CITATION: Wood v Director-General, Department of Fair Trading [2002] NSWADT 183 DIVISION: General Division APPLICANT PARTIES: Alan Grant Wood RESPONDENT Director-General, Department of Fair Trading FILE NUMBER: 023076 HEARING DATES: 07/08/02 SUBMISSIONS CLOSED: 08/07/2002 DATE OF DECISION: 09/25/2002 BEFORE: Higgins S - Judicial Member APPLICATION: Conveyancer - grant of licence - Conveyancers Licencing Act 1995 - Conveyancer - grant of licence MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 Conveyancers Licensing Act 1995 LEGISLATION CITED : Conveyancers Licensing Regulation 1993 Conveyancers Licensing Regulation 2001 Property, Stock and Business Agents Act 1941 CASES CITED: State of New South Wales v Citco Industries Pty Ltd (2001) 53 NSWLR 451 APPLICANT REPRESENTATION: In person RESPONDENT A Wilson, solicitor ORDERS: The decision of the Director-General to refuse Mr Wood's application for a conveyancer's licence is affirmed. BACKGROUND 1 On 3 April 2002, Mr Wood applied to the Tribunal pursuant to s.14(a) of the Conveyancers Licencing Act, 1995 ("the Act") and s.38 of the Administrative Decisions Tribunal Act, 1997 for a review of the decision of the Director-General, Department of Fair Trading ("the Director-General") to refuse his application for a grant of a conveyancer's licence under the Act. 2 Mr Wood has previously held a restricted conveyancer's licence, which he voluntarily surrendered in late 1998. As a holder of a restricted conveyancer's licence Mr Wood operated under the name of Twin Towns Conveyancing. On 13 August 1998, on an ex parte application by the Director-General, the Supreme Court of NSW appointed a receiver and manager of Mr Wood's property, including his Twin Town Conveyancing business. 3 The Director-General sought the appointment of a receiver following a claim by Citco Industries Pty Ltd ("Citco") under s.38 of the Act against the Compensation Fund established pursuant to the Property, Stock and Business Agents Act, 1941. The basis of the Citco claim was Mr Wood's failure to account for $150,000 that Citco deposited with Mr Wood for the purpose of on lending it to a third party introduced by Mr Wood. 4 Following the appointment of the receiver, Mr Wood's conveyancing business was wound up. And in the course of the business being wound up there were other customers of Mr Wood who also made a claim of the Compensation Fund because of Mr Wood's failure to account for money they had deposited with Mr Wood for on lending to a party introduced to them by Mr Wood. 5 On 5 November 2001, Mr Wood made a new application for a conveyancer's licence under the Act. 6 On 5 February 2002, the Director-General refused Mr Woods' application on the basis that he had previously conducted his conveyancing business, as a licensed conveyancer, contrary to the provisions of the Act. The Director-General subsequently conducted an internal review of his decision and on 12 March 2002, having completed that review, advised Mr Wood that the previous decision had been affirmed. 7 The grounds on which the Director-General made his decision were: (a) that Mr Wood had failed to comply with the requirement of Division 2 of Part 3 of the Act in relation to trust money in that he failed to operate a trust account (s.13(1)(d) of the Act). Relevant to this was the manner in which he dealt with money he had received from lenders to on lend to third parties introduced by him; and (b) that Mr Wood had failed to provide documents when requested and to give a satisfactory explanation of his conduct while he was previously licenced under the Act (s.13(1)(h) of the Act). LEGISLATION 8 The Conveyancers Licencing Act, 1995 ("The Act") regulates conveyancing work which is defined in s.4(1) and (2) to mean: " 4(1) For the purpose of this Act, conveyancing work is legal work carried out in connection with any transaction that creates, varies , transfers or extinguishes illegal or equitable interest in any real or personal property, such as (for example) any of the following transactions: (a) A sale or lease of land, (b) The sale of a business (including the sale of goodwill and stock in trade), whether or not the sale or lease of land or any other transaction involving land is involved, (c) The grant of a mortgage or other charge. (2) Without limiting subsection (1), conveyancing work includes: (a) legal work involved in preparing any document (such as an agreement, conveyance, transfer, lease or mortgage)that is necessary to give effect to any such transaction, and (b) legal work (such as giving advice or the preparation, perusal, exchange or registration of documents) that is consequential or ancillary to any such transaction, and (c) any other legal work that is prescribed by the regulations as constituting conveyancing work for the purpose of this Act." 9 Sub-section 10(3) of the Act excludes certain types of work as being conveyancing work, which does apply to the transactions relied on by the Director-General in this application following the decision of the NSW Court of Appeal decision in State of New South Wales v Citco Industries Pty Ltd (2001) 53 NSWLR 451. 10 Sub-section 10(4) of the Act defines "legal work" to mean: "work that, if done for fee or reward by a person who is neither a solicitor nor a barrister, would give rise to an offence under Part 3A of the Legal Profession Act, 1987". 