Company A - Complaint No CA3555138 [2010] NZREAA 73 (16 August 2010)

Last Updated: 3 August 2012

In the Matter of Part 4 of the Real Estate Agents Act 2008

And

In the Matter of Complaint No CA3555138

In the Matter of Company A XXXXXXXX

Decision of Complaints Assessment Committee

_{Dated this 16}th _{day of August 2010}

Complaints Assessment Committee: CAC10046

Chairperson: Anne Darroch

Panel Member: Joan Harnett-Kindley

Complaints Assessment Committee - Decision to take no further action

1. The Complaint

1.1 Mr C has complained to the REAA about the conduct of Company A. The complaint alleges that Mr L of Company A withheld information which would have assisted Mr C in court proceedings.

2. Background

2.1. In August 2005 Mr and Mrs C purchased a property (the property). After taking possession they became aware of an issue with the resource consent in respect of a neighbouring property. In 2008 they commenced legal proceedings in respect of this consent against the vendor.

2.2 On 16 September 2008 Mr C’s lawyer had requested the auction records of the sale and purchase of the property. Her letter to Mr L2 (Company A Auction Manager) included –

“My clients are in the process of issuing proceedings against the vendor for a breach of contract in respect of the purchase of the property. My clients require a copy of the videotape and bidding records you hold in respect of the auction as evidence in the proceedings and would be obliged if you would forward a copy to me.

If you are unable to release a copy of the video and bidding records to me at this point in time please acknowledge that you hold and will keep a copy of the auction videotape and bidding records and indeed keep them secure, because it will form part of the evidence in the forthcoming civil matter in the [local] District Court, Please confirm that you have them in safekeeping.

I further advise that it may be necessary for this letter to be put in

evidence.”

2.3 On 22 September 2008 Mr L responded –

“We do not hold the records referred to.”

2.4 On 24th February 2010 Mr L wrote to Mr S of Company B, the legal firm representing the vendor of the property. He stated –

“Enclosed is the original bidding sheet for the auction of the subject property held 10th August 2005. In our search of the files in 2008 we were unable to find this paper in our archives, hence our letter to [Company C] of 22nd September 2008.The document has subsequently been located by the auctions administrator after her return from maternity leave. In regard to the video recordings – that process was not carried out in 2005 and therefore we have no record.”

2.5 The District Court proceedings commenced on 1 March 2010. Mr and Mrs C were ultimately successful in those proceedings and awarded $100,000.00 damages, which was the amount they had claimed.

2.6 On 7 March 2010 Mr C wrote to Mr L3 of Company A. It included –

“On 16 Sept 2008 our lawyers wrote to [Mr L2] Auction Manager of your company to request release of the auction records. This was specifically to determine if out statement of claim was to be based on the auction process or on valuations. A reply was received on 22 September 2008 signed by [Mr L] stating that your company did not hold the records referred to. Accordingly because our evidence of the auction was subjective we were forced to have a valuation of loss prepared by a registered valuer. He concluded that we suffered a loss in value because of the resource consent of $100,000 and that figure became the basis of our claim.

..........

“You will understand that our complaint against [Mr L] relates to the withholding of a vital evidential document vis. the auction record. Had he supplied that document when requested then our claim would have reflected that ($200,000) and our case would have been a very simple breach of contract matter.”

2.7 On 15 April 2010 Mr C received a response to his complaint from solicitors acting for

Company A Ltd.

2.8 On 24 April 2010 Mr C complained to the REAA.

3. Relevant Provisions

(a) Real Estate Agents Act 2008

Section 172 Allegations about conduct before commencement of this section

(1) A Complaints Assessment Committee may consider a complaint, and the Tribunal may hear a charge, against a licensee or a former licensee in respect of conduct alleged to have occurred before the commencement of this section but only if the Committee or the Tribunal is satisfied that, -

(a) at the time of the occurrence of the conduct, the licensee or former licensee was licensed or approved under the Real Estate Agents Act 1976 and could have been complained about or charged under that Act in respect of that conduct;

(b) the licensee or former licensee has not been dealt with under the

Real Estate Agents Act 1976 in respect of that conduct

Section 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 of 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.

Section 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.

Section 4 Interpretation

Real estate agency work or agency work –

(a) means any work done or any services provided, in trade, on behalf of another person for the purpose of bringing about a transaction....

Transaction means –

(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)

Section 80 Decision to take no action on complaint

......

