in a proceeding commenced by an allegation under section 83 the State Administrative Tribunal is satisfied that proper cause exists for disciplinary action, the State Administrative Tribunal may do any one or more of the following things ¾
(c) suspend or cancel his licence and any triennial certificate in respect thereof and, in addition, disqualify him either temporarily or permanently, or until the fulfilment of any condition which may be imposed by the State Administrative Tribunal or until the further order of the State Administrative Tribunal, from holding a licence or triennial certificate, or both.
(2) There shall be proper cause for disciplinary action if ¾
(a) the State Administrative Tribunal is satisfied that the settlement agent improperly obtained a licence or triennial certificate;
(b) the settlement agent, or any person acting with the authority or upon the instructions of the settlement agent has, in the course of any dealings with a party, or a prospective party, to a transaction, been guilty of conduct that constitutes a breach of any law other than this Act and that prejudices or may prejudice any rights or interests of the party, or prospective party, to the transaction;
(c) the settlement agent is acting or has acted in breach of ¾
(i) a special condition of his licence or triennial certificate;
(d) any other cause exists that, in the opinion of the State Administrative Tribunal renders the settlement agent unfit to hold a licence.
(3) Where the State Administrative Tribunal suspends or cancels a licence or triennial certificate, or both ¾
(b) the licence or triennial certificate as the case requires shall be immediately delivered to the Registrar by the settlement agent.
(4) No penalty provided for elsewhere in this Act in relation to the conduct of a settlement agent is to be taken to limit the powers exercisable by the State Administrative Tribunal under subsection (1)."
86 On the basis of the allegations admitted to by the respondent, the Tribunal is satisfied proper cause exists for disciplinary action pursuant to s 84(2)(c) of the SA Act.
87 By her own admissions, Ms Paridis, during the period 2002 and 2004, did not always give matters and staff proper attention and supervision, she lacked good judgment in the way she dealt with and addressed issues and she made assumptions without checking the correctness of those assumptions.
88 The Tribunal has found the respondent not to have acted dishonestly in respect of the particular transactions that were the basis of allegations made by the Board. The allegations have revealed, however, that at the relevant times Ms Paridis had little apparent control over the operation of her agency; staff were acting independently of her authority, there was not a centralised control of files, appointment to act forms were ambiguous and not checked for client instructions and leasehold settlements were being effected by her in direct contravention of the SA Act. An objective observer could not have been confident that the respondent could provide the service, and financial accountability, expected of someone licensed to undertake real estate settlements. The evidence concerning the allegations of dishonesty, while not establishing the complaint against Ms Paridis, gives a context in which the ongoing failures to reconcile the trust account in a timely way can been seen.
89 The most serious of the concerns was the state of Ms Paridis' trust account. She identified problems with the computer software program beginning in July 2002. She admits, however, that she did not balance her trust account to the standard required by s 49(6) of the SA Act from November 2001 and says, for that period, that her personal and financial problems were taking her attention away from her work. She says it is not the case that the trust account was never balanced and there was usually a "catch-up" where several months were balanced at once. The fact remains that there were 19 separate months from November 2001 to June 2003, when the trust account was not correctly reconciled and balanced.
90 The danger of such a practice is illustrated by three examples from the respondent's trust account history. The first took place during the period of the admitted allegations. On 11 December 2001, Ms Paridis banked a number of cheques totalling $29 178.16 into her trust account, but the bank incorrectly credited the cheques into a visa account not related to Sunset Coast Settlements. Between 13 December 2001 and 3 January 2002, the monies were withdrawn from the relevant trust ledger accounts by way of journal entries or trust cheques. It was not until 6 March 2002, however, that the banking error was corrected by the bank which meant the monies withdrawn were not at the time matched by funds in the account. Ms Paridis had not correctly reconciled her trust account for the period of these transactions, namely December 2001, January 2002 and February 2002.
91 The second example relates to the audit of the trust account for the year ended 30 June 2003. This was not completed by Athans & Taylor until 29 September 2004. By way of letter to the Board which accompanied the necessary statutory declarations required under the SA Act, the auditor stated that the settlement agent, in the process of reconciling the "old" trust account, identified errors which necessitated her having to deposit funds of $2086.80 into that account. Ms Paridis had not correctly reconciled her trust account for the whole of the 12 months to 30 June 2003 and the balances held in trust at that date were unable to be accurately determined by her or the auditor.
92 The third example is outside of the period of the admitted allegations, but falls for consideration by the Tribunal in its overall assessment of the respondent's conduct and the explanations she has given for it. In June 2001, subsequent to a qualified audit report for the year ended 30 June 2000, an Inspector of the Board investigated Ms Paridis' trust account. Upon completion of the investigation, it was found that she had not correctly reconciled her trust account from July 1999 to May 2000 and that during August 1999 and September 1999 the reconciliations were eight months and seven months behind respectively. The respondent was given a warning by the Board by way of a letter dated 24 August 2001. The Inspector noted her explanations for the delay which were stated on the completed investigation report as computer problems. He verified that the trust account was, at the time of his letter, being correctly maintained and that Ms Paridis, in his view, was cognisant of her responsibilities. It was only three months after the letter in August 2001 that the respondent again failed to correctly balance her trust account and this state of affairs continued for 19 out of the following 20 months. Thus it can be seen that the breaches of the SA Act that form the subject of these proceedings occurred in a context where the seriousness of failures to properly maintain the trust account had been formally brought to the respondent's attention.
