Cussen - Complaint No CA4115595 [2011] NZREAA 171 (14 June 2011)

Last Updated: 25 January 2013

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

And

In the Matter of Complaint No: CA4115595 & CA4115667

In the Matter of Diana Cussen

Licence Number: 10015929

William Hale

Licence Number: 10015957

Notice of Determination of Complaints Assessment Committee

Dated this 14th day of June 2011

Complaints Assessment Committee: CAC10100

Chairperson: Paul Morten

Deputy Chairperson: Rob Crozier

Panel Member: David Russell

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. Mr Jackman (the Complainant) is the Chief Executive of the New Zealand Registered Architects

Board (the Board).

1.2. Ms Cussen and Mr Hale (the Licensees) are licensed salespeople under the Real Estate Agents

Act 2008 (the Act). They work for Barfoot & Thompson Ltd, an Auckland agency (the agency).

1.3. In 8 January 2011 the Complainant laid a complaint with the Real Estate Agents Authority (the Authority). It is common ground that the Licensees placed an advertisement in the Papakura Courier on 11 November 2010. The advertisement lists their names as the Licensees whom the public should contact in respect of the sale. The advertisement described the property advertised as follows:

"Renowned New Zealand architect 'Mark Tatton' & the craftsmen at Pukekohe Builder's (sic)

have artfully designed and built a striking, contemporary yet functional family home.....".

1.4. The Complainant says that Mark Tatton is not an "architect". He says this can be confirmed by a search of the New Zealand Architects' Register, which can be accessed at www.nzrab.org.nz.

1.5. He argues that the fact that the Licensees describes the property as "architect designed" indicates that the Licensees see this as adding lustre and therefore market value to the property. He asserts that in this way the Licensees are attempting to use misinformation to enrich themselves and the vendor at the expense of buyers.

1.6. He says the advertisement is a breach of rule 6.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 (the Client Care Rules), which prohibits licensees from misleading customers or clients, or providing false information, or withholding information that should by law or fairness be provided to a customer or client.

1.7. Mr Tatton is not an architect who is registered under the provisions of the Registered Architects

Act 2005 (the Registered Architects Act). However, he has been interviewed by an investigator

appointed to assist the Committee. He states that he has a Bachelors degree in Architecture.

2. Material Facts

2.1. The Licensees advise that at the time the property was listed, the vendors informed them that the home had been designed by the architect Mark Tatton.

2.2. They say that they were provided with copies of the plans, which they say "had Mark Tatton as the Architect". In fact, the plan is supplied to the Committee appear to show that all drawings and designs were the property of MTD Architecture.

2.3. Until they were advised otherwise by Mr Jackman, they never had any doubts that Mr Tatton was not an architect.

2.4. The vendors of the property say Mark Tatton, architect was recommended to them by a friend when they were going through the process of selecting a designer 10 years before. When they sold the house, they told the Licensees the house was designed by an architect.

2.5. Mr House, the Customer Relations Manager of Barfoot & Thompson Ltd says the advertisement in the case of both Licensees was based on the representations of Mr Tatton himself, who is described in the National Business Review on 28 February 2011 as an architect; and as the architect of Nautilus Apartments; and as an architect who designs Linea weatherboard homes; and as an architect consultant for the Tauranga City Council.

2.6. He argues that the information on the advertisement was what was available to the Licensees; and accorded with what was publicly stated about Mr Tatton. Why should the Licensees suspect otherwise?

2.7. In addition, he argues that the information in the advertisements was what the Licensees were advised by the vendors. They used the wording in good faith, and were of the view it was correct and represented the property correctly.

2.8. Finally, Mr House argues that it is not the responsibility of licensees to check the NZRAB register to ensure Mr Tatton's were correct. Agents should not be the enforcement arm of the NZRAB.

2.9. In reply, Mr Jackman says that agents are expected to be professional people who know how their sector is organised. Ignorance is no excuse. The status of a designer is easily determined. Agents ought to know how to make such a check, and it should be a matter of habit. He states that agents are not expected to be the "enforcement arm" of the NZRAB. The complaints are made on the basis of legislation and the code of ethics covering real estate agents, not architects.

