Delmege v Director General NSW Fair Trading

[2013] NSWADT 304

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:	Delmege v Director General NSW Fair Trading [2013] NSWADT 304
Hearing dates:	7 August 2013
Decision date:	31 December 2013
Jurisdiction:	General Division
Before:	K Fitzgerald, Judicial Member
Decision:	The decision under review is affirmed
Catchwords:	Property, Stock and Business Agents Act - Real Estate agent - refusal of certificate of l registration - fit and proper person
Legislation Cited:	Administrative Decisions Tribunal Act 1997 Licensing and Registration (Uniform Procedures) Act 2002 Property Stock and Business Agents Act 2002 Property Stock and Business Agents Regulations 2003
Cases Cited:	Australian Broadcasting Commission v Bond HYPERLINK " \o "View Case" [1990] HCA 33; HYPERLINK " \o "View LawCiteRecord" (1990) 170 CLR 321 Clarke v Commissioner for Fair Trading HYPERLINK " \o "View Case" [2004] NSWADT 273 Delmege v Department of Fair Trading 2013 NSWADT 269 Hughes & Vale Pty Ltd v New South Wales (No 2) HYPERLINK " \o "View Case" [1955] HCA 28; McBride v Walton (NSW Court of Appeal, unreported, 15 July 1994)
Category:	Principal judgment
Parties:	Brett Phillip Delmege (Applicant) Director General NSW Fair Trading (Respondent)
Representation:	Counsel A Rogers (Applicant) Moloney Lawyers (Applicant) M Nicoletti (Respondent)
File Number(s):	133110

reasons for decision

1. Mr Delmege, the Applicant, has applied to the Tribunal for review of the determination by a delegate of the Director General of NSW Fair Trading ("the Respondent") to refuse to grant him a certificate of registration as a real estate salesperson in accordance with section 18(1)(b) of the Licensing and Registration (Uniform Procedures) Act 2002 in response to Mr Delmege's application under the Property Stock and Business Agents Act 2002 (the "Act").

1. On 15 February 2013 the application was refused on the basis that the Respondent delegate was not satisfied that the Applicant was a fit and proper person to hold a certificate of registration and he was therefore not entitled to hold such registration.

1. The Applicant requested an internal review of the initial decision and it was affirmed on 19 March 2013. He subsequently sought external review from the Tribunal.

1. The issue for determination is whether the Respondent made the correct and preferable decision. This is to be determined having regard to any relevant factual material and any relevant law: section 63(1) of the ADT Act.

1. Specifically, in relation to the Applicant, the Tribunal must determine whether the Applicant is a fit and proper person to hold a certificate of registration under the Act.

Background

1. Much of the relevant background was not in issue between the parties. The Applicant applied for a certificate of registration as a real estate salesperson on 12 October 2012.

1. The Applicant was a director of Delmege Asset Management Pty Ltd (ACN 138044943) ("Delmege Asset") from 9 June 2011 to 14 September 2012 during which time the company lodged two applications with the Department signed by the Applicant. The first was dated 11 September 2011 (First Application) and the second was received on 18 July 2012 (Second Application).

1. On each of the First and Second Applications the Applicant was asked whether any director or person concerned with the management of the corporation had, in the preceding three years, been a director or person concerned in the management of any externally-administered body corporate (within the meaning of the Corporations Act 2001).

1. In each of the First and Second Applications the Applicant was asked whether any director or person concerned with the management of the corporation is a director or person concerned in the management of any externally-administered body corporate (within the meaning of the Corporations Act 2001).

1. In relation to the First Application, the Applicant answered the first question "No" and left the second question answer blank. Later, following a request of the Respondent to complete the application, the Applicant answered 'No' in response to the second question.

1. In the Second Application, the Applicant relevantly answered "Yes" to each of those two questions and provided a list of externally administered bodies corporate, of which the Applicant was not a director.

1. In the Second Application the Applicant also answered "No" to a further question that asked whether any director or person concerned with the management of the corporation had in the preceding three years, been an undischarged bankrupt (including in circumstances where a bankruptcy has been annulled) or applied to take the benefit of any law for the relief of insolvent debtors, compounded with his creditors or made an assignment of his remuneration for their benefit.

