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High Court of New Zealand Decisions |
Last Updated: 8 July 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-1174 [2013] NZHC 1619
IN THE MATTER of an appeal under s 116 Real Estate
Agents Act 2008
BETWEEN MAXWELL JAMES HOUSE AND BARFOOT & THOMPSON LIMITED Appellants
AND REAL ESTATE AGENTS AUTHORITY (CAC 20003)
First Respondent
EARL RODGER HENTON Second Respondent
Hearing: 27 June 2013
Appearances: T D Rea for Appellants
M J Hodge for First Respondent
Second Respondent in Person
Judgment: 1 July 2013
JUDGMENT OF COOPER J
This judgment was delivered by Justice Cooper on
1 July 2013 at 2.00 p.m., pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors:
Glaister Ennor, Auckland
Meredith Connell, Auckland
HOUSE AND BARFOOT & THOMPSON LIMITED v REAL ESTATE AGENTS AUTHORITY (CAC 20003) [2013] NZHC 1619 [1 July 2013]
[1] Mr House and Barfoot & Thompson Ltd (“the appellants”) appeal against a determination of the Real Estate Agents Disciplinary Tribunal (“the Tribunal”) dated
22 February 2013. The Tribunal’s decision was made on an appeal from a Complaints Assessment Committee (“the Committee”) under s 111 of the Real Estate Agents Act 2008 (“the Act”). The Committee had dismissed complaints made by the second respondent, Mr Henton.
[2] At the request of the parties the Tribunal considered, as a preliminary or “threshold issue”, whether the conduct of the appellants, about which Mr Henton had complained to the first respondent, the Real Estate Agents Authority (“the Authority”), was capable of falling within the definition of “real estate agency work” in s 4 of the Act. The Tribunal held that it could, and is yet to consider the substantive issue of whether or not the Committee’s decision to take no further action against the appellants should stand.
[3] The appellants contend that decision was wrong.
[4] Mr Hodge has appeared for the first respondent. Although, as noted, the Committee appointed to hear Mr Henton’s complaint determined the complaint in favour of the present appellants, the Authority has taken the view that the Committee’s decision was wrong. In the result, Mr Hodge has been able to argue in this Court in support of the Tribunal’s decision, a position also adopted by Mr Henton.
Background
[5] Mr Henton listed a residential property in Ellerslie for sale with Barfoot & Thompson Ltd (“B & T”). An agreement for the sale of the property was successfully negotiated and became unconditional on 16 December 2011.
[6] Between the date when the agreement became unconditional and the settlement date, Ms Wallace, who was the salesperson dealing with the transaction for B & T received an e-mail from tenants of a neighbouring property. In the e-mail, they advised that they would shortly be opening a childcare centre on the property and they asked Ms Wallace to confirm that the purchasers of Mr Henton’s property
were aware of this. The message advised that Auckland Council had required that they construct an acoustic fence on the boundary, to which some neighbours had objected. It concluded with an invitation that the purchasers contact them to discuss alternative options, but advised that in light of pressing timeframes, a response from the purchasers was needed by 10.00 am on the following day.
[7] At 2.15 pm on 19 December 2011, Ms Wallace forwarded the e-mail message to the purchaser, Ms Hulford, with the following comment:
Hi Robyn, Do you recall me mentioning this to you. I thought you might like to have your say.
[8] The purchaser subsequently expressed concerns about the proposed childcare centre which resulted in a purported cancellation of the agreement for sale and purchase by the purchaser, and the exchange of solicitors’ correspondence. In the event, the sale of Mr Henton’s property was in fact completed in accordance with the agreement, and the purchaser was registered on the title on 11 January 2012.
[9] In the meantime, Mr Henton had made a complaint to B & T about the conduct of Ms Wallace in forwarding the e-mail message to the purchaser. He is angered by what he considers to be the inappropriate handling of his complaint by B
& T, including by Mr House who is B & T’s customer relations manager. In fact, he made a further complaint about the way in which his complaint about Ms Wallace had been handled.
