MORTON-JONES v THE REAL ESTATE AGENTS AUTHORITY [2016] NZHC 1804

MORTON-JONES v THE REAL ESTATE AGENTS AUTHORITY [2016] NZHC 1804 [8 August 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2015-404-1679[2016] NZHC 1804UNDER the Real Estate Agents Act 2008IN THE MATTER of an appeal against a decision of the RealEstate Agents Disciplinary Tribunal inREADT 31/14BETWEEN ALAN MORTON-JONESAppellantAND THE REAL ESTATE AGENTSAUTHORITYRespondentCIV-2015-404-2564BETWEEN COMPLAINTS ASSESSMENTCOMMITTEE 20005 OF THE REALESTATE AGENTS AUTHORITYAppellantAND ALAN MORTON-JONESRespondentHearing: 18 February 2016Appearances: P Kennelly for the Appellant in CIV-2015-404-1679 and theRespondent in CIV-2015-404-2564C Paterson and N Copeland for the Respondent in CIV-2015-404-1679 and the Appellant in CIV-2105-404-2564Judgment: 8 August 2016JUDGMENT OF WOODHOUSE JThis judgment was delivered by me on 8 August 2016 at 10.30 a.m. pursuant to r 11.5 of the High Court Rules 1985.Registrar/Deputy Registrar[1] Mr Morton-Jones appeals against a decision of the Real Estate Agents Disciplinary Tribunal which found him guilty on four charges of misconduct under s 73 of the Real Estate Agents Act 2008 (the Act).1[2] In a subsequent decision the Tribunal suspended the appellant's licence as areal estate agent for nine months, fined him $2,000, and directed that he complete various educational courses.2 The Complaints Assessment Committee of the RealEstate Agents' Authority has appealed against the penalty decision, contending thatthe appellant's licence should have been cancelled.The liability appealSection 73 of the Act[3] Section 73 is as follows:73 MisconductFor the purposes of this Act, a licensee is guilty of misconduct if the licensee's conduct—(a) would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful; or(b) constitutes seriously incompetent or seriously negligent real estate agency work; or(c) consists of a wilful or reckless contravention of—(i) this Act; or(ii) other Acts that apply to the conduct of licensees; or(iii) regulations or rules made under this Act; or(d) constitutes an offence for which the licensee has been convicted, being an offence that reflects adversely on the licensee's fitness to be a licensee.1 Real Estate Agents Authority (CAC 20005) v Morton-Jones [2015] NZREADT 49, 24 June 2015, (the Tribunal decision).2 Real Estate Agents Authority (CAC 20005) v Morton-Jones [2015] NZREADT 71.The charges[4] The appellant was the owner and manager of Rodney Real Estate Ltd (the agency). It operated a business which managed rental properties on behalf of owners. Rent was paid by the tenants to the agency and then required to be paid on by the agency to the owners less commission and any property expenses. There were three charges alleging that rent paid by tenants to the agency was not paid to three landlord clients when it should have been. The fourth charge arose after the Complaints Assessment Committee began investigating complaints, issued a notice to the appellant to produce documents and information, and the appellant failed tocomply.[5] Charges 1, 2 and 3 alleged misconduct under s 73(a). The formal charge was that the appellant was guilty of misconduct because the conduct in question would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful. The particulars of the charges, after amendment, were as follows:Charge 1 – particularsThe Licensee short paid approximately $11,055.72 of property management rental money to his client Rodger Sinclair between 2011 and 2012. After approximately 7 months and repeated demands by Rodger Sinclair and others acting on his behalf, the Licensee eventually repaid the owing money. The Licensee failed to provide any reasonable explanation for the short payments.Charge 2 – particularsThe Licensee short paid approximately $22,798.50 of property management rental money to his client Anton Poynter between 2011 and 2013. After approximately 3 months and demands by Mr Poynter and others acting on his behalf, the Licensee eventually arranged for the repayment of $17,114.76 to Anton Poynter. The Licensee has failed to arrange the repayment of the remaining debt to Mr Poynter, and has failed to provide any reasonable explanation for the short payments.Charge 3 – particularsThe Licensee short paid approximately $9,000.00 of property management rental money to his client Karen Graham between 2009 and 2012. Following Karen Graham's demands the Licensee eventually repaid thismoney to her, including $6,509.05 to her by cheque from Alan Stuart Motors Limited (a separate company of which the Licensee was the sole director).The Licensee failed to provide any reasonable explanation for the short payments.[6] Charge 4 alleged misconduct under s 73(c)(i) – a wilful or reckless contravention of s 85 of the Act. Section 85 empowers a Complaints Assessment Committee, investigating a complaint against a licensee, to give notice to produce information or documents.3 The particulars as filed were as follows:Charge 4 – particularsThe Committee issued a notice requiring the Licensee to produce documentsand information pursuant to section 85 of the Real Estate Agents Act 2008(Act) on 13 June 2013, which it served on him on 15 June 2013. TheLicensee failed to comply with the notice within the required 10 workingdays or since that time, and has failed to provide a reasonable excuse for thatnon compliance. Non compliance with the notice (and lack of reasonableexcuse) constitutes and [sic] offence under section 148 of the Act.Charges 1 and 2: Messrs Sinclair and Poynter: established facts: the appellant'sresponse[7] Charges 1 and 2 are considered together because the primary facts alleged by the respondent in large measure were not disputed, and the appellant's explanationfor what had occurred was the same in both cases.Charge 1: Rodger Sinclair[8] Rodger Sinclair had two properties that were managed by the agency. In 2012, Mr Sinclair's accountant, Margaret Rolls, prepared a tax return for 2011 and discovered that the rent paid into Mr Sinclair's account did not reconcile with statements received from the agency. Ms Rolls then calculated that $9,783.81 in rent was missing for the 2011 financial year and most of the 2012 year.[9] Mr Sinclair spoke with the appellant on 22 February 2012 and asked him to pay the rent shortfall immediately. The appellant told Mr Sinclair that there had been a similar problem with another client and that he, the appellant, would checkMr Sinclair's figures. Following this there were calls to the appellant from Mr Sinclair and from Ms Rolls, through to June 2012, in which the appellant said he needed more time to check the figures.3 Section 85 is recorded below at [64].[10] In June 2012 the appellant acknowledged that there was a rent shortfall, and that it was in fact about $12,000. He later changed this figure to $8,000. He promised to pay the 2011 year shortfall by, it appears, the end of June and the 2012 shortfall by the end of July.[11] Mr Sinclair requested that Mishael Logan of Charta Management take over the management of his properties. Ms Logan established that there was a shortfall of $11,055.72.[12] In August and September 2012, the appellant made a number of part payments of the shortfall. Full restitution was not made until after a complaint had been made to the Authority.Charge 2: Anton Poynter[13] In 2012, Mr Poynter had three properties managed by the agency. During the course of year end financial accounting work, his accountant pointed out some anomalies with rent payments. Mr Poynter went over the accounting records and discovered that there was a rent shortfall for 2011 and 2012 of $22,798.50. He spoke to the tenant at one of his properties and was told that all rent had been paid. That same tenant showed him copies of his bank statements to confirm this.[14] Mr Poynter spoke to the appellant about the discrepancy. Ultimately, he received payment of $17,114.76, over a three-month period, which he accepted in full settlement of the debt. This only occurred when Mr Poynter threatened to report the matter to police.The appellant's contentions in respect of charges 1 and 2[15] The appellant did not dispute that rent due to Mr Sinclair and Mr Poynter did not go to them when it should have. His main explanation was that this was the result of data entry errors by his staff in processing rent payments to clients, and that the money that should have gone to Mr Sinclair and Mr Poynter was mistakenly paid to the accounts of other landlords. The appellant advanced other arguments in his defence, including a proposition that there was fault on the part of Mr Sinclair andMr Poynter in not earlier checking their bank statements. This, and some of theother arguments, are considered in due course, as well as the principal contention ofdata entry errors.Charge 3: Karen Graham[16] The essence of charge 3 was similar to charges 1 and 2 – an alleged failure to pay rent received from tenants to the landlord, Ms Graham. But on this charge the appellant contended that there was no failure to pay rent to Ms Graham when it was due.[17] The sum of "approximately $9,000" referred to in the particulars for charge 3was the total for two periods. Ms Graham's evidence was that in 2009 or 2010 shenoticed a rent shortfall of about $2,000 to $3,000. She spoke to someone at the agency and was told that the money had "got muddled". It was paid into her bankaccount a few days later.