1. The Applicant was appointed a director of Surfside (Willoughby) Holdings Pty Ltd (ACN 093522788) ("Willoughby") from 15 September 2006. On 28 February 2010, Willoughby became an externally administered body corporate when receiver managers were appointed until 5 April 2011. The corporate records list Willoughby having a controller appointed on 22 June 2011 and, though disputed by the Applicant, there is nothing on the corporate records to suggest that Willoughby does not remain an externally administered body corporate.

1. An extract from the National Personal Insolvency Index confirmed that the Applicant entered into a Personal Insolvency Agreement ("PIN") under Part X of the Bankruptcy Act on 5 March 2012.

1. Prior to making its decision the Respondent requested that the Applicant provide an explanation about why he did not disclose the PIN or the external administration of Willoughby in the previous applications that he lodged.

1. Correspondence from the Applicant's former solicitors responded that the non-disclosure was 'more an oversight or clerical error.'

1. In both the original decision and the internal review decision, the Respondent determined that the Applicant was not a fit and proper person to hold a certificate of registration on the basis of his non-disclosure as outlined above.

Relevant Law

1. The definition of licence in section 4 of the Licensing and Registration (Uniform Procedures) Act 2002 (the LicensingAct) is to the effect that a licence includes a certificate in the current circumstances.

1. Section 12(4) of the Licensing Act provides that an application for a licence shall contain such particulars as are required to complete the relevant form.

1. Section 18 of the Licensing Act states that a licensing authority may refuse an application for a licence or certificate of registration.

1. A "real estate salesperson" is defined by section 3(1) of the Act as meaning:

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:

exercises any of the functions of a real estate agent, or

engages in any other activity that is prescribed by the regulations for the purposes of this definition.

1. Section 10(1) of the Act provides that a person must not be, remain as, represent as, act as or exercise any of the functions of a real estate salesperson unless the person is the holder of the relevant certificate of registration.

1. Section 19 of the Act states that an application must not be granted unless the applicant is eligible to be granted the licence or certificate of registration concerned (as provided by section 14).

1. Section 14(3)(b) of the Act provides that a person is eligible to hold a certificate of registration only if the Director-General is satisfied that the person is fit and proper.

Fit and Proper

1. The meaning of 'fit and proper' person in the context of section 14 of the Act in relation to a licence was considered by the Tribunal recently in a matter involving another applicant, in not unrelated circumstances, Delmege v Department of Fair Trading 2013 NSWADT 269.

1. There S Mongomery, Judicial Member, outlined the relevant law as follows and I adopt that summary as relevant to the current circumstances.

1. The meaning of the phrase 'fit and proper person' was discussed by the High Court in Hughes & Vale Pty Ltd v New South Wales (No 2)[1955] HCA 28; (1955) 93 CLR 127, at [9], where 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.'

1. The meaning of the phrase was also discussed in Australian Broadcasting Commission v Bond [1990] HCA 33; (1990) 170 CLR 321, where Toohey and Gaudron JJ said at [36] of their judgment:

"The expression 'fit and proper person', standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of 'fit and proper' cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, 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."

1. As their Honours recognised, at [66], whether a person is a fit and proper person involves a value judgement to be made in the context of the particular activity to be licensed.

1. In McBride v Walton (NSW Court of Appeal, unreported, 15 July 1994), the Court said that where there is evidence of misconduct, there should be consideration of any explanation for that misconduct, its seriousness to the particular activity, the motivation of the person, whether the misconduct is an isolated incident, the person's underlying qualities of character, and the person's conduct since the incident and whether this demonstrates recognition of the misconduct and subsequent reform. 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.

The Applicant's Case

1. The Applicant provided an affidavit in support of his application and gave evidence before the Tribunal. He detailed a lengthy working history in the construction industry, including for his father's companies, and many directorships.

1. The Applicant explained that the provision of incorrect answers on the application forms was as a result of his mistaken understanding as to the meaning of the words "body corporate" rather than because he was dishonestly answering the questions.

1. He says that at the time that he answered the questions, he associated the term "body corporate" with the body corporate of a strata plan. He says that he did not associate or understand the term "body corporate" to mean "company".

