Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Campbell v Director-General, Department of Services Technology and Administration [2011] NSWADT 236 Hearing dates: 18 November 2010, 31 January 2011 Decision date: 10 October 2011 Before: S Montgomery, Judicial Member Decision: The decision under review is affirmed. Catchwords: Real Estate Agent Licence - disqualified person Legislation Cited: Administrative Decisions Tribunal Act 1997 Property, Stock and Business Agents Act 2002 Cases Cited: Australian Broadcasting Commission v Bond [1990] HCA 33; (1990) 170 CLR 321 Hughes & Vale Pty Ltd v New South Wales (No 2) [1955] HCA 28; (1955) 93 CLR 127 Category: Principal judgment Parties: Jennifer Ivy Campbell (Applicant) Director-General, Department of Services Technology and Administration (Respondent) File Number(s): 103007 REasons for decision 1GENERAL DIVISION (S MONTGOMERY, (JUDICIAL MEMBER)): This is an application for review of a determination by a delegate of the Director-General of the Respondent in relation to the real estate agents licence held by Ms Campbell ("the Applicant ") under the Property, Stock and Business Agents Act 2002 ("the Act"). Background 2The Applicant was the holder of a real estate agents licence issued under the Act in February 2005. 3The Applicant was the sole director and secretary of Reda Holdings Pty Ltd ('Reda') after being appointed on 11 May 1999. Her son, Ryan Campbell ("Ryan") was a director of Reda from July 2002 to October 2007. The Applicant's husband Gregory Campbell ("Gregory") was also a director of Reda from July 2002 to March 2009. 4Reda was the holder of a real estate corporation licence issued under the Act. The licence was first issued to Reda in 1999 and expired in July 2008. Reda formerly traded as Raine & Horne from its registered office at Toukley and from its branch office at The Entrance. The Applicant was the licensee in charge of Reda's branch office at The Entrance. 5On 4 March 2009 the Applicant became an undischarged bankrupt. The trustee has lodged an objection to the discharge of her bankruptcy. 6On 27 November 2009, Reda was placed into liquidation. 7The Applicant was interviewed by officers of the Office of Fair Trading ("Fair Trading") on 3 November 2009. At that time Gregory and Ryan were under investigation for various breaches under the Act and were issued with Notices to Show Cause, and Reda's licence had expired. 8Fair Trading did not discover that the Applicant was an undischarged bankrupt until after that interview. Fair Trading issued the Applicant with a Notice to Show Cause on various grounds including the ground that she was an undischarged bankrupt. 9In January 2010, Fair Trading issued a determination against the Applicant with findings that she had become bankrupt and that there was no evidence that she took all reasonable steps to avoid the bankruptcy. Fair Trading affirmed its decision in March 2010. The Fair Trading determination 10The determination that is the subject of this application was: (i) in accordance with section 192(1)(g) of the Act, to cancel the Applicant's licence; and (ii) in accordance with section 192(l)(h) of the Act, to declare that the Applicant is a disqualified person for the purposes of the Act for a period of three (3) years; and (iii) in accordance with section 192(1)(i) of the Act, to disqualify the Applicant for a period of three (3) years from being involved in the direction, management or conduct of the business of a licensee. The Legislative Framework 11The Act regulates the real estate industry and a number of other industries. The Act requires a person carrying on the business of a real estate agent to be licensed. The Act also requires a real estate salesperson to be the holder of a certificate of registration and be employed by a person who is the holder of a real estate licence. 12Section 3 of the Act defines the terms 'real estate agent' as follows: 'real estate agent' means a person (whether or not the person carries on any other business) who, for reward (whether monetary or otherwise), carries on business as an auctioneer of land or as an agent: (a) for a real estate transaction, or (b) for inducing or attempting to induce or negotiating with a view to inducing any person to enter into, or to make or accept an offer to enter into, a real estate transaction or a contract for a real estate transaction, or (c) for the introduction, or arranging for the introduction, of a prospective purchaser, lessee or licensee of land to another licensed agent or to the owner, or the agent of the owner, of land, or (d) collecting rents payable in respect of any lease of land and otherwise providing property management services in respect of the leasing of any land, or (e) for any other activity in connection with land that is prescribed by the regulations for the purposes of this definition. but does not include a person who carries on business as an auctioneer or agent in respect of any parcel of rural land unless the regulations otherwise provide. Note: This definition is not limited to the selling of land and extends to an agent acting on behalf of the buyer of land (a buyer's agent). As noted in section 168 of the Retirement Villages Act 1999, a selling agent acting on the sale of residential premises in a retirement village must be licensed as a real estate agent under this Act. 13Section 3 of the Act defines the terms 'real estate sales person' as follows: 'real estate salesperson' means a person (other than the holder of a real estate agent's licence) who, as an employee of a real estate agent or a corporation that carries on the business of a real estate agent: (a) exercises any of the functions of a real estate agent, or (b) engages in any other activity that is prescribed by the regulations for the purposes of this definition. 