2.10. In reply, Mr House disagrees with Mr Jackman's view that the status of the designer is easily determined. In particular, a search of a number of firms of architects listed in the Yellow Pages show "no match" on the NZRAB Register.

2.11. In Mr Jackman's standard reply to this agency submission he says that these advertisements describe houses as designed by an "architect". A search of the NZRAB would enable a licensee to determine whether an individual is or has been an architect.

2.12. He states that the listing of architects' practices on the NZRAB is a service to the public, but not part of the register of individual architects.

2.13. He says that the Yellow Pages listings of "architects" are full of inaccuracies, and that Yellow Pages have shown no interest in correcting the inaccuracies, because they believe that it is up to a party advertising to determine the classification they wish to be advertised under. He makes the point that the Yellow Pages are not some sort of official document.

2.14. He accepts that architectural designers' websites, which are cited as sources of confusion, go close to the law's edge, by using words like "architecture" and "architectural" but they fall short of advertising individuals as "architects". He states that when a licensee describes a house as "architect designed", that is a representation that the individual who designed the house was a "registered architect". Before making such a claim, licensees in his view should get their facts right. That can be done very rapidly by searching NZRAB, a task that is neither complex nor time- consuming. He argues that a licensee who is not prepared to undertake such a rudimentary check has little regard for their ethical obligations.

3. Relevant Provisions

3.1. The Real Estate Agents Act 2008

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.

Section 72 provides:

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.

3.2. Unsatisfactory conduct must relate to the carrying out of "real estate agency work". Real estate agency work or agency work is defined in section 4 of the Act, and means any work or services provided, in trade, on behalf of another person for the purpose of bringing about "a transaction".

3.3. The word "transaction" is also defined in section 4. The definitions relate to the sale, purchase, or other disposal or acquisition of land, leasehold interests in land, transferable licences, occupation rights, and businesses.

3.4. The Committee finds that the placing of this advertisement comes within the definition of "real estate agency work".

3.5. The Real Estate Agents Act ( Professional Conduct and Client Care ) Rules 2009

Rule 6.2, 6.3 and 6.4 of the Client Care rules provide:

6 Standards of professional conduct

6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

6.3 A licensee must not engage in any conduct likely to bring the industry into disrepute.

6.4 A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or fairness be provided to a customer or client.

3.6. The Registered Architects Act 2005

Section 4 provides:

registered means registered under section 10

registered architect has the meaning set out in section 6

Section 6 provides:

6 Title of registered architect

A person is a registered architect if he or she—

(a) is registered; and

(b) holds a current certificate of registration.

Section 7 provides:

7 Protection of titles registered architect and architect

(1) No person, other than a registered architect, may use in connection with his or her business, trade, employment, calling, or profession—

(a) the title “registered architect”; or

(b) any words, initials, or abbreviations of that title that are intended to cause, or that may reasonably cause, any person to believe that the person using those words, initials, or abbreviations is a registered architect.

(2) No person who designs buildings, prepares plans and specifications for buildings, or supervises the construction of buildings may use the title “architect” unless he or she is a registered architect.

(3) Despite subsections (1) and (2), a person may use the title “registered architect” or

“architect” (or words, initials, or abbreviations of those titles), in accordance with the rules, in representing qualifications or titles awarded by overseas agencies.

(4) A person who contravenes subsection (1) or subsection (2) commits an offence, and is liable on summary conviction to a fine not exceeding $10,000.

Section 10 provides:

10 Board to register applicant or decline application

(1) If the Board is satisfied that an applicant is entitled, under section 8, to be registered as a registered architect, the Board must—

(a) register the applicant; and

(b) notify the applicant that he or she is registered; and (c) issue to the applicant a certificate of registration; and (d) enter the applicant's name in the register.

4. Discussion

4.1. Section 7 of the Registered Architects Act 2005 prohibits a person who is not a registered architect in terms of that Act from describing themselves as a registered architect or architect.