11 Section 9(1) of the Act makes provision for a person to make an application for a conveyancers licence in a form approved by the Director-General. 12 Section 10(1) provides that the Director-General may determine to grant a licence to the applicant, or to refuse the application. 13 Section 10(2) provides that a licence must not be granted to an applicant unless the applicant is qualified to be granted a licence as provided under s.7 of the Act. 14 Section 7, so far as is relevant, provides as follows: "7(1) To be qualified to be granted a licence a person must satisfy the Director-General that he or she: (a) is at least 18 years of age, and (b) has such educational qualification, practical training and conveyancing experience as the Minister approves by order published in the gazette, (c) is not a disqualified person, and (d) has paid such part of any contribution or fee payable under Part 4 as is due and payable on the granting of the licence, and (e) will for the whole of the period of the licence, be insured under an approved policy of professional indemnity insurance in force with respect to the person or his or her employer, or will as a licensee be exempt under the regulations from the requirement for professional indemnity insurance. (2) ….. " 15 Mr Wood is 74 years of age. There is no issue about him having the necessary educational qualifications. However, there is an issue in respect of insurance as at the time of the hearing Mr Wood was not insured as required by s. 7 of the Act. 16 A disqualified person is defined in s.5, to include an undischarged bankrupt. While the Director-General recently caused civil proceedings to be instituted against Mr Wood claiming re-imbursement of amounts that his client's have successfully claimed from the Compensation Fund, they are yet to be determined and are not relevant to this application. 17 Section 10(3) provides that the Director-General may refuse an application on any of the grounds for which the Director-General may suspend or cancel a licence. These grounds are set out in s.13 and, so far as they are relevant, provide as follows: "13(1) The Director-General may suspend or cancel a licence on any of the following grounds: (a) that the licensee has requested the suspension or cancellation of the licence, (b) that the licensee has failed to comply with a condition of the licence, (c) … (d) that the licensee has failed to comply with the requirement of Division 2 of Part 3 in relation to trust money or controlled money, (e) …. (f) that there is no approved policy of professional indemnity insurance in force with respect to the licensee, unless the licensee is exempt under the regulations from the requirement for professional indemnity insurance, (g) that the licensee has become a disqualified person, (h) that the licensee has failed to comply with a requirement under this Act to furnish any record, document or information or if any record, document or information so furnished fails to give a satisfactory explanation of the licensee's conduct, (i) that the licensee has been convicted of an offence against this Act or the regulations, (j) …. (k) … (1A) ….". . 18 Section 11 of the Act provides that the Director-General may grant a licence subject to conditions. These conditions include the following: " s.11(2) The conditions may include conditions of the following kind: (a) A condition prohibiting the licensee from carrying out conveyancing work otherwise than as an employee of a licensee whose licensee does not contain such a condition, (b) A condition requiring the licensee to undertake or complete a specified course of studies within a specified period of time, (c) A condition prohibiting the licensee from carrying out conveyancing work in relation to specified kinds of transactions, (d) A condition prohibiting the licensee from carrying out conveyancing work except in relation to specified kinds of transactions, (e) A condition requiring the proposed licensee to undertake or complete a specified course of further eduction during each year for which he or she remains a licensee" . 19 A licence takes effect on the date on which it is granted, or on such a later date as may be specified in the licence, and remains in force until the end of the financial year in question (ie. 30 June) (s.12(1) of the Act). A conveyancer's licence once issued is renewable each year, so long as the renewal application is made prior to the expiry of the existing licence. Trust Money and Controlled Money 20 Division 2 of Part 3 of the Act sets out what a licenced conveyancer is required to do in respect of money the licensee receives on behalf of another person. 21 Section 25 requires such money to be placed into a trust account or into a controlled money account. So far as it is relevant, that section provides as follows: "25(1) A licensee who in the course of conducting conveyancing business, receives money on behalf of another person: (a) must pay the money, within the time prescribed by the regulations, into a general trust account at a Bank, building society or credit union in NSW and must hold the money in accordance with the regulations relating to trust money, or (b) if a person on whose behalf the money is received directs that it be paid otherwise than into a general trust account, must pay the money as directed and (if the money is to held under the direct or indirect control of the licensee for more than a period prescribed by the regulations), must hold the money in accordance with the regulations relating to controlled money . (2) In either case, the licensee must hold the money exclusively for, and must disburse the money in accordance with the directors of, the person on whose behalf it is held . (3) …" 22 The dictionary at the end of the Act defines the terms "trust money" and "controlled money" to mean the following: " trust money means money required to be dealt with an accordance with section 25(1)(a)". controlled money means money required to be dealt with in accordance with section 25(1)(b) that, while under the direct or indirect control of the licensee by or on whose behalf it is received, is for the time being held otherwise than in a general trust account at a bank, building society or credit union in New South Wales". 