[18] Ms Graham said the second occasion was in 2012; there were missing payments, particularly for a property at 212 Pine Valley Road, Silverdale. Ms Graham had three rental properties managed by the agency. Ms Graham said she spoke to the tenants at Pine Valley Road. They said they had been paying their rent. Ms Graham said this was confirmed by Tina Louis, who worked for the agency and who had been a friend of Ms Graham for 50 years. Ms Louis said that the tenants had been paying their rent and there was no reason why it should not have been paidon to Ms Graham's bank account. Ms Graham said that she then went through herbank accounts. She said: "I think at that stage between 12 and 14,000 was missing".She rang the appellant. She said that he told her that there had been "an accountancyerror and he would sort it out".[19] On 22 September 2012 Ms Graham sent an email to the agency which stated:Management of my properties Waiwera and Pine Valley are to be withdrawn As from today 21/09/2012 and all funds that are owing to me MUST be in my account by the 25th September or I will hand it over to the police.[20] On 25 September 2012 the appellant drew a cheque for $6,509.05 on a company he controlled, Alan Stuart Motors Ltd. The cheque was payable to Ms Graham's account in the name of Krystal Sky Developments Ltd. That sum wascredited to the Krystal Sky account on that date. On 28 September three further sums were direct credited to the Krystal Sky account by the agency, as follows: rent Pine Valley, $2,810.01; rent 2/27 Waiwera, $1,028.00; and rent 1/27 Waiwera, $322.94.[21] The appellant contended that all of the sums paid to Ms Graham's bankaccount in September 2012, including that by cheque from Alan Stuart Motors Ltd, were for current rent payments. He said the reason the 25 September cheque was drawn on Alan Stuart Motors Ltd was that he had got a phone call from Ms Graham when he was in Whangarei, she was insisting on payment, and the only chequebook he had was for Alan Stuart Motors Ltd. He described efforts he made, coming south from Whangarei, to find an open branch of Ms Graham's bank into which he could deposit the cheque.Charge 4: failure to comply with a notice to produce documents: primary facts:appellant's response[22] The respondent's investigator had sought documents from the appellantduring their first discussion, at the appellant's office, on 4 October 2012. Thedocuments were not forthcoming. There were further requests, then a letter in May2013, and then formal notice under s 85 of the Act issued on 13 June 2013.[23] The notice included the following:The Committee accordingly requires you to produce the followingdocuments ("the documents") pursuant to s 85 of the Real Estate Agents Act2008:1. A copy of the analysis you prepared regarding the shortfallsin Rodger Sinclair's account.2. A copy of the landlord statements for Rodger Sinclair for2011 and 2012.3. Documentation to confirm you have settled the shortfalls($6k) in Karen Graeme's [sic] account.4. A copy of the landlord statements for Karen Graeme [sic] for2012.5. Confirm if shortfalls ($40k) in Alan [sic] Poynter's accounthave been settled and if so provide documentation toconfirm.6. A copy of Alan [sic] Poynter's landlord statements for 2012.7. A list of the names and amounts of landlords affected by shortfalls in their accounts totalling $40k.8. A copy of the agreement for the sale of your rental roll to Global Realty Property Management Limited.You are required to produce the documents to the Committee within 10working days after the date this notice is given to you. Section 154 of theReal Estate Agents Act 2008 sets out the circumstances in which this noticeis deemed to have been given to you.Failure to comply with this notice without reasonable excuse is an offence under s 148 of the Real Estate Agents Act 2008 rendering you liable on summary conviction to a fine not exceeding $10,000.[24] It was not in issue before the Tribunal that the appellant failed to comply with the notice. An agreed statement was read to the Tribunal and recorded in thetranscript of the notes of evidence. The transcript, with some minor editing forclarity, is as follows:The parties agree that the Authority's investigator was provided with some, but not all, of the documents listed in the s 85 notice dated 13 June 2013during the [course] of the investigation, by parties other than Mr Morton-Jones: namely, some, but not all, monthly landlord statements for RodgerSinclair for 2011 and 2012; monthly landlord statements for Karen [Graham]for 2012 for the Pine Valley Road property; a redacted copy of the agreementfor the sale of the Rodney Real Estate Limited rental role to Global RealtyProperty Management Limited. In addition, the following documents wereprovided by parties other than Mr Morton-Jones: copies of bank statementsfor Rodger Sinclair; copies of bank statements for Krystal SkyDevelopments, a company associated with Karen [Graham]. All of theabove documents were disclosed to Mr Morton-Jones in advance of theTribunal hearing in response to a request under the Official Information Act.[25] The appellant's response to this charge was, in summary:(a) The Complaints Assessment Committee had sufficient information for its case.(b) The appellant no longer had the documents sought because ofcomputer problems and for other reasons.(c) Property management was not real estate agency work and therefore there could be no notice under s 85 or charge under s 73.The Tribunal's conclusions: charges 1, 2 and 3[26] The Tribunal's conclusions on the first three charges were as follows:[109] We find the submission of counsel for the defendant that these proceedings are in some way speculative at best, and malicious and vexatious at worst, to be puzzling. The evidence is clear that the defendant, in terms of the three specific charges covered in some detail above, failed to pass on net rental proceeds he had collected for the complainants until they spotted the failures, confronted him, and needed to threaten to refer the issues to the Police.[110] It is irrelevant whether, as the defendant seemed to be saying, Messrs Sinclair and Poynter were slow to note from their Bank statements that these errors had occurred. We can accept that at material times the defendant experienced some computer trouble but the errors in question had already arisen and it is likely were known to the defendant. In any case, those errors were due to his rather inefficient method of operating his property management business. That is particularly curious when he is also a chartered accountant. Also, he was far too slow to put matters right.[111] There is no convincing evidence that, as the defendant maintains,payments were made in error to other customers of the defendant's propertymanagement business rather than to the complainants. They simply were not made over material times and seemed to be used by the defendant in his various businesses.[112] In terms of his appearance before us, we consider that the defendant has an attitudinal problem towards complying with his duties as a licensee under the Act.[113] The submissions of counsel for the defendant that there has been some sort of failure on the part of the Committee and this prosecution regarding laying of charges and presentation of evidence is concerning because it is so unfounded. We consider that the witnesses for the prosecution are all people of integrity and we accept their evidence; but we find that much of the evidence for the defendant is not credible and overall is unconvincing. We much prefer the evidence for the prosecution.[114] Having said that, we do not find anything particularly sinister in thatthe payment of $6,509.05 to Mrs Graham came from the defendant's usedcar sales business.[115] In terms of the defendant seeming to wish to blame his staff at material times, we find that he had taken on personal responsibility for the proper functioning of his property management business and was well aware of its financial position at all material times and of its accounting detail, including its bank accounts and its liabilities to its customers month by month.[116] We have endeavoured to make it clear above that, of course, we accept that the defendant is correct in the view that his property management work is not real estate agency work in terms of the Act. However, the sagawe have covered above over the defendant's failures to properly and honestly manage his property management business shows that his fitness to perform real estate agency work under the Act is questionable. In other words, there is a strong nexus between the conduct with which the defendant has been charged and his suitability to continue as a licensee. The complaints against him cannot be simply dismissed as the defence would have it, on the basis that real estate agency work is not involved.The Tribunal's conclusions: charge 4[27] The Tribunal's conclusion on charge 4 was as follows:[107] [We] have no hesitation in finding [charge 4] proved for the reasons covered by Mr Clancy in his submissions as we have summarisedthem above under the heading "The Section 85 Notice". We feel that thedefendant was high handed, stubborn, and disrespectful in his dealings with the Committee in terms of s.85 of the Act which reads as follows: [108] We consider that failure to comply with the normal application procedures from the Committee in terms of s.85 is a very serious failure on the part of a licensee and is misconduct under s.73(a) of the Act set out above.4The meaning of "disgraceful" conduct[28] Charges 1, 2 and 3 alleged "disgraceful conduct". On the meaning of this expression, the Tribunal referred to a Tribunal decision in CAC v Downtown Apartments Ltd.5 In that case the Tribunal said:[55] The word disgraceful is in no sense a term of art. In accordance with the usual rules it is to be given its natural and popular meaning in the ordinary sense of the word. But s 73(a) qualifies the ordinary meaning by reference to the reasonable regard of agents of good standing or reasonable members of the public.