Hinde v Commissioner for Fair Trading [2008] NSWADT 219

CITATION: Hinde v Commissioner for Fair Trading [2008] NSWADT 219

DIVISION: General Division

APPLICANT Jeffrey James Hinde PARTIES: RESPONDENT Commissioner for Fair Trading

FILE NUMBER: 083132

HEARING DATES: 3 June 2008

SUBMISSIONS CLOSED: 3 June 2008

DATE OF DECISION: 11 August 2008

BEFORE: Higgins S - Judicial Member

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Property, Stock and Business Agents Act 2002

In person REPRESENTATION: V Griswold, solicitor

ORDERS: The decision of the Commissioner of Fair Trading is affirmed

REASONS FOR DECISION Introduction 1 This is an application by Jeffrey James Hinde ('Mr Hinde') seeking review of a decision of a delegate of the Commissioner of Fair Trading ('the Commissioner') to refuse his renewal application for a real estate licence under the provisions of the Property, Stock and Business Agents Act 2002 ('the Act'). The Commissioner refused Mr Hinde's licence on two grounds; namely on the ground that he was not 'a fit and proper person to hold such a licence' and on the ground that he was a 'disqualified person' as defined under paragraph 16(1A)(a) of that Act. 2 Mr Hinde, on being advised of the Commissioner's decision, filed an application with the Tribunal seeking review of the decision. At the same time, Mr Hinde filed an application for a stay of the operation of the Commissioner's decision. On 29 April 2008, the President refused Mr Hinde's stay application and made orders in regard to the filing and serving of evidence and set the application down for hearing. In his application filed with the Tribunal Mr Hinde noted that he had not sought internal review of the Commissioner's decision and no such request was made subsequently. Accordingly, it is appropriate to first consider the Tribunal's jurisdiction to deal with this application. Jurisdiction 3 Subsection 55(1) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act') sets out the circumstances in which a person may seek review of a 'reviewable decision' of an agency. There is no dispute that a decision of the Commissioner to refuse an application for a licence under the Property, Stock and Business Agents Act 2002 is a 'reviewable decision'. 4 Paragraph 55(1)(b) of the ADT Act provides that a person's right to seek review of a reviewable decision is dependent on an 'internal review' of the original decision of the agency having been finalised under subsection 53(9) of the ADT Act. That is, a persons right to make an application to the Tribunal for review of a reviewable decision (and the Tribunal's jurisdiction to deal with that application) is dependent on the person having made an internal review request and that review having been finalised. 5 However, this requirement must be read subject to paragraph 55(2)(c) of the ADT Act. That paragraph provides that a person is not prevented from making an application for review that has not been the subject of internal review under section 53 of the ADT Act where the Tribunal is satisfied that: 'It is necessary for the Tribunal to deal with the application in order to protect the person's interests and the application to the Tribunal was made within a reasonable time following the decision of the Administrator concerned.' 6 In my opinion, having regard to the circumstances surrounding Mr Hinde's application, I am satisfied that it is necessary for the Tribunal to deal with his application notwithstanding that he had made no application for an internal review under section 53 of that Act. In this regard it is noted that Mr Hinde is 80 years of age, he had been working as a real estate agent up to the time of the decision the subject of review and he is seeking review of the decision as he wants to continue to work in this field. It is also noted that Mr Hinde filed his application for review in a very timely manner, the Commissioner has not objected to the Tribunal dealing with his application and Mr Hinde has not raised any evidence of substance that was not already before the Commissioner when the decision the subject of review was made. The relevant licensing legislation 7 Subsection 14(1) of the Property, Stock and Business Agents Act 2002 ('the Act') sets out the eligibility criteria for a natural person to be issued with a real estate licence. It relevantly provides as follows: 14 Eligibility criteria for a licence …. (1) A natural person is eligible to hold a licence only if the [Commissioner] is satisfied that the person is; … (b) a fit and proper person to hold a licence …, and … (d) is not a disqualified person, ... 