Case alleging consumer law breaches has been dropped

DOTT & Crossitt founder Jared Zak has welcomed the end of court action against him after law firm Agency Settlements abandoned a lawsuit alleging breaches of consumer law.

Agency Settlements, a settlement support solution owned by Riverstone Partners, launched the NSW Supreme Court proceedings last month, accusing Zak of misleading or deceptive conduct related to statements about Agency Settlements’ business model.

The lawsuit was initiated after Zak took aim at Agency Settlements in an online petition critical of deposit flicking, a contentious practice where real estate agents transfer purchaser property deposits to third parties to hold on the agents’ behalf until settlement.

On Wednesday, Agency Settlements dropped its civil case against Zak and was ordered to pay him $60,000 in court costs, according to court filings.

The discontinuance comes after Zak scored a court win this month when Agency Settlements failed in a bid to restrain him from making comments about its business model. At the time, Zak labelled the ruling “a great win for conveyancers”.

Speaking on Friday, Zak welcomed the end of the court action, saying the result was not unexpected after the earlier ruling in his favour.

“I was very confident it was a pretty wild and ambitious claim to start with and I think they probably regret starting it,” Zak said.

Asked about the decision to drop the lawsuit, Agency Settlements said its business had grown since launching the action, making it “difficult now to substantiate specific losses”.

“We take confidence from the Court’s observations regarding the legality of our business, systems and processes and the validity of our case,” spokesperson Gavin Youngman said in a statement.

“We’ll stay focused on offering real estate agents and consumers a safer way to exchange and settle,” he added.

Agency Settlements has said previously it 100 per cent stands by its legal advice and business processes that have been reviewed by the NSW Supreme Court, Thompson’s Lawyers and law firm Jemmeson Fisher.

The court battle came amid ongoing debate about deposit flicking. NSW Fair Trading is currently investigating the practice after it sparked property industry concerns that it could be used to dodge anti-money laundering laws.

Zak urged the agency to give the industry clarity on deposit flicking as soon as possible “as we still, sort of, are in a bit of limbo”.

“We think it’s a very dangerous practice, that consumers deposits are at risk and there’s a whole lot of legal issues with really big questions marks over them,” he said.

Federal financial crime regulator AUSTRAC has warned agents that they remain covered by tough new AML/CTF laws enacted in July, despite the availability of deposit flicking.

Under the Tranche 2 laws, overseen by AUSTRAC, practitioners must conduct due diligence on clients, report large cash transactions, keep records and report suspicious activity or face potential multi-million-dollar fines.

AIC NSW said deposit flicking represents an “unacceptable” risk to consumers, while REINSW has alerted members to its “serious concerns” with the practice.