14The term 'employee' is defined in section 3 of the Act as: employee includes any person employed whether on salary, wages, bonus, commission, fees, allowance or other remuneration and includes a director or member of the governing body of a corporation. 15Section 14(3)(b) and (d) respectively provide that a natural person is eligible to hold a certificate of registration if the Director-General is satisfied that the person "is a fit and proper person to hold a certificate of registration" and "is not a disqualified person". 16Section 16 (1A)(a) provides that an undischarged bankrupt is disqualified from holding a licence. However, section 16(2B) provides that the Director-General may exempt a person from the operation of subsection (1A) (a) by certifying "that the Director-General is satisfied that the person took all reasonable steps to avoid the bankruptcy concerned". 17Section 16(2D) provides that in determining what reasonable steps could have been taken by a person to avoid a particular outcome, "the Director-General 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." 18Part 12 of the Act deals with complaints and disciplinary action against licence holder and holders of a certificate of registration. The provisions in this Part (i.e. sections 191 to 203) are of general application to all licence holders and holders of a certificate of registration. Section 191 lists the grounds for taking disciplinary action against "a person who is or was the holder of a licence or certificate of registration". Section 191 provides: 191 Grounds for disciplinary action Disciplinary action under this Part can be taken against a person who is or was the holder of a licence or certificate of registration on any one or more of the following grounds: (a) the person has contravened a provision of this Act or any other Act administered by the Minister, or the regulations under any such Act, whether or not the person has been prosecuted or convicted of an offence in respect of the contravention, (b) the person has contravened a condition of the licence or certificate of registration, (c) the person has, in the course of carrying on business or exercising functions under the licence or certificate of registration, acted unlawfully, improperly, unfairly or incompetently, (d) the person is a disqualified person or is otherwise not eligible under section 14 to hold a licence or certificate of registration, (e) the person is not a fit and proper person to be involved in the direction, management or conduct of the business of a licensee, (f) the person has failed to pay any part of a contribution or levy that is due and payable under Part 10 (Compensation Fund), (g) the person has breached an undertaking given by the person to the Director-General under this Act or the Fair Trading Act 1987, in respect of the person's conduct of business or exercise of functions under the licence or certificate of registration, (h) the person has failed to comply with a direction given to the person by the Director-General pursuant to the taking of disciplinary action under this Part, (i) the person has failed to pay a monetary penalty imposed on the person by the Director-General pursuant to the taking of disciplinary action under this Part, (j) the issue of the person's licence or certificate of registration was obtained by fraud or mistake, (k) grounds specified in the regulations as grounds for the taking of disciplinary action against a person under this Act. 19This Tribunal stands in the shoes of the Director-General and exercises the same functions and powers. The Tribunal is therefore constrained in its powers to those held by the Director-General. 20Section 63 of the Administrative Decision Tribunal Act 1997 ("the ADT Act") provides that in determining an application for review the Tribunal is to make the correct and preferable decision having regard to the material before it, and any applicable law. It is well established that in considering an application for review the Tribunal is not restricted to a consideration of the material that was before the Respondent, but may have regard to any relevant material before it at the time of the review. Section 63(3) of the ADT Act provides that in determining an application for the review of a reviewable decision, the Tribunal may decide: (a) to affirm the reviewable decision, or (b) to vary the reviewable decision, or (c) to set aside the reviewable decision and make a decision in substitution for the reviewable decision it set aside, or (d) to set aside the reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal. The issue 21On 18 November 2010, I affirmed decisions (i) and (iii) referred to in paragraph [10] above. 22The remaining issue is with respect to whether the Applicant should be disqualified from working as a real estate salesperson, under section 192(1)(h) of the Act. 23That issue was the subject of argument at the hearing on 31 January 2011. The determination of that issue requires consideration of whether the Applicant took all reasonable steps to avoid bankruptcy. The Respondent's case 24The Respondent contends that the Applicant is not a fit and proper person to hold a certificate of registration as a real estate salesperson because honesty is one of the key elements of fitness. 25The Respondent further contends that the Applicant was aware at all relevant times that an undischarged bankrupt cannot hold a licence. She confirmed that knowledge in a recorded interview in July 2010 ("the July 2010 interview"). She also stated that her then solicitor, Mr Joe McCarthy, was instructed that under no circumstances were either she or Gregory to become bankrupt as they could not hold licences if declared bankrupt. 