Fidelity guarantee account claim form and guide

This publication is for: 
ConsumerProperty industry

How to make a claim for reimbursement from the Fidelity Guarantee Account, including accompanying claim form.

Fidelity Guarantee Account

Information Bulletin No. 1

Settlement Agents Act 1981; Real Estate and Business Agents Act 1978

Effective 1 July 2011

Introduction

This Bulletin explains briefly what must be done when making a claim for reimbursement from the Fidelity Guarantee Account (the Fidelity Account). It is not intended to provide legal advice. If you need legal advice as to your rights to claim against the Fidelity Account or against any other person, you should seek advice from a lawyer.

What is the Fidelity Account

The  Consumer  Protection  division  of  the  Department  of  Mines, Industry Regulations and Safety  administers  the Fidelity Account. The primary purpose of the Fidelity Account is to reimburse people who suffer pecuniary loss or loss of property by reason of a defalcation by a person who is licensed as an agent under the Act.

What is a defalcation

The expression defalcation by a licensee is defined in the Act in this way:

“defalcation by a licensee” includes criminal or fraudulent conduct —

(a)      of a licensee;

(b)      of any one or more of the servants or agents of the licensee; (b) of a person who is a partner in the business of the licensee; or

(c)       of a person who is a partner in the business of the licensee; or

(d)      where the licensee is a firm and a body corporate is a partner in the firm or where the licensee is a body corporate, of any one or more of the directors, officers, servants, or agents of the body corporate,

in the course of the business of the licensee and from which arises pecuniary loss or loss of property to any other person.”

For example, where someone has suffered loss because a licensed real estate or settlement agent has taken money from the agent’s trust account and used it for the agent’s own purposes, there will be a pecuniary loss by reason of the criminal conduct of the agent. That is a defalcation by the licensee.

Defalcation is not limited to cases where the licensee or one of its employees has stolen money. But not every loss that a person may suffer in their dealings with a real estate or business agent, or settlement agent is by reason of defalcation.

Time limits on making a claim

A person who wishes to claim reimbursement from the Fidelity Account must give notice in writing of the claim within three years after the day on which they become aware of the defalcation. Consumer Protection can allow a claim even though notice was not given within three years if notice has been given within six years and Consumer Protection considers it just and reasonable in the circumstances to deal with it.

Consumer Protection will not allow a claim if notice has been given six years after the person became aware of the defalcation.

In some cases, Consumer Protection may publish a notice in a newspaper circulating in the district in which a licensee was carrying on business, and may fix a date within which claims relating to a defalcation by that licensee must be made. Any claim not made in writing to Consumer Protection on or before the date fixed may be barred.

If a person makes a claim outside the time limits they will need to provide written information in the claim form on why it is just and reasonable for Consumer Protection to consider the claim. The information should advise when the person first became aware of their loss, why the claim was not lodged within time, any reason or excuse for the delay and whether the person has or will suffer hardship.

A person who seeks to claim against the Fidelity Account may ask the State Administrative

Tribunal to review a decision by Consumer Protection that it will not allow a claim.

Other proceedings against the licensee

Someone who has suffered loss by reason of a defalcation may bring an action for damages against the licensee in the ordinary courts, and seek to recover their losses in that way.

Where appropriate, a person who has suffered loss as a result of conduct they think is criminal may also wish to make a complaint to the police. Should the licensee be convicted of an offence an application may be made to the court sentencing the offender for a compensation or restitution order. This application is made under the Sentencing Act 1995. Such an application can be made by the person who has suffered loss as a result of the offence or by the prosecutor. It can be made either at the time the offender is sentenced or up to 12 months after the date of sentencing.

An action for damages or a claim under the Sentencing Act 1995 may permit a person to recover more than can be claimed against the Fidelity Account. Compensation under the Sentencing Act 1995 can include expenses reasonably incurred as a direct or indirect result of the commission of the offence. For example, where a court gives a judgment for damages, it can also order that interest be paid on the damages. Interest cannot be recovered from the Fidelity Account.

A person who has taken civil action and exhausted their legal remedies against a licensee, and/or has made a claim under the Sentencing Act 1995 can still claim from the Fidelity Account for the balance of any loss suffered.