23 Section 26 of the Act is a general provision relating to the keeping of accounting records. That section provides as follows: "s.26(1) A licensee must keep accounting records that disclose at all times the true position in relation to money received by the licensee on behalf of another person. a. The accounting records must be kept in a manner that enables them to be conveniently and properly audited and if the regulations so require, must be kept in such manner as the regulations prescribe. b. It is professional misconduct for a licensee to contravene this section". 24 The Conveyancers Licensing Regulation, 1993 ("the Regulations"), which were in force until 1 September 2001, when they were replaced by substantially similar provision in the Conveyancers Licensing Regulations, 2001, made provision for how a licensee was to retain and account for money that was being held for the benefit of another party. These provisions were contained in Divisions 1, 2, 3 and 4 of Part 6 of the Regulations. 25 Division 1 contains general provisions relating to the keeping of records for trust money and controlled money (Cl. 23), records which are retained in a computer system (Cl. 24), money which is held in transit by the licensee (Cl. 25), provisions of statements of account to the person on whose behalf the money is kept or controlled (Cl. 26), and provision of invoices and receipts for the licensee's fees in respect of services provided to the client (Cl. 27). 26 The provision relating to "money in transit" provides: "25 (1)A l icens ee who is authorised or instructed by another person, from whom or on whose behalf the licensee has received money, to pay or deliver the money to a third party (not an associate of the licensee) free of the licensee's control must comply with the subclause (2) The licensee complies with this subclause if the money is paid or delivered: (a) before the end of the next b anking day or, if that is not practicable, as soon as practicable after the next banking day, or (b) no later than the day all owed by the licensee's authority or instructions if it is a day that is later than the day allowed under paragraph (a)". 27 Division 2 of Part 6 of the Regulations relates to trust accounts. Clause 28 provides that a licensee who receives trust money is required to pay that money into a bank account, which is the licensee's trust account, before the end of the next banking day, and if that is not practicable, as soon as is practicable, together with a deposit slip which records the prescribed details on it. 28 Provision is also made for the issue of receipts (Cl. 29), how trust money is to be withdrawn from the trust account (Cl. 30), keeping of daily records and receipts and payments (Cl. 31), the keeping of a journal, ledger and ledger trial balance statements (Cl. 32, 33, 34 and 35) and the delegation by the licensee of his/her authority to operate the licensee's trust account (Cl. 35). 29 Division 3 of Part 6 of the Regulations relates to controlled money. Clause 37 provides that the licensee is required to issue a notice to the client on whose behalf he/she has received the controlled money. That Clause provides, so far as is relevant, as follows: (1) " A licensee must, as soon as practicable after receiving controlled money, issue to the client on whose behalf it was received, a notice that is in or to the effect of Part of Form 3 and contains the particulars required to complete the Form. (2) If the licensee , as authorised or instructed by the client, pays any controlled money to a third party while continuing to control the money directly or through an associate, the licensee must, as soon as practicable after the payment, complete in duplicate, and issue to the client the original of, a notice that is in or to the effect of Part 2 of Form 3 and contains the particulars required to complete the Form. (3) A notice under subclause (2) must, if practicable, be included as part of the notice under subclause (1). (4) If: (a) a licensee pays controlled money to a third party as referred to in subclause (2); and (b) while the licence continues to control the money directly or through an associate, a change occurs in the arrangements under which the money is held or deposited, the licensee must, as soon as practicable after the change, complete in duplicate, and issue to the client the original of, a notice in or to the effect of From 3 containing such of the particulars specified in Parts 1 and 2 of that Form as are applicable. (5) Forms of notice kept by a licensee for issue under this clause: (a) must comprise both Parts 1 and 2 of Form 3, and (b) must be in duplicate, and (c) must be machine numbered in series. (6) A licensee need not issue to a client a notice under subclause (1) or (2) in respect of money received by way of interest or for deposit; if: (a) the money is, as soon as practicable, credited to, or deposited in, an account for which an initial notice has been used and for which a ledger account has been opened, and (b) the particulars of the money received are recorded in the ledger account as soon as practicable" (emphasis added) 30 Clause 38 and 39 relates to what information needs to be maintained, by the licensee, on a controlled money register and controlled money ledger. EVIDENCE 31 At the hearing Mr Wilson, on behalf of the Director-General, relied on the material, which had previously been filed by the Department. This material consisted of numerous documents, each page of which was numbered sequentially from 1 to 454. Included in this material were statements taken by the police in mid 1998 and early 1999 in respect of the transactions referred to below, a report of the receiver, relevant banking documents and copies of traveller's cheques. 32 Mr Wilson also tendered into evidence two further documents, the first was a company extract of Bridgecomp Pty Ltd, of which Mr Wood and a Kenneth Wood were directors and shareholders. The second document was a letter, dated 28 August 1998, from Keller Nall & Brown lawyers to the Director-General. 33 Mr Wilson did not call any oral evidence and did not make any of the persons who had made statements to the police available for cross-examination. 34 Mr Wood tendered into evidence an Affidavit sworn by John Charles Harrison on 6 August 2002. Mr Wilson had no objection to the Affidavit being tendered into evidence and did not wish to cross-examine Mr Harrison. The affidavit related to a conversation that Mr Harrison had with an officer of the Department, following the initiation of the civil proceedings against Mr Wood. 35 Mr Wilson informed the Tribunal that the Director-General was still considering his position in respect of what prosecution action, if any, he may take against Mr Wood in respect of his conduct during 1997 and 1998, while the holder of a conveyancer's licence under the Act. 36 In light of this Mr Wood did not give sworn evidence and the parties agreed that the matter should proceed on the basis of the material submitted by the Director-General and Mr Wood's response to that material as contained in the submissions he filed with the Tribunal. 37 The material relied on by the Director-General fell into three categories, as outlined in the submissions of Mr Wilson. These were: a. Insurance; b. Failure to operate a trust account; c. Failure to provide records when requested and to respond to questioning; d. Failure by Mr Wood to use money he had received from Citco Industries Pty Ltd, Mr O'Malley and Mr Ryan for the purpose for which they were given. Insurance 38 In respect of insurance, there is no dispute that Mr Wood has not obtained the requisite insurance cover in order to satisfy the requirement of s.7(1)(e) of the Act. However, he had obtained the necessary application forms. While Mr Wilson initially argued that this alone was sufficient grounds for the Tribunal to affirm the Director-General's decision, he subsequently agreed that Mr Wood should not be put to the expense of obtaining the necessary insurance cover if the Director-General's decision was affirmed in all other respects. Trust Account 39 There is no dispute that Mr Wood failed to operate a bank account, in the form of a general trust account, during the time he was a licence holder, in particular during 1997 and 1998. 40 In his report, dated 25 November 1998, to the Department, the receiver stated the following: "Alan Wood did not conduct a trust account and he used a general account for all transactions. In addition to the conveyancing practice Alan Wood was heavily involved in mortgage brokering. He was instrumental in obtaining funds from various clients and on lending these monies. In most cases the funds were to be secured by mortgage and/or caveat or other security. Some of which Alan Wood registered, a large percentage he had the documents executed and retained them on the file. Alan Wood does not appear to have maintained any books and records. The only records available to me during my investigation were the various mortgage brokering files and the banking records" (see p.21 of Ex. 1) 41 However, there is evidence that Mr Wood did retain some bank accounts, which were expressly stated to be trust accounts. These were accounts in the name of Twin Towns Conveyancing and held on trust for a particular client (see p.409 of Ex. 1). 42 Attached to Mr Wood's submissions was a completed pro-forma Registered Company Auditor's Report, for Twin Towns Conveyancing for the 1996/1997 financial year, which was lodged with the Department as required under the Act. In the report, the auditor stated that those matters relating to a trust account were not applicable and that those matters relating to controlled money had been complied with by the business (i.e. Mr Wood). 