8 The circumstances in which a person is a 'disqualified person' is set out in section 16 of the Act. This section relevantly provides: 16 Disqualified persons (1A) a person is a disqualified person for the purposes of this Act (…) if the person, (a) is an undischarged bankrupt, … (2B) the [Commissioner] may exempt a person from the operation of subsection (1A)(a), … by: (a) certifying, in the case of the exemption from subsection (1A)(a), that the [Commissioner] is satisfied that the person took all reasonable steps to avoid the bankruptcy concerned, … (2D) in determining for the purposes of subsection (2B) … that reasonable steps could have been taken by a person to avoid a particular outcome, the [Commissioner] is to have regard to the steps that could have been taken by the person from the time that the financial difficulties that gave rise to the outcome first arose. 9 Section 19 of the Act provides that an application for a real estate licence must not be granted unless the applicant is eligible to be granted a licence under section 14. This means that if any of the eligibility criteria for the relevant licence applied for are not met by an applicant, the applicant's application for that licence must be refused. That is, for the purpose of this application the Commissioner had no discretion to issue a licence: (a) where the Commissioner was not satisfied that Mr Hinde was a fit and proper person to hold a real estate licence, or (b) where the Commissioner was not satisfied that Mr Hinde, an undischarged bankrupt, took all reasonable steps to avoid the bankruptcy. 10 The same principles of construction of the relevant provisions of the Act apply to the Tribunal in determining this application. The Evidence 11 There is no dispute about the factual circumstances which surround the Commissioner's decision to refuse Mr Hinde's application for a real estate agent's licence. He had been issued with such a licence in February 2007. Mr Hinde had sought the licence so that he could supplement his work as a solicitor. Mr Hinde had been practicing as a solicitor for some years and he worked as the principal of his firm of solicitors, named Jeffrey Hinde and Associates. 12 In a letter, dated 16 November 2007, Mr Hinde informed the Commissioner that he had filed a petition for bankruptcy the previous day. In his letter, Mr Hinde said that he understood that bankruptcy would cause disqualification of his real estate licence and that he was submitting his letter to appeal against such disqualification. He went on to say the following: "The reason for my bankruptcy is that my once successful Law Practice at [ location ] suffered a collapse in conveyancing volume when the State Government legislated for exit stamp duty on property sales and also I went through a three years traumatic experience with my ex-wife which concluded in her divorcing me. I failed to pay tax as I was unable to pay wages, GST and I built up a large debt to the Tax Office who is my primary creditor. I also spent substantial money on my ex-wife in the hope of saving my marriage which was a complete lost cause. This occasioned me to suffer depression. I understand that your normal consideration for allowing an appeal against disqualification due to bankruptcy is if in all the circumstances it was not the fault of the licensed agent. In my circumstances, I had no option but to file personally for my bankruptcy and accordingly, I request that I am not disqualified from holding a Licence. I have held a practising certificate as a solicitor for almost twenty years, but on Wednesday, 14 November 2007 I have agreed with the Law Society that I will not practise law as a solicitor. The background to this happening is that during this period of major emotional and financial crisis and perhaps suffering from depression and insanity, I misappropriated some trust funds held on behalf of a client and I decided to make a full disclosure to the Law Society and I believe they have written to you advising you of that fact. During my years as a lawyer, firstly, as a corporate lawyer for a company and subsequently, in private practice, I have always rendered good and professional service to a wide variety of clients and enjoyed a high reputation. There can be no excuse for misappropriating clients' funds; it is something for which I am deeply ashamed …" 13 In the letter Mr Hinde also said that if he was unable to continue as a licensed real estate agent he would have no source of income. However, if he were able to continue to work as a licensed real estate agent he hoped to earn sufficient money to repay the money he had misappropriated from his clients. Mr Hinde provided the Commissioner with two references. One reference was from David Standford, a registered tax agent, and the other reference was from Cerena Foo, a solicitor who has known Mr Hinde personally and professionally for many years. Both referees attested to Mr Hinde being a person of good character and integrity notwithstanding his bankruptcy and the circumstances which lead thereto. 