93 A trust account is the core of the practice of any settlement agent. It is into this account which settlement monies are paid. The settlement agent has stewardship of these funds and the public must have complete confidence that the funds are protected and that the trust account is maintained to the highest standards. The public is entitled to expect a trust account is being maintained in accordance with the requirements of the SA Act. If it is not, the consequence is that their funds are at risk. For that reason persons entrusted to keep such accounts in respect of certain professions or disciplines are generally licensed and regulated. In the case of settlement agents this is provided for in the SA Act and the Code. A member of the public armed with the knowledge that settlement agents are subject to the SA Act and the Code, should not have to enquire further, they should be able to proceed with the assurance that their monies will be accounted for in a consistent and meticulous way.
94 Ms Paridis did not conduct herself in the way just described. She presents factors that she submits provide some explanation for the circumstances which lead the Board to bring the allegations to this Tribunal. They include that her practice was extremely busy at the time, that she was supervising six employees and that she had financial, emotional and family problems. She says that she has made many improvements to her practice, that she spent a significant sum to ensure that the computer problem in respect of her trust account was rectified and that the audit report for the year ended 30 June 2005 was not qualified. She submits that she now understands and appreciates her obligation under the SA Act in relation to her trust account.
95 The settlement agent also submits that by admitting to the majority of the allegations made against her by the Board, she does acknowledge responsibility for her actions.
96 Whilst the Tribunal has some sympathy with the personal and family problems that the settlement agent says impacted on her practice during the relevant period, that sympathy cannot extend to a justification for her responsibilities as a licensed real estate settlement agent being unmet to the extent revealed by the allegations made by the Board. It is not acceptable that the trust account was left in an uncertain state for at least the period from November 2001 to June 2003. It is not sufficient to say that the account was at times balanced when this meant several months would be balanced at once. The examples given earlier in these reasons, abundantly demonstrate that by not reconciling the trust account monthly, the settlement agent could not be sure that the funds she was withdrawing from the account would be set against the earlier depositing of matching funds. Such a situation presented a serious risk to the integrity of the trust account. The fact that no allegation of misappropriation or disappearance of trust money was made does not mitigate the existence of that risk.
97 It is the view of the Tribunal that it was incumbent upon the settlement agent to promptly adopt a manual system of reconciliation of the trust account once the computer program was found inadequate in producing monthly bank reconciliations. In her evidence, Ms Paridis said that she had decided to recreate the trust account manually and would reconcile each file manually. She was, however, unable to manually complete monthly reconciliations. At that point it was open to the settlement agent, given the seriousness of the situation, not to accept further funds into her trust account until the problem was rectified. She did not embark upon such a course of action and it was only in early 2004 that the decision was made to change to a new computer program and trust account. By then the problems with the "old" trust account had amplified such that it dangerously affected the settlements of Units 22 and 105 in Forest Village.
98 The respondent submits that her business is now running properly, efficiently and successfully. She has six staff members for whom she is responsible and who will be greatly affected if her licence is suspended or disqualified as she is the only licence holder in the practice.
99 It is a well established principle that the object of disciplinary action is one of the protection of the public by maintaining the integrity of a profession. It is not intended to be punitive even though the disciplinary action may involve significant deprivation to the person disciplined (see for example, Re A Practitioner; Ex Parte The Legal Practitioners Disciplinary Tribunal [2001] WASCA 204 at par [6] and [7].
100 The Tribunal views the admitted allegations, in particular, those relating to the respondent's trust account, as a serious breach of the public trust for a practitioner licensed under the SA Act, and that it warrants a suspension of her licence. The Tribunal does not agree with the Board's submission that the respondent's licence be cancelled and that she be permanently disqualified from holding a licence. To do so would be to find that Ms Paridis is incapable of re-establishing herself over time and that cannot be said on the evidence presented to the Tribunal (see Grljusich v Andrews [2003] WASCA 206).
101 The Tribunal has determined that the respondent's licence and triennial certificate be suspended for 12 months.
102 The Tribunal agrees with the Board's submission that the suspension be deferred for two months to enable respondent to finalise existing settlements and to enable her trust account to be reduced to a nil balance.
103 Relying on the Tribunal's decision in Medical Board of Western Australia and Roberman [2005] WASAT 81 at [30] the Board submits that the settlement agent should be ordered to meet the costs of the Board in bringing and maintaining the proceedings. The Board submits that a reasonable award of costs by the Tribunal would be $10 000.
104 The settlement agent has admitted to the majority of the allegations brought by the Board. The two allegations of dishonesty which were disputed by the settlement agent have not been made out. The hearing dealt with the two allegations of dishonesty and preliminary submissions as to penalty. On the basis of the reasoning in Roberman, the Tribunal accepts that the Board is entitled to costs of bringing the disciplinary action which lead to the admissions by the settlement agent. Had the matters that were relied upon by the Board as supporting a finding of dishonesty been relied upon as basis for a claim of inefficiency, it is most likely that the practitioner would have admitted the allegations as she admitted all other allegations. That would have resulted in a much shorter hearing, and greatly reduced costs. The appropriate amount of costs is assessed as $3000.
1. The respondent's licence and triennial certificate is to be suspended for 12 months, to commence on 24 November 2006.
2. The respondent is ordered to pay costs of $3000.
I certify that this and the preceding [104] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
JUDGE J CHANEY, DEPUTY PRESIDENT
(1938) 60 CLR 336
(1959) 101 CLR 298