43 It was Mr Wood's submission that while he did not have a general trust account he did have specific accounts, which were named as a trust account for a specific client. Where such an account was opened and operated by Mr Wood, the client deposited the loan money into the account, which was then withdrawn by Mr Wood to on lend to a third party. Mr Wood then paid into the account all money received as repayment of loan or interest. This he submitted was what he understood a controlled money account to be. Failure to Provide Records 44 According to an Affidavit of Mr Jammeson, a senior investigating officer of the Department, sworn on 13 August 1998, he commenced investigating the affairs of Mr Wood on 4 August 1998. On that day he attended the offices of Mr Wood and spoke to Mr Wood about the claim made by Citco on the Compensation Fund and the allegations that Mr Wood had not paid the $150,000 he had received from Citco to a Mr Large as he had been instructed to do. During that conversation Mr Jammeson states he asked Mr Wood to provide him with copies of his general account statements, cheque book and any receipts that he issued. Mr Wood's response is stated to be that they were in his car. It is further stated that Mr Wood returned with some documents but it would appear that these were not the documents that Mr Jammeson had requested. Mr Jammeson states he spoke to Mr Wood the following day and then caused to be served on Mr Wood a letter, dated 6 August 1998, requiring him to produce particular documents to the offices of the Department no later than Monday, 17 August 1998 (at p.91 Ex.1). 45 Mr Wood failed to comply with that request. However, prior to that date the Director-General had also commenced proceedings in the Supreme Court seeking orders for the appointment of a receiver. These orders were made on 13 August 1998 and were served on Mr Wood the following day with the receiver closing the business shortly thereafter, on 20 August 1998. 46 At the same time there had been a police investigation into the allegations. In his submissions Mr Wood states that he voluntarily attended the local police station on 4 August 1998 where he was interviewed. He has never been charged by the police in respect of the matters that the police were investigating, however a Mr Kanaris, to whom Mr Wood on lent money has been. 47 In his report dated 25 November 1998, the receiver stated that Mr Wood departed from the Twin Tower Conveyancing business premises, prior to his appointment and that Mr Wood refused to be interviewed. 48 Mr Wood in his submission stated that he had instructed his office staff, which included his daughter, to provide the Departmental officers with any material they requested. He also stated that the receiver, on his appointment, took charge of all files that belonged to the business making it impossible for him to comply with the notice. 49 In respect of being interviewed, Mr Wood stated that he had received legal advice not to speak to the authorities because the allegations were criminal in nature. Failure to Account 50 The Director-General relied on 4 transactions where it is alleged that Mr Wood received money from a client for the purpose of loaning it to a third party for a specific period of time and which Mr Wood did not on loan as instructed. Instead, he on loaned it to a Mr Kanaris for a business venture that Mr Kanaris was involved in, in Greece. These transactions occurred on the following days: a. 2 March 1998 - $110,000 loaned by Mr O'Malley; b. 16 March 1998 - $150,000 loaned by Citco; c. 17 March 1998 - $35,799.89 loaned by Mr Ryan; and d. 6 July 1998 - $30,000 loaned by Mr O'Malley. 2 March 1998 loan by O'Malley 51 In a statement dated 22 February 1999, Mr O'Malley states that on 2 March 1998, as requested by Mr Wood, he deposited a cheque into the Twin Towns Conveyancing bank account (Mr Wood's general business account) for the sum of $110,000 (see p. 233 of Ex. 1). The money he states was for the purpose of Mr Wood on lending it to Kentward Pty Ltd. The Tribunal was informed that Kentward Pty Ltd was a company controlled by a Mr Large, however no evidence was put before the Tribunal in this regard. 52 Mr O'Malley states that the loan was for a period of six months and was secured by a second mortgage over property owned by Kentward Pty Ltd. Mr O'Malley's statement attached copies of the relevant mortgage. Mr Wood prepared the relevant documents. 53 On 2 March 1998, following the deposit of Mr O'Malley's cheque, several cheques were withdrawn from the same Twin Towns Conveyancing bank account. These included the following: (a) Cash cheque for $18,000; (b) Cheque to NAB for $28,820.39; (c) Cheque to Jan Kanaris for $10,000; (d) Cheque to UTAG (Travel Tweed Heads) for $30,000. This cheque was then used to purchase $30,000 worth of travellers cheques, copies of which are included in Exhibit 1 and which appear to have been signed by Mr Kanaris. 54 At the time the $110,000 was deposited into the general business account of Mr Wood the account was in credit to the sum of $107,766.44. In submissions, Mr Wood did not dispute the abovementioned withdrawals were made and paid to or on behalf of Mr Kanaris. However, in his submissions he stated that they were paid to Mr Kanaris on the instructions of Mr Large. In submissions, Mr Wood acknowledged that he had not made any record of such instructions. 55 Mr Large's statement dated 27 July 1998 makes no reference to this transaction, but he was not made available for questioning in this regard. Mr Wood in his submissions also stated that he had not received any written instructions from Mr Large or that he had made a record of those instructions. Mr O'Malley was also not made available so that his statement could be tested. 