14 At the hearing, Mr Hinde tendered an affidavit in which he set out in more detail the circumstances which lead to his misconduct and his bankruptcy. In that affidavit he also listed the names of a number community and other organisations for which he voluntarily provided assistance over the years. 15 At the hearing, Mr Hinde was extensively cross-examined by Ms Griswold. During this cross-examination Mr Hinde did not resile from that which was contained in his affidavit; namely the lavish lifestyle which he and his former wife had lived. This lifestyle he said was demanded of him by his former wife and as part of her many demands she had insisted they move into the city, which required Mr Hinde to move his well established and successful country legal practice into an unknown, yet more competitive, location within the city of Sydney. Consideration 16 While the Commissioner's decision of refusal is based on two grounds, it is unnecessary for the Tribunal to consider both grounds if it is satisfied, on the material before it, that one of the grounds is made out: see paragraph [9] above. For the reasons set out below, the Tribunal is satisfied that the second ground of refusal is established. That is, Mr Hinde is a 'disqualified person', which is sufficient to find that the decision of the Commissioner is the correct and preferred decision: see section 63 of the ADT Act. It is therefore unnecessary to consider whether Mr Hinde is also 'fit and proper' to hold a real estate licence at this time. In the event Mr Hinde were to be discharged from his bankruptcy, and he again applies for a real estate licence this may remain a relevant ground for refusal. This will depend on the circumstances at the time any such application is made. 17 It is not disputed that Mr Hinde is an undischarged bankrupt and falls within the description of a 'disqualified person' under paragraph 16(1A)(a) of the Act. He will fall outside this description if the Tribunal is satisfied that he took all reasonable steps to avoid his bankruptcy: see paragraph [8] above. In my opinion, on the material before the Tribunal, I am not satisfied that Mr Hinde took all such reasonable steps. 18 On his own admissions, Mr Hinde said he was living a lifestyle well beyond his and his then family's means. I accept that he worked hard and that he experienced difficult times when he opened a practice in the city and that his relationship with his former wife was a difficult one. 19 However, Mr Hinde has provided no evidence as to steps he took when he first realised that he was in financial difficulties and he did not have enough funds to meet the demands of his creditors. He is a man with considerable business experience in the corporate world and as a principal in a private legal firm. It must have been very apparent to him, while he was living this lavish lifestyle, the effect it was having on his ongoing liabilities to the Taxation Office and his bank. He took no steps to cut his costs but operated on the hope that he would earn considerable commissions from sales of real estate. When these did not eventuate as anticipated, Mr Hinde used monies he held in his trust account on behalf of his clients to pay his debts. The amounts involved he said was about $110,000, which he pointed out was repaid to his clients through the solicitor's fidelity fund. As a legal practitioner Mr Hinde must have realised the consequences of his action. It would appear he once again operated on the hope of earning commissions from sales of real estate. Again these did not eventuate and Mr Hinde suggested his action in having himself declared bankrupt was the most reasonable thing he could do in the circumstances. In my opinion, this is not the relevant test. The test is what reasonable steps were taken to avoid the bankruptcy; namely steps taken prior to the bankruptcy being declared. On the evidence before the Tribunal, it would appear that Mr Hinde took almost no such steps. While he did try to earn income from another source, once he realised his income from his legal firm had diminished, he did not at any time alter his lavish lifestyle until he had secured or been paid this further income. 20 I accept that Mr Hinde is deeply ashamed about his conduct and the fact that he is now an undischarged bankrupt, however, this is not a relevant factor when considering whether or not he is a 'disqualified person' under paragraph 16(1)(d) of the Act. Mr Hinde said that he was depressed at the relevant time. I accept that Mr Hinde must have been under considerable stress during the time he was experiencing financial difficulties, but whether that stress materialised into a medical condition in the form of depression is difficult to find as there was no medical evidence, in the form of a medical certificate or otherwise, before the Tribunal. Conclusion 21 For the reasons set out above, in my opinion the decision of the Commissioner is the correct and preferred decision and should be affirmed.