[10] It is this second complaint which was the subject of the decision of the
Tribunal, now the subject of this appeal.
Procedures under the Real Estate Agents Act 2008
[11] In accordance with the procedures set out in the Act, Mr Henton’s complaints were considered by the Committee. In a decision dated 5 April 2012 the Committee advised Mr Henton that having considered them it had decided to take no further action, acting under s 80(2) of the Act. That provision enables the Committee to decide not to take any further action on a complaint if, in the course of the
investigation of it, the Committee concludes that further action is unnecessary or inappropriate having regard to all the circumstances.
[12] Under the heading “Reasons for Decision”, the Committee noted that the matters raised by Mr Henton concerned the manner in which Mr House and B & T had dealt with his complaint against another licensee, Ms Wallace. It noted that Mr House had been acting in his capacity as customer relations “officer” and that Mr Garth Barfoot had been acting as a director of B & T. In the Committee’s view, their conduct did not constitute “real estate agency work”. The Committee expressed the view that there was no “misconduct” for the purposes of s 73 of the Act and, because the actions complained about did not amount to the carrying out of “real estate agency work” there was no “unsatisfactory conduct” for the purpose of s 72 of the Act.
[13] Mr Henton appealed from that decision to the Tribunal, which, having heard the parties, issued a decision on 22 February 2013 described as the “Decision of the Tribunal on Threshold Issue”. This wording reflects the fact that, as recorded in [2] of the decision:
By agreement, on 5 December 2012 there was a preliminary hearing before us to address the following ‘threshold’ issue, namely, whether the conduct alleged by the Appellant is capable of falling within the definition of “real estate agency work” set out in s 4 of the Act and, therefore, whether it is capable of amounting to “unsatisfactory conduct” as defined in s 72 of the Act which reads:...
[14] The procedure contemplated that the “threshold issue” would be dealt with on the basis of an agreed statement of facts. However, although an attempt was evidently made to agree a statement for that purpose, in the end the Tribunal was invited to consider a compendious document which consisted of facts stated by Mr House and B & T, and additional facts stated by Mr Henton. It is accepted for present purposes that the Tribunal was entitled to take into account both sets of facts. Further, since dealing with the threshold issue might be dispositive of Mr Henton’s appeal to the Tribunal, it was appropriate for all the facts stated by him to be accepted as true for the purposes of the appeal.
The facts
[15] Mr Henton’s account of the relevant events may be summarised as follows. Insofar as B & T was concerned, those facts included evidence that Mr Henton first complained to B & T on 20 December 2011 after receiving a telephone call from his solicitor advising of receipt of a letter from the purchaser’s solicitors which indicated an intention to terminate the contract. Shortly after that call, Mr Henton telephoned Mr Kevin Lowe of B & T, Greenlane, the branch that was dealing with the transaction. It appears that Mr Lowe told Mr Henton that B & T would seek legal advice, but would not be looking at that until next year. Mr Lowe told him that a statement would be made to the vendor’s solicitor, but that did not occur. Mr Lowe then telephoned Mr Henton on the following day stating that B & T would provide the document “some time” on that day and Mr Henton advised Mr Lowe of an intention to “escalate to head office”. Mr Lowe responded that “they won’t do anything” and hung up.
[16] Thereafter, the agreed statement referred to numerous telephone calls between Mr Henton and B & T employees both at the head office and at the Greenlane branch. From his point of view, he received no satisfactory responses. He continued to telephone after Christmas, beginning on 27 December, at which stage he was told for the first time that he would need to fill out a complaint form and that no action would be taken by B & T until he did so. He was also told that it would normally take ten working days to respond to such a complaint, and he says that he pointed out that this would be after the settlement date of 11 January 2012. It appears that subsequently he did file a complaint, asking that it be dealt with within a shorter timeframe, but a letter was sent to him in response stating that the timeframe would nevertheless be ten days. In the meantime, he instructed a barrister to advise him in relation to his position under the agreement for sale and purchase. Settlement should have occurred on 9 January and eventually occurred on 11 January, by which time Mr Henton had become committed to pay extra legal costs.