26It is not in dispute that the Applicant was declared bankrupt on 4 March 2009. The Respondent contends that the Applicant became aware that she had been declared bankrupt as early as March 2009. 27In the July 2010 interview she was asked when she had become aware of the court's decision on the bankruptcy. In response to that question she answered: "well I went to use my card, the court, it was a few days after the court proceedings were held in Queensland. I went to use my card, I was paying for some food actually, I got some take away food and it wouldn't work. So I paid cash for it, come home rang the bank and asked them why it wasn't working and they said there had been a hold put on my card. So then my husband rang the solicitor that was supposed to be working for us and he told us that the decision didn't go our way. That I had been declared bankrupt and that was the first we heard of it. ... I think that was early March." 28The Respondent contends that, despite that knowledge and her various communications with the Respondent after March 2009, the Applicant did not notify the Respondent that she had been declared bankrupt. She continued to carry on business as a real estate agent after March 2009, although she was aware of the disqualification against a bankrupt person under the Act. 29Ms Robosa, solicitor for the Respondent, submits that the Applicant's conduct showed disregard of the requirements of the Act. It says that the Applicant: (i)continued to act as a property manager in The Entrance branch office of another company under her control - P.M.D. Central Coast Pty Ltd ("P.M.D"); (ii) advised Fair Trading, on 28 October 2009, that she had become a sole trader to be trading as Coastwise Real Estate at The Entrance. She arranged to take over the employment of 2 P.M.D employees. (iii) registered as joint proprietor, with Peta Porter, of the business name Coastwise Real Estate on 29 October 2009. (iv) confirmed, in her interview on 3 November 2009 ("the November interview"), that she continued to carry on real estate business from The Entrance office. 30The Respondent also relies on a number of documents which it says show the Applicant's awareness of her bankruptcy and responsibilities as a bankrupt. Those documents include a letter dated 6 March 2009 advising the Applicant of the appointment of a trustee of her bankrupt estate and the requirement that she comply with the Bankruptcy Act 1966; forms relating to the requirements under the Bankruptcy Act signed and completed by the Applicant on 3 April 2009 and a Statement of Affairs signed by the Applicant on 30 April 2009 with the declaration that the particulars set out in the Statement were correct. Documents on which the Respondent relies make reference to the Applicant being bankrupt and her responsibilities under the Bankruptcy Act . Other documents indicate that Ryan acted on her behalf in dealings with the trustee. 31Ms Robosa submits that the Applicant's failure to disclose her bankruptcy or the sequestration order made against her estate raises doubts about her honesty. She further contends that the Applicant was asked about her licence on a number of occasions in the November interview and she had ample opportunity to make that disclosure. 32Ms Robosa says that the Applicant was well aware of the required information relating to bankruptcy to be supplied to the Respondent, having held a licence since 2005 and that, despite that knowledge, she failed to disclose this important information. 33Ms Robosa submits that the Applicant's claim that she did not make the disclosure because she relied on her solicitor's advice is inconsistent with the available evidence including the Records of Interview and the other documents referred to above. She also submits that the Applicant's account of the advice allegedly given by her solicitor has not been corroborated. 34Ms Robosa further submits that honesty and trust are of paramount importance in the real estate industry and that the Applicant's attitude, her total disregard of the statutory requirements and failure to recognise the seriousness of her misconduct provide no basis for the Tribunal to conclude that she has reformed. 35She submits that, taking into account the Applicant's omission and conduct amounting to dishonesty, the Applicant is not a fit and proper person to hold a certificate of registration as a real estate salesperson. Accordingly, she says that the decision to disqualify the Applicant should be affirmed. 36The Respondent also contends that the chronology of events shows that the Applicant did not take all reasonable steps to avoid her bankruptcy and Reda's liquidation. Ms Robosa submits that the evidence before the Tribunal shows that the Applicant had failed to monitor the operation of Reda's business, officers and employees, and failed to take appropriate action to prevent contraventions of the Act and Regulation. On many occasions, the Applicant had admitted to not being aware of the circumstances surrounding the relevant transactions of Reda, Gregory, and P.M.D. 37For the above reasons, the Respondent maintains that there is no evidence to show that the Applicant took reasonable steps to avoid her bankruptcy and the liquidation of Reda. The Applicant's Case 38The Applicant attended the hearing and also provided written submissions in regard to the issue to be determined. She denies that she was dishonest during interviews or in communications with Fair Trading. She stated that she willingly participated in two interviews with the Fair Trading investigators and answered all questions honestly and truthfully. She stated that she cooperated fully and has been honest and truthful in all of her dealings with the Fair Trading investigators, legal services staff and compensation fund staff. She further asserts that she has always been honest and truthful in relation to the matter before the Tribunal. 