[56] The use of those words by way of qualification to the ordinary meaning of the word disgraceful make it clear that the test of disgraceful conduct is an objective one for this Tribunal to assess. See Blake v Preliminary Proceedings Committee of the Medical Council of New Zealand, [1997] 1 NZLR 71.[57] The 'reasonable person' is a legal fiction of common law representing an objective standard against which individual conduct can be4 Having regard to the terms of the charge, and the facts as found, the reference in [108] to s 73(a) should have been to s 73(c)(i).5 Complaints Assessment Committee (CAC 10024) v Downtown Apartments Ltd (in Liq)[2010] NZREADT 6.measured but under s 73(a) that reasonable person is qualified to be an agent of good standing or a member of the public.[58] So while the reasonable person is a mythical ideal person, the Tribunal can consider, inter alia, the standards that an agent of good standing should aspire to including any special knowledge, skill, training orexperience such person may have when assessing the conduct of the defendant.[59] So, in summary, the Tribunal must find on balance of probabilitiesthat the conduct of the defendant represented a marked or seriousdeparture from the standards of an agent of good standing or a reasonable member of the public.[29] Subject to one qualification I agree with that analysis. The qualification relates to the observation in [59]. It is a restatement of what is clearly expressed in s 73(a). In my opinion the restatement does not accurately reflect the words used. If the charge is under s 73(a) the critical enquiry is whether the conduct is"disgraceful". Conduct which involves a marked and serious departure from the requisite standards must be assessed as "disgraceful", rather than some other form of misconduct which may also involve a marked and serious departure from the standards. The point is more than one of semantics because s 73 refers to more than one type of misconduct. In particular, s 73(b) refers to "seriously incompetent or seriously negligent real estate agency work". Work of that nature would also involve a marked and serious departure from particular standards; the standards to which s 73(b) is directed are those relating to competence and care in conducting real estate agency work.[30] This is not to say that s 73(a) could not apply to work carried out by a licensee so incompetently or negligently as to amount to disgraceful conduct according to the s 73(a) tests. If the work was not real estate agency work, but the person doing the work was a licensee, the appropriate provision for a charge would be s 73(a). This is a point more fully discussed below when considering theappellant's argument that the Act did not apply to his property management work.[31] For the reasons just noted, I agree with a submission for the respondent that, on charges 1, 2 and 3, disgraceful conduct could be established in one of two ways:(a) If it was established that the appellant used the rent money for his own purposes and intentionally failed to account for it to the clients of the agency.(b) If the evidence established that the appellant ran his business with such negligence or incompetence as to amount to a disgraceful abuseof his responsibilities in the handling of other peoples' money.The approach on an appeal against liability[32] The appeal against liability is a general appeal. In accordance withAustin Nicols, I am bound to come to my own conclusion on the merits on the liability appeal.6 There are two relevant qualifications to this on the liability appeal.[33] In Austin Nichols the Supreme Court said that an appeal court "may rightly hesitate to conclude that findings of fact or fact and degree are wrong", on appealsfrom a tribunal with special expertise. The present appeal is from a specially constituted tribunal with expertise in relation to the application of the Act and, more specifically in the present context, the standards of conduct expected of licensees. I do attach substantial weight to the findings of fact and degree, by, or value judgments of, the Tribunal. The appropriateness of this is emphasised by the text of s 73(a).7 The Tribunal, because of its membership, and because of the experience of members in adjudicating on complaints under the Act, is well placed to assess when the conduct of a licensee is disgraceful as assessed by the prescribed standards.[34] A similar view was expressed by Lang J in Robinson v Real Estate Agents Authority:8[21] Counsel for the Authority properly emphasised that the Tribunal has expertise in this area, and that in applying the Act and Rules regularly it has primary responsibility for setting appropriate standards of conduct within the real estate industry. It also maintains constant oversight over the industry as6 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [3] and [5] (Austin Nichols).7 The Real Estate Agents Disciplinary Tribunal is established by s 100 of the Act. The chair of the Tribunal must be a barrister or solicitor of not less than 7 years legal experience and one of the further five members must be a licensee.8 Robinson v Real Estate Agents Authority (CAC 20006) [2014] NZHC 2613. See alsoComplaints Assessment Committee 20003 v Jhagroo [2014] NZHC 2077 at [49].a whole. For that reason he submitted that this Court should not lightly substitute its own standards for those set or imposed by the Tribunal.[22] I accept these submissions without reservation. [35] The second qualification to the general rule, also expressly referred to inAustin Nichols, may arise where the tribunal of first instance had a particular advantage in assessing credibility. This applies on this appeal. As earlier recorded, the Tribunal expressly found "that much of the evidence for the defendant is notcredible and overall is unconvincing". This was the conclusion of a Tribunalconsisting of three members, one of whom was a retired judge and the other twobeing Tribunal members with requisite expertise in relation to the Act and theprofession. The conclusion on credibility was unanimous. I am not bound to acceptthe Tribunal's conclusions on credibility, but the onus was on the appellant topersuade me that the Tribunal was in error. That might have been done, for example,by pointing to established facts, independent of contentions of the appellant, whichconfirmed what the appellant was saying on a material matter where he was found tolack credibility. The appellant was unable to do this. The correctness of theTribunal's decision on credibility is, in any event, borne out on analysis of thecontentions put forward by the appellant in his defence before the Tribunal. Inessence, his contentions at best were unconvincing, or implausible. But in someimportant respects the appellant's explanations, or contentions, were so implausiblethat this added weight to other evidence indicating that the appellant was not beingtruthful and that he had deliberately diverted rent that should have gone to thecomplainants.Misconduct in work other than real estate agency work[36] The appellant contended that the conduct in question did not relate to real estate agency work and for that reason could not be subject to charges under s 73.[37] The work giving rise to charges 1, 2 and 3 was not "real estate agency work", which is defined in s 4 of the Act. That was not in issue before the Tribunal. The basis for the charges was that the appellant was a licensee under the Act. The respondent cited a number of Tribunal decisions in which the Tribunal held that s 73may apply to work by a licensee which is not real estate agency work.9 In one of those, CAC v Kerr, the conduct giving rise to the charges, as in this case, related to property management work.[38] I am satisfied that there can be misconduct by a licensee under s 73 in respect of conduct that does not relate to real estate agency work. The structure of s 73, by itself, makes that sufficiently clear. There is, for example, the express reference to real estate agency work in paragraph (b), and the absence of that qualification in paragraph (a). There is the same difference between paragraph (b) and paragraph (d). Paragraph (d) plainly may apply to conduct unrelated to real estate agencywork, but of a nature which, as paragraph (d) says, "reflects adversely on the licensee's fitness to be a licensee". An obvious example is theft. The short point isthat s 73, in some provisions, is directed only to conduct in the course of agency work, but other provisions do not have that limitation. This analysis is supported by s 72. Section 72 is directed to "unsatisfactory conduct", and is expressly confined toreal estate agency work.