WU V REAL ESTATE INSTITUTE OF NEW ZEALAND INCORPORATED HC AK CIV 2009-404-3983 [2009] NZHC 1362 (1 October 2009)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
                                                              CIV 2009-404-3983


              IN THE MATTER OF         the Real Estate Agents Act 1976

              BETWEEN                  YU JIN WU AKA JIMMY
WU AND
                                       WEN JING CHEN AKA IRIS CHEN
                                       Appellants

   
          AND                      REAL ESTATE INSTITUTE OF NEW
                                       ZEALAND INCORPORATED
    
                                  Respondent


Hearing:      1 October 2009

Counsel:      W Akel and S Lynds for Appellants
   
          S N Haszard and S X Herdson for Respondent
              D R Bigio for Real Estate Agents Licensing Board (leave to
  
           withdraw)

Judgment:     1 October 2009


                     (ORAL) JUDGMENT OF HEATH J




Solicitors:
Simpson Grierson,
Private Bag 92518, Auckland
Meredith Connell, PO Box 2213, Auckland
Alex Lee, PO Box 90-943, Auckland
Counsel:
D R Bigio, PO Box
4338, Shortland Street, Auckland

WU V REAL ESTATE INSTITUTE OF NEW ZEALAND INCORPORATED HC AK CIV 2009-404-3983 1
October 2009


The appeal

[1]      Mr Wu and Ms Chen appeal against orders made by the Real Estate Agents'
Licensing Board (the Board) on 30 June
2009. The Board found that Mr Wu and Ms
Chen were guilty of qualifying misconduct and decided to cancel their licence and to
suspend
their certificate as approved salespersons for a period of one year. In
addition, Mr Wu and Ms Chen were each ordered to pay a fine
of $2500.


[2]      No challenge is brought against the finding of misconduct. The appeal is
directed to the penalty imposed. Mr
Akel, for the appellants, submits that the
penalty is manifestly excessive and disproportionate to the conduct in issue.


Background


[3]      A brief summary of the relevant facts is required.


[4]      In July 2006, Ms Chen became the registered proprietor of
a property situated
at 34 Taharoto Road, Takapuna. That property was leased to friends of Mr Wu and
Ms Chen, Mr Zhu and Ms Wang.


[5]      Between February and March 2007, Mr Wu and Ms Chen approached the
owners of the adjoining property, at 34A Taharoto Road,
to ascertain whether they
were interested in selling that property. An agreement was reached.


[6]      Ms Wang, at Ms Chen's request,
entered into the agreement for sale and
purchase of the property at 34A Taharoto Road. The purchase price was $645,000.
Settlement
took place in due course.


[7]      In April 2007, another real estate agent approached Mr Wu and Ms Chen to
ascertain whether any
properties were available to show his client. They referred the
agent to the recently acquired property at 34A Taharoto Road. Because
that property
was in Ms Wang's name, Ms Chen decided to sign the listing authority for the
property in Ms Wang's name. The property
was listed through the agency operated
by Mr Wu and Ms Chen in Pinehill. That agency operated under the "Ray White"
brand.

[8]
   Subsequently, a purchaser for the 34A Taharoto Road property was
introduced by the other agent. Ms Wang, at Mr Wu's and Ms Chen's
request, signed
a further agreement for sale and purchase, to sell the property to the purchaser, Mr
Lee. That sale was ultimately
settled. The purchase price was $775,000. Mr Lee
took title to that property on 10 May 2007.


The Institute's investigation


[9]
   The circumstances in which the property was acquired and subsequently sold,
came to the attention of the Real Estate Institute
of New Zealand Inc (the Institute).
The Institute embarked upon an inquiry into Mr Wu's and Ms Chen's conduct. An
investigator was
appointed to interview Mr Wu and Ms Chen.


[10]   The investigator, Ms Gerrard, asked questions of them, to which false
answers
were given.       Ultimately, the Institute brought disciplinary proceedings
against Mr Wu and Ms Chen that led to the orders in
issue on appeal.


