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PM banned for ‘cavalier’ approach to trust account

PM banned for ‘cavalier’ approach to trust account

by Nick Bendel 11 comments

An agency has received a five-year ban for mishandling tenants’ money despite none of it going missing.

Melbourne firm Baycrown Management has had its licence cancelled and been disqualified from holding a licence until 2020 after breaching Victoria’s rental and agent laws.

The Victorian Civil and Administrative Tribunal ruled that Baycrown deliberately breached trust account rules for the sake of “convenience” – although “at no time whatsoever” did Baycrown steal or ‘borrow’ any money that belonged to the trust account.

According to the tribunal, the agency had a practice of collecting two months of rent in advance, but only half of this money would be paid into the trust account. The other half would be paid into a separate interest-bearing account, where it actually served as a bond.

On all but three occasions between October 2012 and about January 2014, Baycrown failed to forward this bond money to the authorities as required, the tribunal found.

During that time, Baycrown collected about $243,000 of bond money on which it earned $574 of interest.

Baycrown director Gilbert “Jack” Horton told the tribunal that the agency used this process because it had received professional advice that it was permitted.

However, the tribunal noted that this legal advice was not produced and ruled that Mr Horton’s explanation of Baycrown’s conduct was “contradictory and unsatisfactory”. 

“It was not done out of ignorance, but for convenience,” according to the tribunal.

“In any event, [Baycrown] ought not to need legal advice one way or the other for an estate agent managing rental premises to recognise that the money was being held on trust and ought to have been paid into the trust account.”

In other findings against Baycrown, the tribunal ruled that the agency failed to notify the regulator when it opened its trust account and twice asked tenants to sign blank bond claim applications.

Baycrown argued that a licence disqualification would be excessive punishment and that it should instead be required to accept a series of enforceable undertakings.

However, the tribunal said it didn’t think that would protect the public given the “cavalier attitude of Baycrown to its obligations in the past and the lack of reassurance about its current attitude”.

Baycrown was also ordered to pay $5,000 to the Victorian Property Fund, which is used by Consumer Affairs to fund grants and compensation claims.

[Related: Compliance systems questioned after trust account failures]

PM banned for ‘cavalier’ approach to trust account
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