[39] The purpose of the Act is set out in s 3(1) as follows:The purpose of this Act is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work.(emphasis added)[40] The emphasised words support the conclusion from the text of s 73 that, in certain circumstances, conduct by a licensee when carrying out work that is not real estate agency work may nevertheless constitute misconduct bearing on the fitness of the person to be a licensee. This conclusion is consistent with statutory provisions governing the conduct of members of other professions: misconduct which may justify disciplinary action is not confined to conduct in the course of the particular profession.9 Smith v Complaints Assessment Committee (CAC 10027) [2010] NZREADT 13; Complaints Assessment Committee (CAC 10026) v Dodd [2011] NZREADT 1; Real Estate Agents Authority (CAC 10054) v Subritzky [2012] NZREADT 19; Real Estate Agents Authority (CAC 10054) v Subritzky [2012] NZREADT 20; Real Estate Agents Authority (CAC 10027) v Brankin [2013] NZREADT 32; Real Estate Agents Authority (CAC 303) v Kerr [2015] NZREADT 33.Evaluation: charges 1 and 2[41] The Tribunal rejected the appellant's argument that there were data entryerrors resulting in inadvertent payments to the wrong clients. I am satisfied that the Tribunal came to the correct decision. It is appropriate to set out a reasonably full summary of the reasons for rejecting the appellant's contention because this bears, in a material way, on the ultimate conclusion that the conduct was disgraceful and on the penalty appeal.[42] The appellant failed to produce a single page of documentary evidence to show any inadvertent payment to another client. In particular, there were no relevant and unredacted bank statements for the rental trust account of the agency. Thisjustified an inference adverse to the appellant.[43] The appellant was unwilling to name the alleged recipients of the erroneous payments, either to the Committee or to the Tribunal. The s 85 notice required the appellant to provide the names and the amounts, but he refused. When directed to answer questions put to him by counsel at the Tribunal hearing, the appellantclaimed that "about 19" people received money in excess of what they should have. But the appellant could provide only one full name (Peter Ridley), one partial name(McMillan) and a reference to "a guy in Australia". No evidence from any of the 19 clients was put before the Tribunal. Lauren White, a witness called by the appellant, who answered the telephone at the agency over the relevant period, confirmed that no client had ever contacted the office to advise they had received more rent than they should have.[44] The appellant is a chartered accountant. He was unable to give a clearexplanation as to how the "errors", which allegedly occurred a number of times over a period of months, remained undetected if monthly bank reconciliations for individual clients were undertaken. These records included what went in and out of the agency account, with reference to each of the agency's tenants and landlords. If there was any substance to the appellant's explanation, the records would have shown rent arrears for the client who was short paid and a surplus for the client who received the payment in error.[45] It is inherently unlikely that the sort of manual errors described by the appellant could have occurred without being detected long before the total number of clients not entitled to payments had reached 19. The total number of seemingly undetected erroneous payments, as opposed to the number of clients, would appear to have been in excess of 19 because the appellant said that there were a number of erroneous payments totalling substantial sums to some of the clients. Even without a robust system for cross-checking payments, an indicated high number of undetected errors over a number of months is improbable.[46] The appellant's explanation cannot be reconciled with the fact that many of the missing payments appear to comprise part payments of rent, rather than full payments. If, as the appellant said, the error was one of transposition of client digits in an accounting code, entered for the purpose of sending a current rent payment to the client, the shortfall for the client who should have received the payment would be the full amount of the net rent after deduction of commission, or, occasionally, after deduction of commission and property expenses. But on many occasions the complainant client received a part payment so that the missing sum, if the appellant was correct, was an inadvertent payment to the wrong client of part only of the total payable. And this would have also required an inadvertent data entry error for the wrong client for part of the money, but with a correct three digit entry for the entitled client for the other part. This is highly improbable.[47] There was no evidence for the appellant of any effort made to have the unintended recipients of the funds repay the money they were not entitled to. Theappellant's evidence was that he met the shortfalls from his own funds, even though this required him to refinance and to sell the agency rental roll to obtain the money. It was a large sum in total. It is implausible that the appellant would not have sought to recover it, at least from clients who erroneously received large sums.[48] The appellant said he was aware by June 2012 of shortfalls affecting Mr Poynter. He admitted that, despite this, he did not contact Mr Poynter to tell him what had happened, as would be expected in the event of an inadvertent accounting error. Instead, it was left to Mr Poynter to contact the appellant, in October 2012, when the problem was detected by Mr Poynter's accountant.[49] There is documentary evidence that, in the cases of Mr Sinclair and Mr Poynter, and also in Ms Graham's case, payment by the appellant occurred onlyafter a threat was made to report the issue to the police or to the respondent.[50] The appellant, in the course of his evidence, sought to explain why he had not produced the sort of independent evidence that would be expected to be available to support his assertions of simple data entry errors and payments to the wrong people. These explanations, and in particular the loss of records through computer failure, were not borne out by the evidence. This general approach was consistent with theappellant's response to the investigation of the complaints from the outset. Theappellant provided the data entry error explanation in his first interview with Mr Gallacher, and gave assurances that documents would be provided todemonstrate this. But at the same time the appellant was not willing to provide anydetail to the investigator and, in respect of a number of possible lines of enquiry,asked the investigator not to pursue these lines of enquiry (such as contacting theagency employees or the agency's bank). And documents were not provided.[51] I am satisfied that the Tribunal was correct in its rejection of the appellant'sargument of data entry error. I am also satisfied that the Tribunal was correct in coming to the positive conclusion that the rent that should have gone to Mr Sinclair and Mr Poynter was knowingly used by the appellant for his own benefit. It is in my judgment, the proper inference to be drawn from all of the evidence.Other arguments in response to charges 1 and 2[52] One of the grounds of appeal was that Mr Sinclair and Mr Poynter "did notcheck their [bank accounts] for long periods and did not see that the rental paymentswere not being made". This argument was developed by Mr Kennelly in his writtenand oral submissions for the appellant, including the following written submission:The Appellant submits how could the Tribunal have found "disgraceful conduct" when there is a degree of contributory negligence by theLandlords. Contributory negligence would have been considered if civil proceedings had been commenced by the landlords.[53] The enquiry into the appellant's liability is not assisted by reference to contributory negligence. But, in a more general sense, the suggestion that thecomplainants somehow were at least partially responsible for the fact that they were not paid on time is another indicator of the appellant's attitude to his responsibilitiesin handling money for clients. The fact that the landlords did not regularly checktheir bank accounts is irrelevant to assessment of the appellant's conduct. Thatmight not have been the case if there was some arrangement between one or more of the landlord clients and the agency which put some onus on the client to check their accounts. There is not a shred of evidence to that effect, nor would it be likely that any landlord would assume a degree of responsibility of the sort asserted by the appellant. It was the appellant, through his agency, who had control over the money.