(2) Despite anything in subsection (1), the Committee may, in its discretion, decide not to take any further action on a complaint if, in the course of the investigation of the complaint, it appears to the Committee that, having regard to all the circumstances of the case, any further action is unnecessary or inappropriate.

Section 4 Interpretation

Real estate agency work or agency work –

(a) means any work done or any services provided, in trade, on behalf of another person for the purpose of bringing about a transaction....

Transaction means –

(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 license 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 grant, sale, purchase or other disposal or acquisition of any

business (either with or without any interest in land).

(b) Real Estate Agents Act 1976

Section 70 Rules of Institute

(1) The Institute may from time to time make rules (......) for all or any of

_{the following purposes:}

.....

(m) Prescribing a code of ethics for regulating the professional conduct of members of the Institute and the conduct of salespersons and branch managers employed by members:
_...

Code of Ethics

Rule 13.1

Members shall always act in accordance with good agency practices, and conduct themselves in a manner that reflects well on the Institute, its members, and the real estate profession

4. Discussion

4.1 Mr C’s complaint is about the failure to provide information held by Company A which Mr C considered could assist him in court proceedings. The incorrect notification that Company A did not hold the requested information occurred in September 2009 which is prior to the commencement of the relevant parts of the Real Estate Agents Act 2008 (the 2008 Act). However, although the Real Estate Agents Act 1976 (the 1976 Act) was the legislation in force at that time, the 2008 Act is relevant to any findings of unsatisfactory conduct or misconduct relating to events under the 1976 Act.

4.2 Section 72 of the 2008 Act specifies the conduct that represents “unsatisfactory conduct”.

Unsatisfactory conduct must relate to the carrying out of “real estate agency work” which is defined in section 4 of the 2008 Act. In the Committee’s view, the conduct complained of does not fall within the definition of “real estate agency work” and therefore does not come within the scope of section 72.

4.3 Section 73 of the 2008 Act specifies the conduct that represents “misconduct”. Section

73(b) is concerned with “seriously incompetent or seriously negligent real estate agency

work”, again excluding the conduct complained of. Section 73(c) is limited to wilful or reckless contraventions of the 2008 Act or other Acts which apply to the conduct of licensees, or of the rules and regulations made under the 2008 Act. Section 73(d) deals with convictions.

4.4 Section 73(a) refers to conduct that would “reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful.” This does not require that the conduct is in the course of “real estate agency work”.

4.5 “Real estate agency work” was not defined in the Real Estate Agents Act 1976 and complaints such as this one could be considered by virtue of section 70 of that Act. However, under section 172(2) of the 2008 Act the Committee can only determine whether the licensee is guilty of unsatisfactory conduct or whether a charge should be laid in the Tribunal alleging misconduct.

5. Consideration of the complaint

5.1 As noted above, neither section 72 nor section 73(b) of the Act applies to the conduct complained about, as it does not fall within the definition of “real estate agency work”.

5.2 Sections 73(c)(i) and (iii) cannot apply because the 2008 Act and accompanying rules and regulations were not in force at the time.

5.3 With respect to section 73(c)(ii), while other Acts in force in 2008 (such as the Fair Trading Act 1986) could be considered to apply to the conduct of licensees, the conduct complained of needs to meet the threshold of being “a wilful or reckless contravention” of the relevant Act. In the Committee’s view, the conduct complained of, even if fully proven could not meet that threshold.

5.4 Section 73(d) is not relevant to this dispute.

5.5 Hence, the only remaining section of the 2008 Act which could apply to the complaints is section 73(a). However, the threshold for this section is conduct which would be regarded as “disgraceful.” Although the Committee considers that the response that “We do not hold the records referred to” was unhelpful and as it turned out, inaccurate, the Committee finds that this could not be considered to reach the threshold for misconduct.

6. Decision

As a result of the above, the Committee has decided to exercise the discretion provided by section 80(2) of the Act to take no further action on this complaint.

7. Publication

The Committee directs that this decision is to be published in the interests of ensuring the disciplinary process remains transparent, independent and effective.

The complainant, the licensee, Mr L and any other named individual or firm are not to be identified in the published decision.

8. Right of Appeal

A person affected by a determination of a Complaints Assessment Committee may appeal to the Disciplinary Tribunal against a determination of the Complaints Assessment Committee within 20 working days after the date of this notice.

Appeal is by way of written notice to the Tribunal. You should include a copy of this Notice with your Appeal.

Further information on lodging an appeal is available by referring to the Guide to Lodging an Appeal at www.justice.govt.nz/tribunals.

Signed

Anne Darroch

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 16 August 2010