[17] The facts before the Tribunal also included evidence about interactions between Mr Henton and B & T in relation to a proposition that he made that his legal fees should be deducted from B & T’s commission on the sale.
[18] Mr Henton complained about B & T’s responses over the period from
20 December 2011, including dealings that he had with Mr Barfoot in which he argued for his proposition that the legal fees he had sustained should be paid out of B
& T’s commission on the sale. Mr Barfoot evidently took the view in discussions with Mr Henton that the fact that the transaction had settled showed that Ms Wallace had done nothing wrong and there was no basis on which B & T should be liable to compensate Mr Henton.
[19] There was an important e-mail sent by Mr Henton to B & T on Monday
2 January 2012. The e-mail address was compliance@barfoot.co.nz which I infer is an address that he must have been told to use by someone at B & T. In his e-mail Mr Henton referred to the 10 January settlement date, and expressed the hope that some of the issues could be dealt with prior to that date “to ensure it does not affect that process”. He referred to pressure on his personal finances as a consequence of “almost definitely” having to continue to make repayments on a substantial mortgage and also incur rental costs and extra legal costs with no receipts for the sale of the property. Plainly he was concerned that the sale would not proceed. He alleged that the situation was a direct result of poor communication between Ms Wallace and the purchaser. He asserted it was unclear that there was any legal requirement to disclose the e-mail to the purchaser since details of the neighbouring development had been available at the Council. He further complained about the lack of communication with himself or his solicitor, and asserted that it was inappropriate to simply send an e-mail on such matters and claimed that there was a clear “cause – effect” between Ms Wallace’s action and the “situation to be remedied”.
[20] The e-mail included the following:
Going forward from here, we need to know the solutions around:
[21] Mr Henton also observed in the e-mail that he looked forward to a discussion about a plan (by inference, for resolution of the situation that had developed) prior to the settlement date. He acknowledged that was “inside the ten business day timeframe” but pointed out that was the “timeframe of the agreement”. He thanked a person whom he called Sharon (obviously a B & T employee) for her efforts prior to Christmas, stating that the whole situation had blown up around a difficult time of year, “creating some real desperation”.
[22] Mr Henton’s complaint against B & T evidently started out, in his dealings with the Authority, as a complaint against Mr Barfoot personally. However, Mr Barfoot not being a person licensed under the Act, the Authority pointed out that it could not deal with concerns raised about him specifically. The Authority’s case manager took the step of recording Mr Henton’s concerns as being against B & T itself. This was not only helpful, but clearly appropriate. Although Mr Henton suggested that he had lodged a formal complaint form in respect of B & T, this was not in the papers before me.
[23] The only written complaint which formed part of the documents produced for the purposes of the present appeal was one that was made against Mr House. The complaint was on a form evidently provided on the Authority’s website headed “Notification of Concern”. The concerns in relation to Mr House were set out as follows, under the heading “Summary of Concern”:
Failure to act and address issues in a professional manner, including recognising his role is specifically to address complaints at Barfoot & Thompson.
Failure to supply a professional response to a complaint in line with agreed
REAA process, and documented Barfoot processes
[24] Under another heading, “Details of Your Concerns” Mr Henton listed concerns which related to the actions of Ms Wallace and subsequent alleged failures by B & T to provide “solutions” in the period prior to the Christmas vacation. In particular, in relation to Mr House, it was then said:
- I have received an email from Max House, the complaints manager at
Barfoots
- Basically this response tells me nothing, answers no questions I specifically asked, did not even make an effort to make grammatically correct, and refused to send on company letter head.
- When asked for a more appropriate response, I was supplied with a more inappropriate response.