[54] The appellant advanced other arguments in an endeavour to shift responsibility from himself. One was similar to the contributory negligenceargument against the appellant's own clients. This was that none of the 19 landlord clients to whom the complainants' money allegedly went had drawn the mistake tothe appellant's attention, or to the attention of one of the staff at the agency. This does not provide any form of defence for the appellant. As earlier recorded, it is part of the evidence which leads to the conclusion that the rent due to Mr Sinclair and Mr Poynter had not gone to other landlord clients.[55] The appellant also argued that the delay in payment of the money to Mr Sinclair and Mr Poynter was not disgraceful because, once he was aware of the non-payment, the money was repaid. On the evidence this is not correct in the case of Mr Poynter. In any event, the fact of repayment does not bear on liability, because the circumstances of repayment do not give rise to any inference favourable to the appellant on the question of the disgraceful conduct in question.Evaluation: charge 3[56] The charge referred to a sum of "approximately $9,000". There was evidence of a sum of approximately $2,000 to $3,000 in 2009 or 2010 and a further sum of $6,500 in 2012.[57] The Tribunal did not appear to attach any significant weight to the evidence in respect of the earlier period. I am satisfied that there is insufficient evidence to support a finding of misconduct in that regard, although the event remains relevantto the main issue. This is whether there was material default by the appellant in payment of rent due to Ms Graham in 2012 and, in particular, whether the cheque for $6,509.05 was payment of arrears or payment of current rent.[58] Mr Kennelly argued that there was no documentary evidence produced by therespondent to support the primary contention that payments that should have gone toMs Graham, prior to the payment by cheque in September 2012, did not go toMs Graham when they were due. In the case on appeal there were two bankstatements for the bank account into which Ms Graham's rent was paid by theagency – the account in the name of Krystal Sky Developments Ltd – but these wereonly for August and September 2012. It nevertheless appears from the agreedstatement of the appellant and respondent, relating to charge 4, that there werestatements for Ms Graham's account for 2012 in respect of one of her rentalproperties at Pine Valley Road, which is the rental property of primary concern. Andthe agreed statement records that the appellant got copies of these documents. Thestraightforward way of recording the position from the complainant's perspectivewould have been to provide a simple statement of receipts, with dates, supported bycopies of the bank statements. These could have been obtained even if Ms Grahamhad mislaid her own copies. This has not made the task of assessment on appeal anyeasier. I am nevertheless satisfied, on the balance of probabilities, that the appellantfailed to pay rent to Ms Graham when it should have been paid.[59] The evidence at the conclusion of the prosecution case before the Tribunal, and in particular the evidence of Ms Graham, was sufficient to establish, on the balance of probabilities, that the cheque of $6,509.05 drawn by the appellant on Alan Stuart Motors Ltd was a payment of rent that should have been paid earlier to Ms Graham. On that basis an evidential onus shifted to the appellant to provide a reasonable foundation for his argument that the cheque was for current rent or, if it was in whole or in part for arrears, to provide some reasonable explanation for the delay in payment. The appellant's contention was that there was no delay, and hetherefore did not seek to provide an explanation for delay. The evidence he did provide fell well short of demonstrating that the respondent, as prosecutor, had not met the onus on it to prove that the payment was for arrears.[60] The appellant's payment to Ms Graham was made after a threat by Ms Graham to go to the police. In the absence of other evidence, that is not a threat that could be regarded as likely to be made by a landlord who was receiving rentpayments on time. It is action consistent with Ms Graham's evidence of the earlierfailure to pay on time – in 2009 or 2010 - and other evidence from Ms Graham of her reaction to what she said were payment defaults in 2012. A lump sum payment made following a threat to lay a complaint is also conduct by the appellant markedly similar to what happened with Mr Poynter and Mr Sinclair.[61] The bank statements of Ms Graham's company, Krystal Sky Developments,produced at the Tribunal hearing as exhibits E and F, show that in August and September 2012 there were a number of direct credit transfers of rent from the agency. If the cheque was for current rent and a bond received by the agency, as the appellant suggested, there would have been no reason to pay the funds by cheque drawn on the account of Alan Stuart Motors Ltd or by cheque drawn on the agency'saccount, or on any other entity. The appellant claimed that payment by this means, and which required him to go to the bank, was necessary because he was out of Auckland. This is not a credible explanation. Given the direct credit facilities, thesimplest way of paying current rent, which would be sitting in the agency's bankaccount, if the appellant's evidence was truthful, would have been for the appellant to phone one of his staff in Auckland and instruct that person to implement the direct credit. It is also not credible because there were two direct credits on 19 September for Pine Valley Road and three on 28 September for all three properties, with the cheque being deposited on 25 September.[62] At the Tribunal hearing the appellant produced a typed summary of what he said were a series of rent payments to Ms Graham between 15 August 2012 and 29 October 2012, seemingly relating to all three properties, together with two sums paid by way of bond, and totalling $14,370.44. Attached to this were six pages said to evidence the rent receipts by the agency. Although the summary is headed "rentspaid to Karin [sic] Graham", it actually records money received by the agency from tenants: the sums are clearly the full rent, not the net sum, after commission, paid or payable to Ms Graham.[63] These documents from the appellant do not prove that the cheque paid intoMs Graham's account was for some of the payments said to have been received inthe period covered by the appellant's summary. The six pages attached to thesummary, to the extent that they might be accepted as reliable evidence, can berelated only to eight of the 17 receipts of rent and two receipts of bonds recorded inthe summary. In addition, and tellingly in relation to the appellant's credibility, thesix attachments, seemingly recording the eight receipts, are, as the respondentaccurately said, incomplete and redacted to the point of being meaningless.Evaluation: charge 4[64] This charge was founded on a failure to comply with a notice issued under s 85 of the Act. Section 85 is as follows:85 Powers to call for information or documents(1) If the conditions stated in subsection (2) are satisfied, a Committee may, by notice in writing, require any person to produce to the Committee any papers, documents, records, or things.(2) The conditions referred to in subsection (1) are that—(a) the members of the Committee believe, on reasonable grounds, that the exercise of the powers conferred by that subsection is necessary to enable the Committee to carry out its inquiry; and(b) the person to whom a notice under that subsection is to be given has failed to comply with a previous request to produce to the Committee, within a reasonable time, the papers, documents, records, or things required by the notice; and(c) the members of the Committee believe, on reasonable grounds, that—(i) it is not reasonably practicable to obtain the information required by the Committee from another source; or(ii) for the purposes of the investigation, it is necessary to obtain the papers, documents, records, or things to verify or refute information obtained from another source.[65] The appellant argued that s 85 could not be used by the Complaints Assessment Committee in this case because it was seeking to investigate work by theappellant which was not real estate agency work. I do not agree. A Complaints Assessment Committee is given the power under s 85 for the purpose of investigating complaints. For reasons already recorded, these may include complaints against a licensee in respect of work which is not real estate agency work.[66] There was no argument for the appellant that the conditions specified in s 85(2) had not been met, and I am satisfied that they were met. In particular, in relation to a charge of misconduct under s 73(c) of "wilful or reckless contravention"of the Act, there had been persistent failure by the appellant to produce documentsand this had been over an extended period of time – from the first interview inOctober 2012 through to the issuing of the notice in June 2013. And this had beenfailure by the appellant notwithstanding assurances to the Authority's investigatorthat documents would be produced.