16 March 1998 loan by Citco 56 As mentioned above, this transaction has been the subject of litigation in that the Director-General refused Citco's claim on the Compensation Fund on the grounds that the transaction was an "investment" and did not come within the meaning of "conveyancing work" as defined in s.45 of the Act. This argument was rejected by the District Court, which was upheld on appeal by the NSW Court of Appeal (State of New South Wales v Citco Industries Pty Ltd (2001) 53 NSWLR 451). 57 In the litigation, no issue was taken by the Director-General in respect of the facts surrounding the transaction as alleged by Citco. That is, the Director-General accepted the facts in respect of the transaction as alleged by Citco. Furthermore, it is important to note that Mr Woods was not a party to these proceedings and was not in a position to test the evidence, which Mr Woods in his submission argues is false and misleading. 58 In a statement dated 24 June 1998, Mr Flynn of Citco, states that on 16 March 1998 he made out a cheque for the sum of $150,000 payable to Twin Towns Conveyancing. He states that this was to be on lent to an Aero Club for the purpose of purchasing liquor from New Zealand. $50,000 was loaned for one month and $100,000 was loaned for two months and security for the loan was a charge over the Aero Club and a personal guarantee by Mr Large, the principal of the Club. 59 On payment of the $150,000, Mr Flynn was given a cheque for $10,000 being an up front payment of interest for the transaction. Mr Hayde who had been the initial broker who introduced Mr Flynn to Mr Wood was also paid an up front fee of $5,000. 60 There is no dispute that the money loaned was deposited into the Twin Towns Conveyancing general account and it was subsequently withdrawn and paid to Mr Kanaris. 61 From statements obtained by the police in mid 1998 it would appear that Mr Wood has always alleged that this money was paid to Mr Kanaris on the instructions of Mr Large. The statement of Mr Large dated 27 July 1998 denies this. As stated above, as a result of the Director-General's concession in the Citco proceedings this evidence was not tested. Mr Wood in his submissions states that Mr Large has fled the jurisdiction. 62 The money loaned was not repaid and the security documents went missing from the offices of Twin Towns Conveyancing. Mr Wood submits that they were stolen. 17 March 1998 loan by Mr Ryan 63 In his statement dated 22 February 1999, Mr Ryan states that Mr Wood approached him in 1997 stating that he could get a better return on Mr Ryan's investment money by on lending it to other clients who required short-term loans for property transactions. These loans were primarily for the payment of stamp duty and would be secured by using real estate. As a result Mr Wood opened a "controlled money account" for his dealings with Twin Towns Conveyancing. As explained above, this was an account in the name of Twin Towns Conveyancing, but expressly stated to be held on trust for Mr Ryan. Mr Ryan was not a signatory to the account. 64 After the account was opened, Mr Ryan deposited money into the account from time to time and Mr Wood would withdraw money for on lending to another party. According to Mr Ryan's statement, each time Mr Wood withdrew money from the account, he always sought Mr Ryan's consent to the amount that was to be withdrawn, to whom it was to be on lent and the period for which it was to be lent. 65 In his statement Mr Ryan states that on 17 March 1998, following a request from Mr Wood, he agreed that Mr Wood should with draw a sum of $35,799.89 from the trust account to be loaned to a Mr Hankins for a period of two months. 66 At the time the loan was made, the trust account, which was being held on trust for Mr Ryan was in credit to the sum of $35,799.89 (at p.409 Ex. 1) and it was not disputed that the money which was withdrawn was used to purchase travellers cheques for Mr Kanaris. Mr Wood stated in his submissions that Mr Hankins had instructed that the money loaned from Mr Ryan was to be invest in Mr Kanaris' Greek venture. In his submissions, he further alleges that Mr Ryan was aware of this as he and Mr Hankins were present at the bank when he withdrew the money from the trust account. Again Mr Ryan and Mr Hankins were not available to have these matters put to them. At the same time, Mr Wood provided no documentation, which supported the submissions he made. 6 July 1998 loan by Mr O'Malley 67 In his statement Mr O'Malley also refers to a loan he agreed to make to Bridgecomp Pty Ltd for the sum of $30,000. The loan was made at the request of Mr Wood and Mr O'Malley deposited a cheque for the amount to be loaned into the Twin Towns Conveyance bank account. 68 Mr O'Malley states that at the time he made the loan he was not aware that Bridgecomp Pty Ltd was a company controlled by Mr Wood and that he understood the loan was to pay stamp duty. Mr Wood in submissions stated that the company conducted its business from Twin Towns Conveyancing and was engaged in the money lending business, which was known to Mr O'Malley. 69 Mr O'Malley again provided a cheque to Mr Wood for the sum of $30,000 payable to for this loan. The banking documents for Twin Towns Conveyancing show that a cheque was deposited into the account on 6 July 1998 and the same amount was withdrawn the same day (p. 380 of Ex. 1). On this occasion the balance in the Twin Towns Conveyancing account before the cheque was deposited was $3,803.78. 