39The Applicant further stated that she was not interviewed by Fair Trading investigators in regard to breaches by Reda and was not noted as a person of interest in their investigation. She asserts that while Gregory admitted to breaches she had no knowledge or participation in those breaches. 40As has been noted above, the Applicant asserts that her bankruptcy was a result of inaction by her solicitor, Mr McCarthy. She asserts that Mr McCarthy was provided with all relevant documents with the expectation that he had the knowledge and capability to respond appropriately to the documents he was given. She and Gregory relied on Mr McCarthy for advice and his legal expertise in his representations on their behalf during the legal process. However, the expected legal representation from Mr McCarthy was not forthcoming. After viewing their file from Mr McCarthy's firm, Brazel Moore Lawyers, she stated that it is apparent that Mr McCarthy failed to make submissions and responses on their behalf to the documents they were sending him. She and Gregory have now instigated legal proceedings against Mr McCarthy and Brazel Moore Lawyers. 41She asserts that Mr McCarthy has a history of professional misconduct and referred to a finding of professional misconduct against him in the Tribunal's Legal Services Division and the order that he pay a fine: Legal Services Commissioner v McCarthy [2010] NSWADT 269. 42She stated that she first became aware of the hold that was put on her bank account on 5 March 2009 and wondered whether she had been made bankrupt. However, she said that her solicitor subsequently advised her and Gregory that they were not bankrupts. 43At the time of the July 2010 interview the Applicant had received a notice to show cause for the cancellation of her licence as she was an undischarged bankrupt. She stated that she had become aware that she was an undischarged bankrupt, and answered the questions honestly throughout the interview. 44The Applicant conceded that she did sign off on the income statement but stated that it was completed by Mr McCarthy with the information that she and Gregory had given him. She also conceded that she did sign off on the Statement of Affairs document but stated that the document was also completed by Mr McCarthy with the information they had given him. Mr McCarthy completed the section below the Applicant's signature as the person providing assistance for completing the form. 45The Applicant further stated that she was not aware that the trustee was lodging an objection to the discharge of her bankruptcy until Ms Robosa brought it to her attention. 46With reference to an interview with officers from the Fair Trading on 28 October 2009 the Applicant referred to the statement by the Investigator, Edmund Bishera, which set the scope of the interview. Mr Bishera stated: "Ms Campbell, as I've already explained to you, Investigator James and I are making enquiries into allegations about your involvement or your observations of activities regarding unlicensed trading by the corporation and several staff members employed at the Toukley and The Entrance office: that's the first one. And the forgery of the licences or the corporation, Brian Campbell and certificate of registration, Melissa Clifford. That's two. I'm going to ask you further questions about these matters. You're not obliged to say or do anything as anything you say or do will be electronically recorded and may later be used in evidence. Do you understand that ?" 47The Applicant asserts that this statement/question by Mr Bishera establishes the reasoning and content for the ensuing interview. She stated that she attended the interview willingly, answered all questions honestly and truthfully, and that she was cooperative with the Fair Trading investigators at all times. 48She also stated that she completed the application form for the restoration of her licence correctly and that her representations to the Tribunal have been consistent. She says that as she has not been dishonest with the Respondent there is no basis to the assertion that she is not a fit and proper person to hold a Certificate of Registration. She has also supplied character references from landlords of properties that attest to her honesty. 49The Applicant's bankruptcy and the liquidation of Reda followed litigation in relation to a franchise agreement by which Reda purchased the exclusive right to operate the Raine & Horne Surfers Paradise franchise ("the Surfers Paradise office"). 50In relation to the Respondent's assertion that she did not take reasonable steps to avoid her bankruptcy and the liquidation of Reda, the Applicant asserted that Reda's decision to close the Surfers Paradise office was taken on a financial basis. She says that the previous owner of that business had gone bankrupt, but that fact had not been brought to Reda's attention. The previous owner's bankruptcy meant that the office name was sullied in the area and that as the new owner Reda was inundated with creditors' demands of payments for outstanding accounts. 51The Applicant stated that at the time Reda closed the Surfers Paradise office there was a nil balance for the office and all creditors for Reda were paid in full. However, legal action was taken by Raine & Horne Qld Pty Ltd (subsequently transferred to Atkinson Family Trust). She says that Mr McCarthy was instructed to counter sue Atkinson Family Trust but he had failed to carry out those instructions. 