[67] The appellant also argued that he could not comply with the notice because relevant financial information had been lost when a computer failed. This contention was not borne out by the computer technician, Mr White, called to give evidence insupport of the appellant's case. It was established in cross-examination of Mr White that the computer that failed was not the one used for compiling rental records. And the failure of one computer was in any event not relevant because the main server was intact and defence witnesses agreed that data was backed-up at all relevant times. I also agree with a submission for the respondent that many of the documentslisted in the s 85 notice would also have been available from other sources, and inparticular the agency's bank.[68] The appellant argued that his failure to comply with the notice was not material because the Complaints Assessment Committee had obtained enoughdocuments to pursue its case. In some circumstances that might, conceivably,provide a defence to a charge of wilfully or recklessly failing to comply with anotice. But there was no evidence to support an argument to that effect.[69] In this case the appellant failed to produce some critical documents and theCommittee was unable to obtain many of them from other sources. To a greater orlesser extent this applies to items 2, 4, 6 and 7 in the notice; that is, copies of thestatements for Mr Sinclair, Ms Graham and Mr Poynter, and the list of the names ofthe alleged 19 landlords who had inadvertently received payments that should havegone to Mr Sinclair and Mr Poynter and the sums in each case.[70] Misconduct was established on charge 4. It was undoubtedly wilful contravention of the Act – of a lawful direction to a licensee. It followed a long period of what the respondent, in its submissions, accurately described as a"sustained pattern of obfuscation and non-compliance by the appellant when the committee sought relevant records from him during the investigation". And the inference to be drawn from a substantial body of evidence is that it was designed to seek to ensure that there was no direct evidence of deliberate misappropriation.Other grounds of appeal[71] The appellant's arguments considered so far are those which I consider were relevant to the question whether the Tribunal was in error in finding all four charges proved. There were some further arguments advanced on appeal. These included submissions relating to errors in the particulars of the charges as originally laid,delay, and alleged breach of the appellant's right to a fair hearing. I am not persuaded by these, and some other arguments, all of which were secondary, that there was error by the Tribunal or that, for any other reason, the appeal on liability should be allowed, on any of the charges.Result on the appeal against liability under CIV-2015-404-1679[72] The conduct alleged on charges 1, 2 and 3 was established and I agree with the Tribunal that it was disgraceful conduct. On charge 4 there was wilful contravention of the Act which amounted to misconduct.[73] The appeal against liability is dismissed.The penalty appeal[74] The Complaints Assessment Committee appealed against the penalty decision in a separate proceeding. It is, therefore, the appellant in that proceeding but, toavoid confusion, I will refer to the Complaints Assessment Committee as the respondent.[75] The respondent appealed on the following grounds:(a) The Tribunal erred in failing to identify and/or correctly apply the relevant legal principles that apply to the determination of penalties under the Act.(b) On the facts as found by the Tribunal in its liability decision, theTribunal erred in declining to cancel the appellant's real estate agent licence. The respondent contended in the alternative that there shouldhave been a suspension of the appellant's licence for the maximum of24 months, rather than the suspension for nine months from 7 October 2015.[76] The appellant did not appeal against the penalty of nine months suspension. He submitted that suspension for that period was the maximum appropriate penalty in all the circumstances.The Tribunal penalty decision[77] After summarising parts of the liability decision, the Tribunal referred to general principles relating to penalties for professional misconduct and noted a number of its decisions. The discussion of the cases commenced with the following statement:[9] Any finding that reflects a lack of absolute probity when dealing with client money will be treated seriously by us, as has been emphasised in a number of previous decisions.[78] The Tribunal then referred to the failure to comply with the notice under s 85 of the Act and, in that context, to the decision of this Court in Hart v Auckland Standards Committee 1 of New Zealand Law Society.1010 Hart v Auckland Standards Committee 1 of New Zealand Law Society [2013] NZHC 83 at [108]- [109].[79] After summarising submissions, the Tribunal's conclusion was as follows:[34] Standard principles of sentencing include factors such as aggravating and mitigating features, and remorse. The theme of non-acceptance of our findings as outlined in the submissions for the defendant is concerning. We accept, of course, that the principal purpose of the Real Estate Agents Act 2008 is to promote and protect the interests of consumers in respect of real estate transactions and promote public confidence in the performance of real estate agency work. One of the ways in which the Act achieves its purpose is by providing accountability through an independent, transparent, and effective disciplinary process.[35] Professional standards must be maintained. The aspects of deterrence and denunciation must be taken into account. It is settled law that a penalty in a professional disciplinary case is primarily about the maintenance of standards and the protection of the public, but there can be an element of punishment. Disciplinary proceedings inevitably involve issues of deterrence, and penalties are designed in part to deter both the offender and others in the profession from offending in a like manner in the future. Having said all that, it is often appropriate to consider rehabilitation of the professional, and that may involve requiring a licensee to undergo training or education.[36] As we stated orally at the end of the penalty hearing at Auckland on Wednesday, 7 October 2015, we cannot disagree with the content of the thoughtful submissions from Ms Paterson on behalf of the prosecuting Authority. As we have already made clear in our substantive decision, we still wonder whether the defendant quite understands the seriousness of his conduct and the curious attitudinal problem he has adopted towards the Committee and us in our assessment of his offending. We endeavoured to explain that issue to him orally at the hearing of 7 October 2015 and we would like to feel he is now remorseful and understanding of the reasoning we carefully set out in our decision of 24 June 2015.[37] We again emphasise the submission for the prosecuting Authoritythat the defendant's licence be revoked is compelling in many ways.However, we prefer to take the following more moderate approach of suspension of the licence on the expectation that, if there is any further offending by the defendant then, upon the annual review of his licence, it not be renewed.[80] In addition to suspension for nine months, there were the following further penalties and orders:(a) A fine of $2000, but with payment deferred until 30 September 2016;(b) An order that the appellant complete "the usual on-going verifiable educational requirements to the satisfaction of the Registrar of theAuthority";(c) An order that the appellant undertake, to the satisfaction of the Registrar within the next six months, two courses relating to internal controls and audits in real estate firms and on the principles of ethics applying to real estate practice.The approach on appeal[81] For the respondent Ms Paterson referred to "a divergence of opinion in theHigh Court as to whether an appeal against the penalty decision of a disciplinarytribunal is an appeal against the exercise of a discretion or a general appeal". She referred, in particular, to different opinions expressed by full courts of the High Court in Bhanabhai v Auckland District Law Society11 and Sisson v Standards Committee.12 Both of those cases concerned disciplinary proceedings against lawyers. Considerations bearing on the question whether a disciplinary tribunal has a discretion when assessing penalty may apply to disciplinary tribunals generally, but that does not necessarily follow. When the inquiry extends beyond disciplinary proceedings against lawyers, the divergence of opinion remains. This was discussed in respect of disciplinary proceedings under the Health Practitioners Competence Assurance Act 2003 by Collins J in Roberts v Professional Conduct Committee of the Nursing Council of New Zealand.13 The Judge agreed with a number of decisions which concluded that, under that Act, the assessment of penalty involved exercise of a discretion.[82] I was not referred to any decisions of this Court on this question under the Real Estate Agents Act. Ms Paterson submitted that the appeal against the penalty imposed by the Tribunal in this case is an appeal against the exercise of a discretion. Mr Kennelly, understandably, did not take issue with that proposition.