70 It is not disputed that the $30,000 that was withdrawn was paid to Peter Kanaris for traveller's cheques ($15,150) and cash ($14,850). Mr O'Malley states in his statement that he did not authorise Mr Wood to disperse this money to Mr Kanaris and Mr Wood in his submissions stated that Mr O'Malley had authorised it. Again Mr Wood did not provide any documentation, which supported such an authorisation. SUBMISSIONS 71 Mr Wilson on behalf of the Director-General submitted there was sufficient evidence to establish that Mr Wood had breached the Act by failing to keep a trust account and his failure to provide records when required. These contraventions he said went to the heart of the underlying consumer protection objective of the Act and on these grounds alone the Director-General's discretion to refuse Mr Wood's application was the correct and preferred decision. 72 Mr Wilson also submitted that the evidence of the various transactions showed that Mr Wood was a person who lacked honesty and was therefore not a fit and proper person to be issued with a licence under the Act. He submitted that the proper construction of s.10 enabled the Director-General to have regard to issues of character when exercising his discretion under s.10(1), notwithstanding the fact that no mention is made of this in the section. 73 Mr Wood submitted that he had always acted on the advice of the Department. He had been audited every year and there had never been any complaints from the Auditor or the Department in regard to the manner in which he ran his business. He further submitted that the statements of Messrs Flynn, Hyde, Large, O'Malley and Ryan should not be accepted as they were either false or had been made by being given wrong information. He submitted that he had never been charged with any wrongdoing and that he voluntarily went to the police in August 1998. It was Mr Kanaris who had been charged and not he. He further submitted that there was no evidence of him personally having benefited from the monies loaned and that he too was conned by dishonest people. REASONS 74 As mentioned above, in the Citco decision the NSW Court of Appeal held that the Citco transaction was a transaction, which fell within the terms of the definition of "conveyancing work" under s.4 of the Act. The Court found that while the transaction related to an investment it nevertheless came within Division 2 of Part 3 of the Act because the money was paid to Mr Wood as he was to prepare or did prepare a mortgage, charge or caveat over property to secure the loan. It was the latter which brought the transaction into the terms of the Act because the preparation of these documents related directly to his conveyancing business (Ipp, A-JA at 455 and Rolfe, A-JA at 461). 75 As Mr Wood has not given sworn evidence (a position he was entitled to take in light of the other matters that are outstanding against him) and the matters contained in the statements of Messrs Flynn, Hayde, Large, O'Malley and Ryan have not been tested, I make no findings of fact in relation to the intention, or knowledge of the various parties involved in the various transactions in so far as these relate their respective honesty. These are matters to be determined, when and if appropriate, in another forum. 76 Accordingly, I make no finding about Mr Wood's honesty in regard to these. 77 However, in my opinion, there is sufficient material before the Tribunal on which the Tribunal is able to make findings in respect of the allegations concerning Mr Wood's compliance with the provisions of the Act as set out in the reasons of the Director-General. Failure to Provide Documents 78 First, in respect of the failure to provide documents, when requested by Mr Jammeson in early August 1998. 79 Section 32 of the Act gave Mr Jammeson authority to make the request and there is no requirement that the request be made in a particular way. A failure to comply with such a request constitutes an offence punishable by a fine. 80 In this case Mr Jammeson, in his Affidavit, states that he had received a telephone call on 28 May 1998 from the President of the Australian Institute of Conveyancers who informed him that Mr Woods' staff had left his offices and that there were allegations that there may have been "tampering with clients' investments". 81 Mr Jammeson also states that Citco lodged its claim on the Compensation Fund on 11 June 1998 and yet it was almost two months after that when Mr Jammeson attended the offices of Mr Wood. By that time, to the knowledge of Mr Wood, the police had already conducted investigations into the Citco allegations. The Tribunal had no evidence of the outcome of those investigations and what documentation the police may have obtained, if any, from Mr Wood during their investigations. However, as mentioned above, the Tribunal was informed that Mr Kanaris was charged with criminal offences and Mr Large appears to have left the jurisdiction. 82 Mr Jammeson may not have been aware of the seriousness of the allegations until he attended the police station early August 1998. However, as a result of his attendance he sent the letter dated 6 August 1998, to Mr Wood, requesting specific documentation. 