1. He says that in his experience, the term "body corporate" is used in the real estate industry to describe the manager of either a residential strata plan block of units, or alternatively a commercial strata plan. His father had used that term for over 20 years and his experience of the term was in that context.

1. The Applicant said in relation to the list of directorships that the list was prepared by his accountant on his behalf and that he didn't check the list. He took no steps to check the list of companies before signing the declaration at the end of each of the Applications.

1. The Applicant claimed that in relation to the PIN he attended his family lawyers who, although they were acting for him, provided no advice written or otherwise to him or his family in relation to the PIN. Further, the Applicant explained that he thought that by signing the PIN he had avoided bankruptcy but again did not check this point before signing the declaration.

1. He further gave evidence that from about 2003 or 2004, his stepmother suffered serious health issues and that as a result he had to become more involved in the family business. The Applicant become a director of various companies including Willoughby.

1. Much detail was provided about a series of transactions, loans and changes in the surrounding economic circumstances that led to the Applicant incurring significant personal debt as a result of his directorship of Willoughby and the provision of a personal guarantee of loans for the company.

1. The Applicant claimed that he was never the General Manager of Delmege Assets though acknowledged under cross -examination that he had in fact signed correspondence to the Respondent as General Manager of that Company.

1. It was also put on the Applicant's behalf that the relevant application forms were ambiguous and did not suggest an individual should obtain legal advice before completing them.

1. It was further put that while the term 'externally-administered body corporate' is defined in the Corporations Act, the term 'body corporate' is not in fact defined in that Act. Mr Rogers submitted that if the Applicant had in fact read the Corporations Act he would have been no better off in terms of his understanding of the term 'body corporate'.

Decision

1. The Applicant explained that he provided incorrect answers in the various licence renewal application forms because he mistakenly understood the meaning of the words "body corporate".

1. Attention was drawn by the Respondent to the second reading speech of the Strata Schemes Management Bill (Strata Schemes Management Miscellaneous Amendments Act) 1996 where it was discussed that one of the amendments was the change of the description 'body corporate' to 'owners corporation'.

1. In any event the Applicant's explanation seems extraordinary given his significant experience, including as a company director. It is difficult to accept this explanation particularly as the question also requests the relevant company names and ACN numbers.

1. It is also difficult to accept, given his representation by experienced solicitors, that the Applicant did not ask or was not advised as to the repercussions of entering into the PIN.

1. Even harder to understand is why the Applicant did not include his directorship of Willoughby in the relevant list of companies when that directorship and the associated personal guarantee were the very reason that he required the PIN.

1. However, even if all of the Applicant's explanations with respect to those matters were to be accepted, there still remains the question as to whether he is a fit and proper person to hold a real estate agent's certificate.

1. It was put for the Applicant that the standard of 'fit and proper' does not require the standard of perfect conduct. He submitted that the Applicant was merely mistaken, that conduct does not have to be perfect for an applicant to fulfil the standard of fit and proper and that as it was a real estate certificate of registration not a licence that was being applied for, the standard required of the former should be less.

1. Schedule 1 of the 2003 Property Stock and Business Agents Regulation lists the expectations of licensees and registered persons. Section 37 makes clear these apply to those exercising functions under a licence and a certificate of registration. There is nothing in the legislative scheme to suggest that a lower standard of conduct applies to a certificate holder as compared to a licence holder.

1. Schedule 1 in setting out the rules of conduct is relevant to fitness and propriety as it provides the context for the assessment within the particular licensed activity. Relevantly, it is required that the agent has knowledge of relevant laws and regulations and that the agent exercises reasonable skill, care and diligence.

1. The Applicant's explanation for his incorrect answers on the various licence renewal application forms suggests that he may not have the necessary knowledge or care to be regarded as a fit and proper person to hold a certificate of registration.

1. At the very least the Applicant failed to exercise reasonable skill, care or diligence when providing information to the Respondent.

1. He submitted incomplete forms, inaccurate information, including about matters he should reasonably have been aware (for example whether or not he had the role of general manager), and failed to take care to ensure information was accurate, for instance in relation to the list of companies provided.

1. This oversight and lack of care was not an isolated incident and points to a pattern of conduct.

1. For these reasons, the decision to refuse the Applicant a certificate of registration should be affirmed as the correct and preferable one.

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