What can be recovered

The claim against the Fidelity Account may be more limited than the damages, which would be recovered through the courts. A person is not entitled to recover from the Fidelity Account an amount greater than the balance of the loss suffered by them as a result of the defalcation.

The balance is calculated by deducting from the total amount of the loss the amount or value of all money or other benefits which reduce the loss and which have been received or are receivable by the claimant from any source other than the Fidelity Account. This includes any benefits received by reason of services rendered or payments made by the licensee.

As noted above interest cannot be recovered from the Fidelity Account.

Claims for reimbursement from the Fidelity Account

A claim against the Fidelity Account must be made in writing on the Fidelity Account Claim Form determined by Consumer Protection.

The claim form sets out the information required by Consumer Protection to consider the claim.

A person who seeks to claim against the Fidelity Account is known in the Fidelity Account Claim Form as the claimant. All persons entitled to claim for reimbursement from the Fidelity Account must complete the Fidelity Account Claim Form. For example, if the property in question is jointly owned, both owners must complete the Fidelity Account Claim Form.

The claim form requires the Claimants to write down the facts supporting the claim. These facts must be verified by a statutory declaration by each Claimant.

Claimants must also attach copies of any documents, which might help to prove their claim.  These  may  include  a  property  management  agreement,  a  contract  of  sale, Lease Agreement, receipts, cheque butts, deposit books and bank statements.

Consumer Protection may require that it is provided with securities and documents necessary or available to support the claim. Failure to deliver required securities and documents may lead to a claim being rejected.

Disallowed claims

Consumer Protection may refuse to allow and settle a claim against the Fidelity Account, or may allow the claim for less than the amount claimed. In these circumstances, the claimant can apply to the State Administrative Tribunal for a review of the decision of Consumer Protection.

In certain circumstances a claimant may also commence an action in court against the Fidelity Account. Leave of Consumer Protection is required before such an action can be brought. A decision by Consumer Protection to refuse leave to commence an action may be reviewed by the State Administrative Tribunal.

Subrogation

Where  a  claim  is  allowed,  the  Real  Estate  and  Business  Agents  Act  1978  and  the

Settlement Agents Act 1981 give Consumer Protection a right of subrogation.

Subrogation is a right to take proceedings in the name of the claimant to enforce any rights, and obtain any remedies against the licensee, which the claimant could have recovered from the licensee.

Consumer Protection may exercise its right of subrogation and seek to recover from the licensee the amount that has been paid out of the Fidelity Account. In exercising it right of subrogation, Consumer Protection would commence proceedings in the name of the claimant but Consumer Protection is responsible for the action and its costs. Any legal fees incurred in taking subrogation proceedings remain with Consumer Protection, and the claimants will not be asked to contribute. Claimants may, however, be asked to assist Consumer Protection by giving evidence in those proceedings.

Obtaining a Fidelity Account Claim Form

Fidelity Account Claim Forms can be requested by calling 1300 304 054 (calls are charged at the local rate, except from mobiles and public phones).

Lodging the Fidelity Account Claim Form

Completed  Fidelity  Account  Claim  Forms  with  supporting  documentation  should  be addressed to:

Commissioner for Consumer Protection
Consumer Protection – Fidelity Guarantee Account
Locked Bag 14
CLOISTERS SQUARE WA 6850

-OR-

submitted in person at:

Consumer Protection
2nd Floor (Reception)
140 William Street PERTH WA 6000
(Please use the Railway Lane entrance off the Murray Street Mall)

What happens to the Fidelity Account Claim Form

You will receive a letter from Consumer Protection acknowledging that your claim has been received.

Staff of Consumer Protection will review your completed Fidelity Account Claim Form. Once all required information has been obtained a report will be provided to Consumer Protection. Consumer Protection will consider your claim and decide whether it will be allowed.

When considering claims, the licensee and other interested persons are also given the opportunity to challenge whether your claim should be allowed.

Do you need further help?

For  further  information  about  the  Fidelity  Account  you  can  contact  the  Consumer Protection Advice Line on 1300 304 054 for the cost of a local call. You will be referred to a Consumer Protection staff member who can help you.

Consumer Protection
Form – application
Last updated 31 Aug 2017

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