[25] These statements related to two e-mails which Mr Henton had received from Mr House and which he had forwarded to the Authority for the purposes of his complaints. The e-mails were dated 24 and 25 January 2012. In the first, Mr House recorded that Mr Barfoot had asked him to address Mr Henton’s concern regarding the actions taken by Ms Wallace following receipt of the e-mail from the neighbouring tenant. Mr House asserted that the agency agreement and the sale and purchase agreement were clear as to the obligations that a vendor has in regard to disclosure. He considered that the agency agreement required the vendor to disclose if they were aware of any pending works on adjoining properties which might affect a purchaser’s decision to purchase. In addition, the sale and purchase agreement obliged the vendor to deliver any notice received, which directly or indirectly affected the property, either to the purchaser or the purchaser’s lawyer. Mr House took the view that Ms Wallace had complied with those obligations in forwarding the e-mail to the purchaser’s solicitor and he also asserted that she had complied with the “Real Estate Agents [sic] that states that a licensee must not withhold information that should by law or fairness be provided to a customer or client”.
[26] Mr Henton considered that this e-mail did not answer questions that he had raised and he said so in an e-mail sent in reply. He recorded his assumption that “a professional response” would be on its way and he looked forward to receiving it. Mr House sent his second e-mail in response to Mr Henton’s e-mail on the following day. The text of his response was relevantly as follows:
The concerns that you initially raised in regard to this matter were discussed in full in your telephone conversation with Garth Barfoot when you advised that you did not wish to accept his offer of a monetary advance. Mr Barfoot has said that you agreed with him that the only issue that remained outstanding was that of the actions of Debbie Lee Richards Wallace following the receipt of the neighbours email.
That matter was addressed in my email of 24 January 2012 to you.
The matter that you has [sic] raised has been addressed in accordance with our internal investigation process. We have complied with you [sic] request to investigate and you took the opportunity to escalate your concerns on a one to one basis with the Director.
That you may not find satisfaction with the responses provided or do not accept what has been said is a matter over which we have no influence.
Accordingly our file has been closed and we will not enter in to further reply.
The Tribunal’s decision
[27] In its decision, the Tribunal held that the alleged conduct of Mr House and B
& T was capable of amounting to “unsatisfactory conduct” as defined in s 72 of the Act. Unless the present appeal is allowed, the Tribunal will subsequently have to consider whether, on the facts it is satisfied have been proved, Mr House and B & T have been guilty of unsatisfactory conduct.
[28] Key passages in the reasoning of the Tribunal were identified by Mr Hodge in his written submissions. They were as follows:
[36] It is relevant that real estate agents regularly market themselves as providing an “end to end” service. One of the reasons a consumer may employ an agent (rather than sell privately) is that he or she expects the agent to assist in resolving any issues with the purchaser, including any issues that occur post contract or post settlement. In fact, the understanding that an agent will perform some work after the contract is formed may well be fundamental to the consumer’s decision to sign an agency agreement in the first place and, accordingly, key to bringing about the transaction.
...
[75] We certainly agree with [counsel for the Real Estate Agents Authority] that the precise facts of a case matter and that we should take a common sense approach....
[76] As we have already indicated above, we think it inappropriate to endeavour to artificially carve up the nature of the service work expected from a real estate agent to consumers, particularly to his principal, the vendor.
...
[79] We consider that the way in which a licensee, acting in a supervisory capacity, responds to a vendor client’s concerns or complaint about the actions of a salesperson will typically amount to real estate agency work. Of course, each case must be assessed on its particular facts. For instance, a relevant factor is how closely linked the supervisor’s conduct was to the overall services provided by the agency to the client. Where a complaint is
raised prior to a transaction settling, or even after that stage in some circumstances, the actions of a licensee in responding to a complaint may be integral to the success of the transaction and the overall service provided to the client.
...
[85] Very simply put, while it is obvious that the words “for the purpose of bringing about a transaction” are fundamental to the definition of “real estate agency work or agency work”, and must be respected, they should not be used to over-confine a situation so as to relieve a licensee of responsibility for unsatisfactory conduct in the course of what is, in reality, part of real estate agency work.