4.2. While a licensee is unlikely to be prosecuted under section 7 of the Registered Architects Act for labelling a third party as an architect when they are not, that does not mean that the Act's description of who may or may not describe themselves as an "architect" is irrelevant to the Committee's consideration of the Licensees’ conduct in this case.

4.3. It is clear that dictionary definitions of the word "architect" are less specific than the interpretation of the term "registered architect" in the Registered Architects Act. Consider, for example, this extract from Wikipedia:

"An architect is a person trained in the planning, design and oversight of the construction of buildings, and is licensed to practice architecture. To practice architecture means to offer or render services in connection with the design and construction of a building, or group of buildings and the space within the site surrounding the buildings that have as their principal purpose human occupancy or use. Etymologically, architect derives from the Latin architectus, itself derived from the Greek arkhitekton (arkhi-, chief + tekton, builder), i.e. chief builder.

Professionally, an architect's decisions affect public safety, and thus an architect must undergo specialized training consisting of advanced education and a practicum (or internship) for practical experience to earn a license to practice architecture. The practical, technical, and academic requirements for becoming an architect vary by jurisdiction (see below).

The terms architect and architecture are also used in the disciplines of landscape architecture, naval architecture and often information technology (for example a software architect). In most of the world's jurisdictions, the professional and commercial uses of the term "architect", outside of the etymological variants noted, is legally protected."

4.4. The Committee has considered whether the word "architect" in the advertisements must be given an "ordinary or natural meaning", which is simply "a person who designs buildings". If "the public" uses the words "architecture" "architecturally" and "architect" interchangeably, how can a licensee be in breach of professional standards by making the same type of error.

4.5. The Committee does not accept that the use of the word "architect" in the advertisement simply means that the respective properties were designed by people who design buildings. Nor does the Committee accept that a licensee who confuses the words "architect" and "architecture" is somehow absolved from professional responsibility for doing so.

4.6. First, some historical background to give this issue its proper context.

4.7. The Committee notes that in July 2009 (shortly before the Act came into force) the Real Estate Institute of New Zealand Inc advised its members in its journal "RE" that "architects" could be identified on-line.

4.8. The article, titled "Architects Identified On-line" begins by referencing the NZRAB website, so that "a person described in marketing or advertising material as an "architect" actually has the right to do so".

4.9. The article refers to the fact that some real estate agents had come under fire from the Board for inaccurately naming a person as the architect that designed the house being sold "when in reality, the person named isn’t, or wasn’t an architect".

4.10. The article stated that the Board was concerned that such advertising misled potential buyers; and suggested that it threatened the interests of architects and that it degraded the "brand". The chairman of the Board was quoted as saying that claiming a property was designed by an architect could push up its price or create a false expectation about quality which was unfair on buyers.

4.11. The article stated that the problem of not being able to work out whether designers' names on plans or in council records were or were not the names of architects was resolved by the new website, which had a "find a former architect" facility, as well as listing all current architects.

4.12. As a result, real estate agents, writers of advertising copy, newspapers and potential buyers could now instantly check if a person whose name was on a building's plans or in the council records is or was an architect.

4.13. Mr Elford, the REINZ president, said in the article that he was sure the website would go a long way towards educating people as to who could be described as an architect, or when a building could be described as architecturally designed. He encouraged members to make use of the website.

4.14. Judging by the volume of complaints to be considered by this Committee, Mr Elford's optimism was somewhat misplaced.

4.15. In May 2010, the REINZ published a feature article by Mr Jackman in its journal. The title of the article was "Was the architect an architect?"

4.16. The article referred to the "deep frustration" felt by architects at real estate advertisements claiming properties for sale were designed by architects when actually the person named was not an architect at all. It referred to the fact that about 5% of New Zealand's residential properties were designed by architects, the rest being designed by others, sometimes called architectural designers, who either were trained in drafting, or were self-taught.

4.17. Referring to rule 6.4 and relevant provisions under the Registered Architects Act, Mr Jackman suggested that real estate agents needed to check before placing advertising claiming that a

named person was an architect. Mr Jackman referred to the website, and the ability to check current and former architects.

