Craigieburn estate agent misappropriation triggers $109,000 compensation order against Century 21 Australia

Century 21 Australia Pty Ltd has been ordered to pay more than $109,000 in compensation, plus $28,000 in interest, after the misappropriation of trust account funds by an estate agent with which it was in a franchise agreement.

Century 21 Australia Pty Ltd (ACN: 003 145 346) was ordered to pay the funds into the Victorian Property Fund (VPF), after the misappropriation of trust accounts by an estate agent.

The actions of Victorian Realty Group Pty Ltd (ACN: 135 903 374), trading as Century 21 Complete Properties, caused 13 clients to lose money.

The company was deregistered in 2013.

Those clients received compensation from the VPF. 

In 2016, the Secretary to the Department of Justice and Regulation (of which Consumer Affairs Victoria is a business unit) took action in the Supreme Court of Victoria against Century 21 Australia to recover those funds and return them to the VPF. 

Under the Estate Agents Act 1980 (the Act) each party to a franchise agreement (that is, the franchisee or franchisor) is liable for any misappropriation by an estate agent subject to the agreement. 

The original case was dismissed, as the court found that the agreement between Century 21 Australia and VRG did not constitute a franchise agreement. 

The Secretary appealed that decision, and the Court of Appeal found that the agreement between the two parties was a franchise agreement.

As such, Century 21 was liable for VRG's defalcations, in accordance with the Act.

Real estate agents Kon Balasis and Victorian Realty Group Pty Ltd (VRG), operating as Century 21 Craigieburn, were permanently disqualified from holding estate agents’ licences after breaking the law on trust accounts.

At a hearing on 1 October, 2012, the Victorian Civil and Administrative Tribunal (VCAT) found that VRG and Mr Balasis breached the Estate Agents Act 1980 in relation to:

• a deficiency in the Century 21 Craigieburn trust account of $166,935.27 on 27 March, 2012, regarding deposits paid on six property sales  
• VRG holding deposits as a stakeholder pending completion of transactions and not retaining that money in its trust account until paid to the persons entitled.
• VRG fraudulently omitting to pay about $177,000 to the persons entitled to that money, which money was being held by VRG as a stakeholder pending completion of sales of land. Mr Balasis at the time was an officer of VRG and he knowingly authorised these contraventions
• VRG not keeping full and accurate accounting records so as to show the true position of all moneys it received.

VCAT also found that VRG breached the Sale of Land Act 1962 in that:

• it received deposit moneys in the course of transactions for the sale of land and did not hold that money as stakeholder until the purchasers became entitled to those deposits.

The tribunal ruled that Mr Balasis was guilty of conduct as an estate agent that rendered him unfit to hold a licence and he was not of good character or otherwise a fit and proper person to hold an estate agent’s licence.

VCAT cancelled Mr Balasis’ licence and permanently disqualified VRG and Mr Balasis from holding a licence.