52The Applicant asserts that she took reasonable steps to avoid the bankruptcy and liquidation by regular contact with her solicitor and passing on any and all documents as they were received. However, she says that he did not follow the instructions and then lied to cover his mistakes. Discussion 53As noted above, I previously determined to affirm the Respondent's decision to cancel the Applicant's licence; and to disqualify her for a period of three years from being involved in the direction, management or conduct of the business of a licensee. The remaining issue is whether to declare that the Applicant is a disqualified person for the purposes of the Act and if so, for what period. The Respondent determined that she should be disqualified for a period of three years. 54The essence of the Applicant's case is that she took reasonable steps to avoid the bankruptcy and liquidation by seeking legal advice form Mr McCarthy, instructing him to counter sue Atkinson Family Trust and following his advice. 55I do not agree. In my view, a reasonable person in the Applicant's position would have been proactive in pursuing the litigation and in ascertaining the true position in regard to her bankruptcy. 56I accept the Applicant's evidence in regard to the instructions that she gave to Mr McCarthy. I also accept that it is possible the Mr McCarthy advised her that he had followed those instructions and also that he may have wrongly informed her that she had not been declared bankrupt. However, in my view it is implausible that the Applicant was not aware of her bankruptcy. 57The Applicant had been a company director and an experienced business operator for many years prior to the bankruptcy. There is no basis for a finding that in those roles she was merely acting as a puppet for others. Rather, she was actively involved in the businesses. It is improbable that she would not have had experience in dealing with business documentation. 58I accept the Applicant's evidence that Mr McCarthy prepared the forms relating to the requirements under the Bankruptcy Act and that he did so from information that the Applicant and Gregory had given him. However, it is implausible that the Applicant would not have known why he had prepared those forms or why she had given him the information. 59The Applicant conceded that she signed the Statement of Affairs document with the declaration that the particulars set out in the Statement were correct. I cannot accept that she would have signed the documents relating to her bankruptcy without being aware, at least in general terms, of the nature of those documents. Notwithstanding the assurances and advice that she was given by Mr McCarthy, it is my view that at the time she signed those documents the Applicant should have known that she had been declared bankrupt. If she did not know that she was bankrupt, a reasonable person in her position would have taken steps to discover the true situation and not merely rely on information provided by Mr McCarthy. 60In any event, the evidence supports the finding that the Applicant was aware of her bankruptcy at the time she was dealing with Fair Trading in late 2009. She did not inform the Fair Trading officers of that fact when she met with them on 3 November 2009 or at any other time in 2009. I do not accept the Applicant's explanation for not informing the Fair Trading officers that she was bankrupt. The fact that she was interviewed for other reasons would not have prevented her from making that disclosure. 61I accept Ms Robosa's contention that the Applicant was aware at all relevant times that an undischarged bankrupt cannot hold a licence. This is clear from her evidence that her instructions to Mr McCarthy were to ensure that neither she nor Gregory would become bankrupt as they could not hold licences if declared bankrupt. 62In the circumstances it is my view that the Applicant was aware of her bankruptcy and deliberately withheld that information from the Respondent. 63As noted by the Respondent, honesty is one of the key elements of fitness. In the High Court decision in Hughes & Vale Pty Ltd v New South Wales (No 2) [1955] HCA 28; (1955) 93 CLR 127, at [9], Dixon CJ, McTiernan and Webb JJ said: The expression 'fit and proper person' is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. 'Fit' (or 'idoneus') with respect to an office is said to involve three things, honesty knowledge and ability: 'honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it. 64If I am wrong and the Applicant did not deliberately withhold the information from the Respondent, it is apparent that she did not have the requisite "knowledge to know what [s]he ought duly to do". 65It is well accepted that the expression 'fit and proper' involves a value judgement having regard to the activity for which the person seeks a licence or other authority and ' depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur' : see Australian Broadcasting Commission v Bond [1990] HCA 33; (1990) 170 CLR 321. 66I agree with Ms Robosa's contention that the Applicant is not a fit and proper person to hold a certificate of registration as a real estate salesperson. 67For these reasons, I do not propose to exercise any discretion that I have in the Applicant's favour. In my view, the decision taken by the Respondent is the correct and preferable one and should be affirmed. Order The decision under review is affirmed. I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 October 2011