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The former president of the Real Estate Institute of Australia is facing court after allegedly breaching real estate rules of conduct.
Malcolm Gunning, former president of REIA, is being prosecuted by Fair Trading for allegedly breaching the rules of conduct that apply to licensed agents.
Mr Gunning told REB that the matter had already been dealt with, but he has to go back to court.
“Fair Trading fined us 12 months ago but have found fit to come back and commence proceedings again. I suppose you might wonder why,” he said.
Mr Gunning was reprimanded by Fair Trading in February last year over breaches to the real estate act related to alleged failures to monitor his company’s property management trust fund.
Mr Gunning admitted that there was a management failure in his company, Guncom, at the time, but they had done the work to fix it.
“I worked with Fair Trading at that time and we changed the accounting and the property management staff and put new people in place and changed the process completely. That’s what took place,” he said.
A Fair Trading spokesperson told REB that the company had been charged with failing to have trust account records audited, failing to keep a trust account in the correct licensee name and failing to comply with requirements related to receipts for trust money.
Mr Gunning said that he was not the licensee at the time and the mistakes that took place escalated over time.
“When I was made aware of it, I immediately took back control of the business. I effected those changes including changing all the staff, worked with Fair Trading to make sure all the systems were in place,” he said.
None of the clients of Guncom were disadvantaged, Mr Gunning said, as any shortfall was paid back by him.
“None of our clients were disadvantaged cause any money that at the time was a shortfall was paid back by me,” he said.
Mr Gunning’s wife, Alice Gaye Gunning, is also facing court after having her licence cancelled and being disqualified for the industry for four years last February.
Ms Gunning is facing more serious charges, including breaching the rules of conduct, failing to have trust records audited and trust account fraud.
Mr Gunning said that his wife hadn’t been involved in the business for over 12 months and they would both be defending the charges.
“New procedures, new staff, no one’s disadvantaged, but we were fined, and now we’ve got to face not only the press but these other proceedings. Which we are vigorously defending,” he said.
Fair Trading said that Mr Gunning and the company matters would be before the Parramatta Local Court on 7 March, with Ms Gunning’s matter to be before the courts later in March.
The bigger picture
Director of Property Alchemy Penelope Valentine said that the case was disappointing, but may have a broader upside.
“It’s very disappointing, but it will remind people that they will get caught if they do the wrong thing and that they need to make sure they follow the law to the letter,” she said.
Ms Valentine said that most professionals do the right thing with trust accounts, but when funds are unlawfully accessed, it is damaging to the reputation of the industry as a whole.
“It scares investors and it gives property management a bad name and it just doesn’t need to be that way,” Ms Valentine said.
Ms Valentine said that a history of problem cases has prompted the market to react, and this was the reason she decided to launch Property Alchemy without a trust account, choosing Managed App which automates all transactions between tenants, property managers, landlords and tradespeople.
“There are now alternatives around trust accounts, and I think it’s a great thing for the industry because not using a trust account will mean you eradicate the opportunity to misappropriate funds and it will give investors piece of mind,” she said.
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