Century 21 Australia Pty Ltd (ACN: 003 145 346) has been ordered to pay more than $109,000 in compensation, plus more than $28,000 in interest, into the Victorian Property Fund (VPF), after the misappropriation of trust account funds by an estate agent with which it was in a franchise agreement.
The actions of Victorian Realty Group Pty Ltd (VRG)(ACN: 135 903 374), trading as Century 21 Complete Properties, caused 13 clients to lose money. 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 “defalcation” (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.