What types of breaches would lead to a disciplinary action in real estate Victoria?

The following are disciplinary cases brought by the Council for Estate Agencies against salespersons or estate agents for breaching the Estate Agents Act (Cap. 95A) or regulations made thereunder including the Code of Ethics and Professional Client Care or the Code of Practice for Estate Agents.

These cases illustrate the misconduct which had been committed and the charges which were brought as well as the penalties that were imposed by the Disciplinary Committee upon the respective respondents. The cases are examples of breaches of the respective regulations and the penalties that are meted out for breaches would depend upon the facts and circumstances of each case. They are meant to inform salespersons about the disciplinary cases which have been concluded and to remind them not to commit such breaches of the Act or Regulations.

The cases are also meant to provide respondents in on-going disciplinary proceedings (who may be facing charges similar to those cited in the cases and who wish to know about precedents e.g. for plea bargaining purposes) with information on the previous decisions on penalties which were meted out by the Disciplinary Committee.

Contravention of HDB's rules

1. Estate agents and salespersons must not undertake estate agency work in respect of Housing and Development Board flats unless they are fully conversant and comply with the applicable laws, regulations, rules and procedures that apply to transactions involving such flats.
2. The following cases are meant to provide salespersons with a useful resource of past breaches. The cases can be accessed here (PDF,125KB). 

Advice to Salespersons

• If the client's instructions are not in accordance with the law, the salesperson should advise the client accordingly. If the client persists, the salesperson should discharge himself.
• Obtain consent to advertise before marketing any property.
• Advertisements must provide accurate information.
• If in doubt, the salesperson should verify the client's information.
• Salespersons should not facilitate subletting of HDB rental flats.
• HDB rental flats are not meant to be sublet and it is a serious matter to do so.

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In Western Australia, all real estate and business agents have an obligation under the Real Estate and Business Agents Act 1978  to comply with the obligations set out in the Real Estate and Business Agents and Sales Representatives Code of Conduct 2016 at all times.

The primary duties imposed on agents and sales representatives by the Code of Conduct are:

• To act in good faith and exercise due skill, care and diligence (Section 6);
• To act in the best interests of their clients (Section 5);
• To be honest in their dealings with all persons involved in a transaction (Section 7); and
• To act in accordance with the client’s reasonable instructions (Section 10(b)).

What if my agent breaches these duties?

If a real estate or business agent breaches any of their duties or obligations under the legislation, the aggrieved person may make an application to the State Administrative Tribunal. Under Section 103(1) of the Act, the State Administrative Tribunal has the power to:

• Reprimand or caution the agent;
• Impose a fine not exceeding $10,000; or
• Suspend or cancel an agent’s licence and any triennial certificate in respect thereof and in addition, disqualify the agent either temporarily or permanently, or until the fulfilment of any condition which may be imposed by the Tribunal.

Alternatively, under Section 103(3), in a matter concerning the discipline of a sales representative the Tribunal may:

• Reprimand or caution the sales representative;
• Impose a fine not exceeding $3,000; or
• Suspend or cancel the agent’s registration and, in addition, disqualify him either temporarily or permanently, or until the fulfilment of any condition which may be imposed by the Tribunal, from being registered.

In respect to the possibility of a licensee to have their licence and triennial certificate cancelled, a licensee must commit an offence involving:

• Defalcation by the licensee; or
• The fraudulent rendering of an account, knowing it to be false in any material particular, in respect of money or other property entrusted to him by or on behalf of another person in the course of the licensee’s business; or
• a breach of any one or more of the provisions of Part VI relating to the proper payment in and out of the trust account of the licensee of money entrusted to him by or on behalf of another person in the course of the licensee’s business, his licence and any triennial certificate in respect thereof is thereby cancelled, and the registrar of the court convicting him shall forthwith notify the Commissioner accordingly.

Some real-life examples

Below are some examples of penalties imposed for breaches committed by real estate and business agents in Western Australia.

Real estate agent barred from registering for 15 years

In 2017, Paul King was sanctioned for 13 breaches of the Code of Conduct relating to the sale of 5 lots of rural land between 2008 and 2010 while King was working for his father’s real estate agency. Mr King had sold the properties to an intermediary company controlled by his brother, Michael King, who was not a licenced real estate agent or sales representative. The properties were then sold to Malaysian investors at substantially higher prices, with more than $5 million profit going to Mr King.

This was in direct breach of Mr King’s obligation to act in the best interests of his client. Mr King was barred from registering as a real estate agent for 15 years and he and his father were fined $39,000 in total.

$5,000 fine for breaches of the Real Estate and Business Agents Act and Code of Conduct

In 2016, Caputo & Clay Pty Ltd trading as Harcourts Integrity Maylands was fined $5,000 for breaches of the Code of Conduct relating to various accounting failures. These allegations related to the withdrawal of trust funds without prior authorisation and failure to maintain proper records of transactions. Among other things, the Tribunal found that Harcourts Integrity had failed to exercise due skill, care and diligence.

Real estate agent suspended for 18 months and fined $3,000

In the case of Johnson v Sheppard, heard by the Western Australian Supreme Court in 2005, Mr Johnson was found to have failed to exercise due skill, care and diligence in effecting a misdirection of rental monies. This accounting failure resulted in the agent being suspended from practice for 18 months and fined $3,000. Mr Johnson appealed this decision, but the appeal was dismissed.

How can we help?

If you believe that your real estate agent or business agent is in breach of their obligations under the Real Estate and Business Agents Act or the Code of Conduct, GTC Lawyers can assist you to try to resolve these issues with the agent. If no mutually agreeable solution can be reached, GTC Lawyers can help you make an application to the State Administrative Tribunal for adjudication of the matter.

Michelle Makela

Michelle Makela is a Legal Practice Director at Go To Court Lawyers. She holds a Juris Doctor, a Bachelor of Science (Psychology) and a Master of Criminology. She was admitted to practice in 2006. Michelle has over 15 years experience in the legal industry, working across commercial litigation, criminal law, family law and estate planning. 

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