[83] As observed in the majority judgment of the Supreme Court in Kacem v Bashir:1411 Bhanabhai v Auckland District Law Society (ADLS) [2009] NZAR 282 (HC) at [33].12 Sisson v Standards Committee [2013] NZHC 349 at [14]–[15].13 Roberts v Professional Conduct Committee of the Nursing Council of New Zealand [2012] NZHC 3354 at [24]–[43].14 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].The distinction between a general appeal and an appeal from a discretion is not altogether easy to describe in the abstract. But the fact that the case involves factual evaluation and a value judgment does not of itself mean the decision is discretionary.(emphasis added)[84] The starting point is the statute. Section 110 of the Act prescribes the orders that may be made by the Tribunal on a finding of misconduct. The relevant provisions are as follows:110 Determination of charges and orders that may be made if charge proved(1) If the Disciplinary Tribunal, after hearing any charge against a licensee, is satisfied that it has been proved on the balance of probabilities that the licensee has been guilty of misconduct, it may, if it thinks fit, make 1 or more of the orders specified in subsection (2).(2) The orders are as follows:(a) 1 or more of the orders that can be made by a Committee under section 93:(b) an order cancelling the licence of the licensee and, in the case of a licensee that is a company, also cancelling the licence of any officer of the company:(c) an order suspending the licence of the licensee for a period not exceeding 24 months and, in the case of a licensee that is a company, also suspending the licence of any officer of the company for a period not exceeding 24 months:(d) an order that a licensee not perform any supervisory functions until authorised by the Board to do so:(e) an order, in the case of a licensee who is an employee or independent contractor, or former employee or former independent contractor, that any current employment or engagement of that person by a licensee be terminated and that no agent employ or engage that person in connection with real estate agency work:(f) an order that a licensee who is an individual pay a fine not exceeding $15,000 and order a licensee that is a company pay a fine not exceeding $30,000:(g) where it appears to the Tribunal that any person has suffered loss by reason of the licensee's misconduct, an order that the licensee pay to that person a sum by way of compensation as is specified in the order, being a sum not exceeding $100,000.[85] I am satisfied that under s 110 of the Act the Tribunal has a discretion as to the penalty or penalties to be imposed. This is indicated by the words used in s 110(a) — "It may, if it thinks fit, make 1 or more" of the specified orders — and by the range of orders that may be made as specified in s 110(2).[86] What this conclusion means, at a general level of analysis, is that the principles summarised by the Court of Appeal in May v May apply: the Tribunal'sdecision on penalty should not be overturned on appeal unless the Tribunal has made an error of principle, considered irrelevant matters, failed to consider relevant matters, or was plainly wrong.15 The practical task is to identify matters that limit the discretion to determine whether the Tribunal has acted within it.Limits on the discretion[87] Although s 110(1) provides some discretion, there are constraints. These arise from other provisions of the Act, and from well established principles relating to the conduct of people in different professions and, in particular on the facts of this case, where there is dishonesty in handling money for clients.[88] The starting point is s 3 of the Act, part of which was recorded above at [39]. The section in full is as follows:3 Purpose of Act(1) The purpose of this Act is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work.(2) The Act achieves its purpose by—(a) regulating agents, branch managers, and salespersons:(b) raising industry standards:(c) providing accountability through a disciplinary process that is independent, transparent, and effective.[89] The purpose warranting emphasis in the present context is protection of theinterests of consumers. That is expressly directed to protection "in respect of15 May v May (1982) 1 NZFLR 165 (CA).transactions that relate to real estate". But, for reasons earlier recorded, the importance of protection is not diminished by the fact that the misconduct of the appellant in this case arose in respect of work that was not real estate agent's work.Other provisions of s 3 warranting emphasis are paragraphs (b) and (c) of subsection (2).[90] This statutory provision, which amounts to a direction to the Tribunal in respect of disciplinary proceedings, is reflected in the principles developed in the cases. In Z v Dental Complaints Assessment Committee, the majority in the Supreme Court said:16[128] It is accordingly appropriate to consider further the nature of, and public interest involved in, the disciplinary process, including the framework within which the Act provides for that process. The purpose of disciplinary proceedings is materially different to that of a criminal trial. It is to ascertain whether a practitioner has met appropriate standards of conduct in the occupation concerned and what may be required to ensure that, in the public interest, such standards are met in the future. The protection of the public is the central focus. Protection is a less prominent factor in the criminal process. One consequence of this difference is that the disciplinary process may cover much wider ground than that litigated at the criminal trial.(Footnote omitted)[91] Further relevant provisions are the following:(a) Section 36(1)(c) requires that a licensee must be "a fit and proper person to hold a licence."(b) Section 37(1)(a) provides that a person cannot be granted a licence if convicted within the last 10 years of a crime involving dishonesty. Although this does not apply to the appellant, it is relevant because it gives substantial emphasis to the need for honesty in a licensee generally, not just honesty in real estate agency work.(c) Section 122 imposes duties on agents in respect of money received by an agent.16 Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1.[92] In Bolton v Law Society, Sir Thomas Bingham MR discussed penalties for breach of professional duties by solicitors, including those almost always imposed for dishonesty.17 He said:Any solicitor who is shown to have discharged his professional duties with anything less than complete integrity, probity and trustworthiness must expect severe sanctions to be imposed upon him by the Solicitors Disciplinary Tribunal. Lapses from the required high standard may, of course, take different forms and be of varying degrees. The most serious involves proven dishonesty, whether or not leading to criminal proceedings and criminal penalties. In such cases the tribunal has almost invariably, no matter how strong the mitigation advanced for the solicitor, ordered that he be struck off the Roll of Solicitors.(Emphasis added.)[93] Bolton has been applied in lawyers' disciplinary proceedings in NewZealand.18 I am satisfied that the general tenor of Lord Bingham's observations isapplicable to dishonesty by a licensee under the Act when handling clients' money. And I again emphasise that this applies to misconduct of that nature whether arising when carrying out real estate agency work or other work.Evaluation[94] Mr Kennelly made a number of submissions in opposition to the respondent'spenalty appeal which, in substance, repeated arguments advanced on the liability appeal. These were:(a) There was no breach by the appellant of his obligations as a licensee under the Act and there never had been.(b) The appellant believed the Complaints Assessment Authority had no authority over the running of the rental business.(c) There was no contract for services between the landlords and the appellant personally.17 Bolton v Law Society [1994] 1 WLR 512 at 518.18 Sisson v Standards Committee, above n 12; Dorbu v New Zealand Law Society [2012] NZHC 564.(d) The Tribunal failed to give any weight to the difference between a realestate trust account and a "property management account".[95] On the question of penalty, those submissions are of no assistance to the appellant. This is a case of serious dishonesty in relation to the handling of money for clients by a person who is a licensee under the Act. The dishonesty bears directly on the fitness of the appellant to continue as a licensee. The arguments on thequestion of penalty lend weight to the respondent's argument that the licence should be cancelled. This is because these arguments for the appellant at the penalty stage of the proceeding indicate that he still does not understand, or accept, the gravity of his misconduct. This bears on penalty.[96] There were three principal points for the appellant directed to the nature of the conduct, as follows:(a) There was never any "direct evidence of dishonesty."(b) There was no evidence of money going to any account other thanlandlords' accounts.(c) There was no conduct "akin to taking funds for personal use".