The Real Estate Agents Act 2008
[29] The Act contains a clear statement of its purposes. Section 3 provides:
3 Purpose of Act
(1) The purpose of this Act is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work.
(2) The Act achieves its purpose by—
(a) regulating agents, branch managers, and salespersons: (b) raising industry standards:
(c) providing accountability through a disciplinary process that is independent, transparent, and effective.
[30] Section 4 of the Act includes the definition of “real estate agency work” or “agency work” which is at the heart of the argument in the present case. That definition reads as follows:
real estate agency work or agency work—
(a) means any work done or services provided, in trade, on behalf of another person for the purpose of bringing about a transaction; and
(b) includes any work done by a branch manager or salesperson under the direction of, or on behalf of an agent to enable the agent to do the work or provide the services described in paragraph (a); but
(c) does not include—
(i) the provision of general advice or materials to assist owners to locate and negotiate with potential buyers; or
(ii) the publication of newspapers, journals, magazines, or websites that include advertisements for the sale or other disposal of any land or business; or
(iii) the broadcasting of television or radio programmes that include advertisements for the sale or other disposal of any land or business; or
(iv) the lending of money on mortgage or otherwise; or
(v) the provision of investment advice; or
(vi) the provision of conveyancing services within the meaning of the Lawyers and Conveyancers Act 2006.
[31] The word “transaction” used in paragraph (a) of that definition is also defined
in s 4. The definition is:
transaction means any 1 or more of the following:
(a) the sale, purchase, or other disposal or acquisition of a freehold estate or interest in land:
(b) the grant, sale, purchase, or other disposal or acquisition of a leasehold estate or interest in land (other than a tenancy to which the Residential Tenancies Act 1986 applies):
(c) the grant, sale, purchase, or other disposal or acquisition of a licence that is registrable under the Land Transfer Act 1952:
(d) the grant, sale, purchase, or other disposal or acquisition of an occupation right agreement within the meaning of the Retirement Villages Act 2003:
(e) the sale, purchase, or other disposal or acquisition of any business
(either with or without any interest in land).
[32] Section 6 provides that a person must not carry out any real estate agency work unless the person is licensed under the Act, and acts within the scope of that licence, or is exempt from the licensing requirement under any of ss 7 to 9 (or under another enactment). The exemptions are for lawyers and conveyancers,1 for licensed auctioneers2 and for persons exempted by a regulation made under the Act.3
[33] Plainly, the term “real estate agency work” is one of the key provisions of the
Act and indeed, it is fundamental to the statutory prohibition in s 6. Mr Hodge
1 Section 7.
2 Section 8.
3 Section 9.
referred also to the use of the term in s 126 of the Act, requiring there to be an agency agreement before a commission may be charged in connection with any real estate agency work; to s 134 which proscribes the acquisition by a licensee under the Act of land which is the subject of a transaction in which the licensee is carrying out real estate agency work; and to s 136 which contains a rule that a licensee carrying out real estate agency work in respect of the transaction must disclose in writing to every prospective party to the transaction whether or not the licensee may benefit financially from the transaction.
[34] Mr Rea, for the appellants, emphasised the importance of the definition of real estate agency work for another set of reasons. That is because firms such as B & T have directors and employees who are not licensed under the Act. The Act provides for licensed salespersons, branch managers and real estate agents. Section
36(1) sets out requirements for entitlement to being licensed in each of these categories. A company may be licensed as an agent if at least one officer of the company meets the qualifications for licensing as an agent or branch manager under the section.4 Only a licensed real estate agent is, however, permitted to be incorporated and if a company is the holder of an agent’s licence at least one officer of the company, at any given time, must hold an agent’s licence.5
[35] Under s 48(1) of the Act, an agent’s licence authorises the licensee to carry out real estate agency work on his or her own account, whether in partnership or otherwise. Section 49(1) provides that a branch manager’s licence or a sales person’s licence authorises the licensee to carry out real estate agency work for or on behalf of an agent. It follows from these provisions that an unlicensed director of a licensed real estate agency company may not personally undertake real estate agency work. However, as Mr Rea submits, such a person is clearly able to perform administrative functions of the business, and would be expected to do so as a director. Mr Barfoot is in the category of an unlicensed person, but as a director of a prominent real estate agency he is clearly able to be involved in many of the business
activities of the firm. The breadth of the definition of real estate agency work is