83 That request required compliance by 17 August 1998 and of course by that time the Director-General had been successful in appointing a receiver, who appears to have immediately taken charge of the office and the documents in the office making Mr Wood's compliance with the notice no longer possible. 84 There may of course have been documents falling within the terms of the request which Mr Woods had stored elsewhere, however there is no evidence of this. What the evidence does indicate is that there was very little documentation anyway. 85 Accordingly, in my opinion the circumstances were such that Mr Wood was unable to comply with the request to produce documents. The person who was able to comply was the receiver, who had been appointed on the Director-General's application. Had a notice been issued earlier when Mr Jammeson first became aware of the allegations, it may have been different. Trust Account 86 There is no dispute, that in light of the Citco decision that the money advanced to Mr Wood by Mr O'Malley, Mr Ryan and Citco, for the purpose of on lending it to a third party, Mr Wood was required to deal with that money under s.25(1)(a) or s.25(1)(b) of the Act. Section 25(1)(a) required the money to be paid into a bank, building society or credit union account which was a general trust account. Mr Wood did not have a general trust account so he could not have complied with that paragraph. 87 He did however, have a trust account in respect of money deposited by Mr Ryan or received on his behalf. While this was not a gen eral trust account it comes within the definition of "controlled money" as contained in the Dictionary of the Act. 88 In respect of all the other transactions, Mr Wood not having a bank trust account, he was required to regard the money as controlled money pursuant to s. 25(1)(b) of the Act. Controlled money is not a name for a particular class of bank account. The provision merely requires the licensee to account for the money received in the manner prescribed in the Regulations. 89 In Citco Rolfe, A-JA expressed the view that the money advanced to Mr Wood by Citco came within s.25(1)(b) of the Act and that Mr Wood held the money for the benefit of both Citco (the mortgagee) and the Aero Club (the mortgagor) to be dispersed as directed by each of them (at p.461 para 46). 90 Accordingly, the fact that Mr Wood failure to have did a general trust account was not necessarily a contravention of the Act. 91 However, in my opinion, cl. 25 of the Regulations requires a licensee who receives money, which comes within the terms of s.25(1)(b) of the Act, to pay or deliver the money received as directed before the end of the next banking day or if that is not practicable, as soon as practicable. The same would apply to the money that was deposited into the trust account of Mr Ryan. 92 That is, in each of the transactions listed above, Mr Wood was required to deliver the loan money he had received, from the lender, to the borrower, by the end of the day after he had received it. This Mr Wood appears to have done, but it is alleged that he has paid it to persons other than those he was directed to pay it to. 93 Leaving these allegations to one side, the Regulations prescribe in considerable detail how controlled money (ie. that which is received pursuant to s.25(1)(b) of the Act) is to be accounted for by the licensee. 94 In this case, there is no evidence that Mr Wood accounted for the money he had received to on lend to a third party as required by the Regulations and he was therefore acting in breach of the Act. What the evidence does show, and which Mr Wood does not deny, is that he retained very little by way of documentation. Indeed there is no evidence that he had even created a system, which ensured that his business complied with the requirements of the Act. And as explained to Mr Wood these requirements were there not only for the protection of consumers or customers of a licensee but also for the licensee himself. 95 It appears to have been Mr Wood's understanding that an account, such as the account his business held on behalf of Mr Ryan, was a controlled account and this was sufficient compliance with the Act. This is clearly not the case, yet the money, which Mr Ryan advanced, was controlled money and should also have been accounted for and recorded as required under Division 3 of Part 6 of the Regulations. This required records to be kept not only about the lender but also about the borrower. That is to whom it was lent, when it was lent etc. 96 These records were kept by Mr Wood and, in my opinion, through this failure Mr Wood breached s.25 and s.26 of the Act. His failures to comply were not merely technical. Even though Mr Wood had his accounts audited, this does not excuse his failure to comply with what was required of him as a licensee. 97 At all times Mr Wood must have realised the importance of accounting for money he had received, be it from the lender or the borrower, and yet in his submissions he acknowledges that he failed to keep adequate records in this regard. For these reasons, Mr Wood's failures are serious breaches and on this basis alone the Tribunal is of the opinion that the Director-General's decision is the correct and preferred decision. 98 The Tribunal again stresses that it has otherwise made no findings about Mr Wood's honesty. 99 The Tribunal orders that the decision of the Director-General to refuse the application of Mr Wood for a conveyancer's licence be affirmed. 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