[97] These submissions were founded on circumstances - an absence of direct evidence - which came about because of other misconduct by the appellant. The best evidence on what happened to the rent payments received by the agency from thetenants would have been the agency's trust account records. Mr Kennellyacknowledged this would have been the best evidence. For reasons discussed when dealing with liability, in respect of charges 1, 2 and 3, as well as charge 4, the fact that this evidence was not before the Tribunal arose in part from misconduct by the appellant (charge 4) and in other respects because he did not meet the evidential onus on him to rebut the prima facie case of misappropriation arising from therespondent's evidence (charges 1, 2 and 3). I will come back to the evidence of dishonesty.[98] There was a further submission that no other tribunal had found the appellant guilty of any wrong-doing. This was a reference to complaints to the police, the Serious Fraud Office and other enforcement agencies. This is irrelevant. The assessment required on this appeal is to be made on the basis of the relevant evidence before the Tribunal. There is also the point made in the statement of Lord Bingham MR earlier quoted: proven dishonesty will almost invariably result in disqualification whether or not that dishonesty led to criminal proceedings and criminal penalties. And in Z v Dental Complaints Assessment Committee the majority held that disciplinary proceedings could be brought in respect of conduct which had been the subject of criminal proceedings which resulted in the acquittal of the appellant.19[99] For the respondent, Ms Paterson submitted that the Tribunal failed correctly to identify and apply important principles and, in particular, that dishonesty should result in cancellation in all but rare cases. She submitted that the need for that penalty is given emphasis in this case by the appellant's complete lack of candour indealing with the Committee and non-compliance with the statutory notice. She further submitted that the penalty decision was plainly wrong because, in essence, it was in conflict with numbers of clear findings by the Tribunal.[100] I am satisfied that the Tribunal's penalty decision is contrary to principle, andplainly wrong when assessed in relation to the Tribunal's own findings of fact, beingfindings I have upheld on the liability appeal. It is error which requires this Court to intervene.[101] The error is reflected in the penalty imposed when compared with theTribunal's observation at [36], cited above, that it could not disagree with thesubmissions to it by Ms Paterson for the respondent, which was the same submission made on this appeal. This was repeated in a different way at [37] when the Tribunal expressly recorded that the respondent's arguments in favour of cancellation were"compelling in many ways". But the Tribunal drew back from that outcome for reasons which effectively ignore the fundamental requirement of protection of the community, and the requirement that, in most cases involving dishonesty, the proper19 Z v Dental Complaints Assessment Committee, above n 16.penalty in a disciplinary proceeding is cancellation of the licence. There was further error in drawing back from cancellation, and imposing penalties which in the circumstances were modest, on the basis that if there is further offending the licence would not be renewed. In my respectful opinion the Tribunal failed to meet its responsibilities set out in s 3 of the Act and in particular those earlier discussed.[102] The Tribunal, in the end, essentially ignored its own findings of fact. These are the findings in the liability decision and recorded, verbatim, at [26] of this judgment. Contrary to the submissions for the appellant, they were findings that the appellant had been dishonest. The submissions for the appellant on this aspect of the case, and on numbers of other aspects, were in some respects disingenuous and in others fairly revealing. Both aspects are captured in the submission, earlier recorded,that there was no "direct evidence of dishonesty". That does not mean there was no evidence of dishonesty. The proper inference to draw from all of the circumstances of the case is that the appellant used money which should have been paid to the landlord clients of the business that he controlled. The inference arises from the positive findings of the Tribunal, affirmed on this appeal, coupled with theappellant's steadfast refusal to provide any evidence in support of his primarydefence that there had simply been data entry errors and the money had inadvertently gone to other clients. There is no evidence to suggest that there would have been any difficulty in obtaining relevant records. The appellant went out of his way to avoid providing any information as to what happened to the money. It was a substantial sum - around $40,000.[103] The gravity of the appellant's misconduct was aggravated by his steadfast refusal to meet his obligations, as a real estate agent, to respond to the notice from the Authority under s 85 of the Act. In Hart v Auckland Standards Committee 1 of the New Zealand Law Society, this Court made clear that a failure by a professional to comply with a lawful request made by a regulator is a serious matter.20 The Court said that practitioners have a duty to act in a professional, candid and straightforward way in dealing with investigating committees and that it is axiomatic that practitioners must co-operate with those tasked with dealing with complaints, even20 Hart v Auckland Standards Committee 1 of the New Zealand Law Society, above n 10.where practitioners consider the complaints are without justification. These observations apply with equal force to the duties of a licensee under the Act.[104] The gravity of the misconduct in failing to comply with the notice under s 85 of the Act, which aggravated the gravity of the other charges, was itself aggravatedby the appellant's approach to the disciplinary proceeding, his steadfast refusal to acknowledge in any real way the seriousness of his conduct, his continuing to effectively blame the landlord clients whose money had dishonestly been diverted and his approach to the Tribunal. These matters, at least to an extent, are reflected inthe Tribunal's observation in the penalty decision, at [36], that the Tribunal stillwondered whether the appellant understood the seriousness of his conduct "and theserious attitudinal problem he had adopted towards" the respondent and to theTribunal.[105] In my judgment the penalty imposed by the Tribunal is not the result of exercise of a discretion within a permissible range. In my respectful opinion it is plainly wrong and contrary to principle having regard to the provisions of the Act, the broad approach to penalties for dishonesty, and the facts of this case indicating serious dishonesty by the appellant coupled with a marked inability to recognise professional responsibilities.[106] There were further submissions from Mr Kennelly bearing on the appellant'spersonal circumstances. I have had regard to those submissions. I am not persuaded that they justify a result less than cancellation.[107] I have taken account of the earlier Tribunal penalty decisions relied on by therespondent, and Mr Kennelly's submissions in respect of those decisions.2121 Complaints Assessment Committee (CAC 10024) v Downtown Apartments Ltd (in Liq),above n 5; Real Estate Agents Authority (CAC 10058) v N [2012] NZREADT 18;Kerr v Complaints Assessment Committee (CAC 303) [2015] NZREADT 72.Ms Paterson drew to my attention a number of other cases where the Tribunal had not cancelled a licence notwithstanding findings of dishonesty.22 A number of those decisions are materially different on the facts, notwithstanding elements of dishonesty. To the extent that some cases may be more comparable to the present case, they do not justify a conclusion that the Tribunal's decision in this case shouldbe upheld on the basis of a principle of parity or consistency.Result on penalty appeal under CIV-2015-404-002564[108] The penalty and other orders imposed by the Tribunal in its decision dated 27 October 2015 are quashed.[109] There is an order cancelling the licence of Alan Morton-Jones pursuant to s 110(2) of the Real Estate Agents Act 2008. This order is to take effect from 16 December 2014, the date on which an order of interim suspension pursuant to s 115 of the Real Estate Agents Act 2008 came into effect.Costs[110] If the Real Estate Agents Authority, as respondent on the liability appeal, or the Complaints Assessment Committee, as appellant on the penalty appeal, seeks costs a memorandum in that regard should be filed and served by 26 August 2016. Any response for Mr Morton-Jones should be filed and served by 16 September 2016.______________________________Woodhouse J22 Real Estate Agents Authority v Ross [2012] NZREADT 4; Real Estate Agents Authority (CAC 10007) v Wallace [2012] NZREADT 70; Complaints Assessment Committee (CAC 10026) v Dodd, above n 9; Real Estate Agents Authority (CAC 10003) v Kumandan [2013] NZREADT 28; Gollins v Complaints Assessment Committee (CAC 20002) [2015] NZREADT 26; Complaints Assessment Committee (CAC 20009) v Li [2015] NZREADT 48;Real Estate Agents Authority (CAC 20002) v Brar [2015] NZREADT 59; Real Estate Agents Authority (CAC 10020) v McDonald [2014] NZREADT 29.