4 Section 36(3).
5 Section 44(2).
clearly important in determining what limits might exist by operation of the Act on the work that he can carry out.
[36] The concept of agency work is also critical under s 50 of the Act. Section
50(1) provides that a sales person must, in carrying out any agency work, be properly supervised and managed by an agent or a branch manager.
[37] The definition is also important for the complaints and discipline procedures set out in Part 4 of the Act. In particular, reference should be made to the two key statutory provisions concerning unsatisfactory conduct and misconduct. These are ss 72 and 73 which provide as follows:
72 Unsatisfactory conduct
For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that—
(a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or
(b) contravenes a provision of this Act or of any regulations or rules made under this Act; or
(c) is incompetent or negligent; or
(d) would reasonably be regarded by agents of good standing as being unacceptable.
73 Misconduct
For the purposes of this Act, a licensee is guilty of misconduct if the licensee's conduct—
(a) would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful; or
(b) constitutes seriously incompetent or seriously negligent real estate agency work; or
(c) consists of a wilful or reckless contravention of—
(i) this Act; or
(ii) other Acts that apply to the conduct of licensees; or
(iii) regulations or rules made under this Act; or
(d) constitutes an offence for which the licensee has been convicted, being an offence that reflects adversely on the licensee's fitness to be a licensee.
[38] As can be seen, s 72 is confined only to real estate agency work. Section 73 can relate both to real estate agency work and other conduct, with only paragraph (b) confined to real estate agency work. The other paragraphs may be applied without such limitation. It may be noted that of the two provisions, s 73 is the more serious and proof of a charge of misconduct may have the consequence of cancellation of the licensee’s licence or suspension of the licence under s 110(2). There is no suggestion of such misconduct here. Where a determination is made that a licensee has engaged in unsatisfactory conduct, a range of orders may be made including censure or reprimand, an order for apology, an order that the licensee undergo training or education and an order relating to the fees charged for work, a fine and other
remedies.6
Submissions
Appellants
[39] Mr Rea submitted on behalf of the appellants that the complaints made by Mr Henton both against B & T and Mr House insofar as they related to the handling of his complaint about the actions of Ms Wallace were not complaints in relation to real estate agency work as defined. In particular:
(a) The process of responding to a client complaint and demand for compensation (which is how Mr Rea characterised the e-mail of
2 January 2012 discussed above) was not within the ordinary and natural meaning of the words “work done or services provided” in the context of a real estate agency business. Such a business in general terms involves the marketing for sale of properties on behalf of vendors and negotiating agreements for sale and purchase. These are activities involving some productive pursuit directed toward achieving a result for the client and that is the clear connotation of the words “work” and “services” used in the statute.
(b) Nor was the process of responding to a client complaint something done “on behalf of another person”. Mr Rea submitted that it would be artificial to suggest otherwise and he referred to a decision of the District Court in Real Estate Agents Authority v Famularo7 in which it was held that the words “on behalf of” in paragraph (a) of the statutory definition implied interaction with a third party on behalf of
the principal.
(c) It could not be said that it is within the ordinary and natural meaning of the words “for the purposes of bringing about a transaction” since, at the time of Mr Henton’s complaint, a transaction had already been brought about, and there was an unconditional agreement for sale and purchase. Under the terms of its agency authority, B & T had already become entitled to commission at that point. Mr Rea noted in particular that Mr House had had no communications at all with Mr Henton until after the sale of Mr Henton’s property had settled. Insofar as B & T is concerned, Mr Henton’s request that it reduce its fee was inappropriate since the fee had been earned on a transaction already effected. In the circumstances, B & T’s purpose in responding to Mr Henton’s complaint cold have nothing whatsoever to do with “bringing about a transaction”.