Misconduct


[11]   By the time of the penalty hearing before the Board, Mr Wu and Ms Chen
had accepted that they were guilty of misconduct for the purposes of s 94(1)(b)
of
the Real Estate Agents Act 1976 (the 1976 Act). That provision gives jurisdiction to
the Board to cancel a licence, in those circumstances.


[12]   Mr Wu and Ms Chen each held licences and certificates of approval. The
Board was entitled to cancel or suspend the certificate
of approval of a salesperson
under s 99(1) of the Act. The ground on which suspension was made, by the Board,
was that the two agents
had been shown to be "of such a character that it is, in the
opinion of the Board, in the public interest that the certificate of
approval be ...
suspended": s 99(1)(b).


The Board's decision


[13]   The findings of fact on which the penalties were imposed
are set out in the
Board's decision.

[14]   The Board found that Mr Wu and Ms Chen combined to implement a scheme
involving a purchase
and sale of a property and used "a knowingly and growingly
unwillingly young person" to facilitate the transactions. That young person
was said
to possess a "sense of gratitude to" Mr Wu and Ms Chen, having been helped in the
past by them.


[15]   The Board considered
that the "joint attempt" to disguise those underlying
facts to the Institute's investigator was behaviour that reflected adversely
on their
character, to the extent that their respective licences ought to be cancelled. Similar
reasoning formed the basis of the
suspension decision, in respect of their certificates
of approval as salespersons.


[16]   While the point is disputed by the Institute,
the Board did not make a positive
finding that either Mr Wu or Ms Chen had any intent to sell the property at 34A
Taharoto Road for
a profit, after its acquisition.


Analysis


[17]   Towards the end of Mr Akel's argument, in support of the appeal, it became
clear
that the Board failed to take account of a relevant consideration. It is no
criticism of Mr Akel and Mr Haszard, both of whom appeared
before the Board, or
the Board itself, that this was overlooked. It relates to the effect of s 37(1)(c) and (d)
of the Real Estate
Agents Act 2008 (the 2008 Act).


[18]   That Act received Royal Assent on 16 September 2008 and is due to come
into force on 17
November 2009, 14 months after the date of Royal Assent in terms
of s 2(2) of that Act. Because the Act was not in force, its terms
were not in the
contemplation of the parties or the Board, at the time of the hearing.


[19]   Section 37(1)(c) and (d) set out
the categories of persons who are not eligible
to hold "a licence" as defined by the 2008 Act. The term "licence" is defined more
expansively than it is under the 1976 Act, meaning "a licence granted under [the
2008 Act] to act as an agent, branch manager or
salesperson". Therefore, the current
concepts of licensee and salesperson are merged.

[20]     Under s 37(1)(c), a person whose
licence or certificate of approval has been
cancelled within the preceding five years is ineligible to hold a licence.          
By
s 37(1)(d), a person whose licence has been cancelled within five years or whose
licence has been suspended at the time of application
under the 2008 Act, is
ineligible to seek a licence under the 2008 Act.


[21]     It is conceivable that, had the Board turned its
mind to the impact of those
provisions, the penalties imposed would have been regarded as too harsh. In effect,
the terms of those
sections might have had an unintended consequence of extending
the period of cancellation or suspension well beyond that contemplated
by the Board.


[22]     The failure to take into account that relevant consideration vitiates the
decision of the Board. I see no
option but to allow the appeal. However, the nature
of the ground for allowing the appeal is such that it is better reconsidered
by the
Board, given its multi-disciplinary membership.


[23]     Under s 116 of the 1976 Act, I have power to remit the proceeding
back to
the Board to reassess penalty. I am entitled to direct the Board to reconsider, either
generally or in respect of any specified matters, the whole
or any specified part of the
decisions under appeal. The Board will be required to consider the issue of penalty
afresh, having regard
to the impact of s 37(1) of the 2008 Act on the circumstances
of both Mr Wu and Ms Chen.


Result


[24]     Mr Wu's and Ms Chen's
appeals are allowed. The penalties imposed by the
Board are set aside. The proceeding is remitted to the Board to reconsider the
penalty to be imposed on each appellant for the misconduct found. In assessing that
penalty, the Board shall have regard to s 37(1)
of the 2008 Act.


[25]     There will be no order as to costs.


                                                   _____________________________


                                                                           P R Heath J