[40] Mr Rea acknowledged that the purpose of the Act was to protect the consumers. However, if there was merit in Mr Henton’s substantive complaint about Ms Wallace that would be sufficient to protect his interests as a consumer. It was unnecessary to add a second layer of potential complaint, enabling them to be made about the process by which an agency had handled the substantive complaint, which was the case here.
Respondents
[41] Mr Hodge submitted that the definition of real estate agency work under the
Act must be applied in context to the conduct which is in question in any particular
case. He asserted that the appellants were arguing effectively for a black and white rule that conduct carried out in response to a complaint could not fall within the definition of real estate agency work as a matter of law; it was neither possible nor desirable for the statute to be construed in that way.
[42] Mr Hodge emphasised that the Act was important consumer protection legislation, and that the definition of real estate agency work is a cornerstone provision of the Act serving as the gateway to most of its consumer protection provisions. He submitted that the definition must be read in a way which is consistent with the Act’s consumer protection purpose, which applies to the broad range of work or services commonly provided by real estate agents to consumers. He argued that it would be contrary to the Act’s purpose, and wholly artificial, to divide up work or services commonly provided by real estate agents to consumers in a piecemeal fashion, with some designated real estate agency work and others not.
[43] He argued that if all other aspects of the definition were met, work or services connected with the objective purpose of bringing about a transaction would fall within the definition even if they were only indirectly connected to that purpose. Here, it was the conduct of Ms Wallace acting on the sale of Mr Henton’s property that led to the purported cancellation of the agreement for sale and purchase. When that occurred, Mr Henton had sought the intervention of her superiors at B & T in addressing the problems that had resulted for a transaction which appeared to be in jeopardy. In this context, Mr Hodge submitted it was inevitable that the Tribunal had concluded that the appellants’ conduct in responding to Mr Henton was capable of coming within the definition of real estate agency work.
[44] Mr Henton provided written submissions in which he made points similar to those made by Mr Hodge. In oral argument, he emphasised that from the point of view of a consumer of real estate services he expected that B & T would have provided an “end to end” service and would have responded to his complaints, including his attempt to “escalate” the matter within B & T in a more timely and pro- active fashion.
Discussion
[45] It is plain from the statement of statutory purpose in s 3 of the Act that the main object of the legislation is the promotion and protection of the interests of consumers in respect of real estate transactions, and the promotion of public confidence in the performance of real estate agency work. I accept that given that statutory purpose and the regulatory apparatus contained in the Act, a narrow and literal approach to the definition of “real estate agency work” would be inappropriate.
[46] One example of why that is so is immediately apparent. The definition refers to “work done or services provided”. Nowhere is there an express reference to an omission or failure to do something which ought to have been done to secure a successful resolution of a transaction. Unless the definition is construed so as to extend to such failures to act, the achievement of the legislative purpose would in many cases be frustrated.
[47] Mr Rea accepted that the definition would need to cover omissions, but made the rejoinder that the omissions would need to be in relation to something required for the purpose of “bringing about a transaction”. How a complaint is handled would not be in that category.
[48] In my view, insofar as the complaint against B & T is concerned, that stance fails to acknowledge the situation as it existed when Mr Henton began to complain. I have earlier set out the facts that he relied on for the purposes of the “agreed statement”, and summarised his e-mail to B & T of 2 January 2012. Clearly, he was concerned about the possibility that the agreement would not be completed by the purchaser who in fact initially adopted the stance that the contract would be cancelled. In those circumstances the complaints he made and the assistance that he was seeking from B & T were related, at least indirectly, to the bringing about of the transaction. Mr Rea was concerned to suggest that in the e-mail of 2 January all Mr Henton was doing was seeking compensation. However, I consider that construes the e-mail too narrowly. He said that he looked forward to “some discussion around a plan pre-settlement date”. As a lay person, he was clearly
hoping that B & T’s assistance and expertise in property transactions would be applied on his behalf. This seems to me pretty clearly a request that work be done or services provided on his behalf to ensure that the transaction would not founder.
[49] In these circumstances, the complaint is effectively that B & T did not offer appropriate assistance whilst the transaction was under threat. In other words, it was a complaint about an omission to provide services on his behalf for the purpose of bringing about the transaction. I consider this to be clearly within the contemplation of the definition.
[50] This conclusion effectively treats the definition as applying to the overall task the agency is required to perform: once the relationship of principal and agent has been established anything (be it an act or omission) that is related directly or indirectly to that work is liable to be within the definition. This accords with the pivotal nature of the definition in the scheme of the Act and its importance for the achievement of the statutory purpose.
[51] The complaint against Mr House is in a different category. Mr House was the customer relations manager of B & T. However, by the time that Mr Henton attempted to deal with him, Mr House was on holiday. Others within B & T, including Mr Barfoot, dealt with the matter in Mr House’s absence. When he returned from holiday he wrote the e-mails of 24 and 25 January, which formed the substance of Mr Henton’s complaint against him. By this stage, the transaction had settled and the purchasers had become registered on the title. Steps taken (or omitted) after that point could not properly be described as taken or omitted “for the purpose of bringing about a transaction”.
[52] Mr Hodge raised an issue as to whether, as the customer relations manager, Mr House should have been engaged in dealing with the complaint made about Ms Wallace at the time that it had been raised before Christmas. However, there is no evidence justifying that conclusion in the material that was before the Tribunal or this Court. Certainly, the agreed statement of facts on which the Tribunal decided to proceed did not include that suggestion.
[53] I conclude that the Tribunal erred when it decided that what Mr House had done was capable of falling within the definition of real estate agency work or agency work.
[54] Two further observations are appropriate. First, some of the arguments addressed by Mr Rea suggested that, having regard to the structure of the Act, and its separate provision for different kinds of licensee, a person in Mr Henton’s position should somehow understand the structure by which the agency operates and direct complaints to the appropriate quarter. This submission had as its background the branch structure adopted by B & T (and other agencies) which in itself reflects the distinctions possible between licensed and non-licensed employees, and management of the business through branches. I do not consider that a consumer can be required either to understand the provisions of the Act or the structure that has been adopted by the particular agency employed to structure its business.
[55] Second, Mr Rea raised a concern that persons in the position of Mr Barfoot might inadvertently put themselves in a position whereby they have breached the proscription in s 6(1) of the Act against carrying out real estate agency work if they become involved in handling a complaint. In the present case, Mr Barfoot had a passing engagement with the matter. The Authority’s response to a complaint against him was to treat the complaint as having been made against B & T. This, it seems to me, was a practical and reasonable response. I doubt whether, on these facts, it could be suggested that Mr Barfoot was himself acting personally in relation to real estate agency work. It is possible that more complicated situations might arise in future. If so, they should be dealt with as such cases arise. I have not seen this point as one that should govern the proper interpretation and application of the relevant statutory provisions in this case.
Result
[56] For the reasons given, the appeal is allowed insofar as the Tribunal’s finding that Mr House’s actions were capable of amounting to real estate agency work under the Act is concerned. In the absence of any suggestion of misconduct on his part
under s 73, of the Act, it will not be appropriate for further further action to be taken on the complaint against him.
[57] The appeal is otherwise dismissed, with the consequence that further proceedings may be taken by the Tribunal in relation to the complaint against B & T.
[58] I emphasise, for the avoidance of doubt, that this decision has been confined to the threshold issue argued before the Tribunal and subject to this appeal. The nature of any further proceeding and its outcome are matters for the Tribunal.
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URL: http://www.nzlii.org/nz/cases/NZHC/2013/1619.html