4.18. He warned that real estate agents should take the matter seriously, because the Board had laid complaints with the Advertising Standards Authority, and the Commerce Commission. He said that the Real Estate Agents Authority was also investigating a breach.

4.19. He made it clear that the Board would lay further complaints whenever more breaches were detected.

4.20. In September 2010, Complaints Assessment Committee 10040 found a licensee, Robert Mosen, guilty of unsatisfactory conduct for describing a property as "architect designed" when it was not. The decision received widespread print and voice media coverage.

4.21. In March 2011, the REINZ published in its journal "the Hub" an e-mail dated 17 February 2011 from Angela Sutton, Advisory Services Manager of the REINZ. In light of media publicity the previous day, advice was offered to members on the use of the words "architect" and "registered architect" in any advertising. The e-mail stated that prohibitions on the use of the words "architect" and "registered architect" extended to the misuse of those terms in marketing and advertising material. Ms Sutton referred to the July 2009 article published in the Journal, which touched on the issue and set out the position quite clearly. The full text of the July 2009 article was attached to a link. Ms Sutton concluded by saying:

"In the meantime if you are intending to describe the building in terms involving use of the word "architect" in any form, we strongly recommend that you first check that the designer of the building is named on the NZRAB register—see the link above."

4.22. The Committee considers the purpose of the Act is highly relevant to this issue.

4.23. As section 3 of the Act makes clear, the purpose of the 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.

4.24. What would a hypothetical consumer make of an advertisement describing a home as designed by an architect?

4.25. The Committee considers that consumers in the class of people who would be looking at purchasing such a home would consider the use of the word "architect" in the advertisement meant something different from a home that had been designed by a builder or draughtsman.

4.26. Such a consumer might not have the precise terminology of the Registered Architects Act in his or her mind; but the consumer would be likely to regard the word "architect" as constituting a point of distinction from a house designed, for instance, by a builder or by a draughtsman.

4.27. While the Committee considers that it would be contrary to the consumer protection purpose of the Act to allow properties to be advertised as "architect designed", when the design of such properties had nothing to do with work done by an "architect", that is not the position that applies in this case.

4.28. If the Licensees had checked the NZRAB website, they would have discovered that Mark Tatton was not registered as an architect in New Zealand, and had never been so registered.

4.29. But would it have been the end of the matter, given that Mr Tatton in fact had a degree in architecture? While Mr Tatton may not be able to describe himself as an architect, that does not necessarily mean that there is a breach of the rules of conduct that bind licensees under the Real Estate Agents Act 2008, when a licensee describes a person with a degree in architecture as an architect.

4.30. There may be any number of reasons why a person who might be able to obtain registration under the Registered Architects Act does not apply for registration. Financial considerations may apply: perhaps Mr Tatton cannot afford the registration fee. Perhaps he considers that registration under the Registered Architects Act 2005 does not provide him with benefits that match the cost of the registration. All of this, of course, is speculation on the Committee's part.

4.31. The issue here is whether or not this house, designed by Mr Tatton who has a degree in architecture, is properly described as designed by Mark Tatton, architect. The Committee considers it is. The "hypothetical consumer", in the Committee's view, is going to make little of the distinction between Mr Tatton, with his degree in architecture, and an architect with a degree in architecture who happens to be registered under the Registered Architects Act 2005.

4.32. The Committee wishes to make it clear that it does not consider there is any evidence that suggests an intention by the Licensees to mislead any members of the public.

4.33. The Committee notes that conduct under section 9 of the Fair Trading Act 1986 may be misleading, despite the absence of any element of intention: Bonz Group Pty Ltd v Cooke (1996)

[1996] NZCA 301; 7 TCLR 206, 213 (CA).

4.34. The Court of Appeal decision is a helpful one. The Committee considers that a licensee's conduct may similarly breach the provisions of the Act, despite the absence of any element of intention.

4.35. But on the facts of this case, the Committee does not consider that this advertisement by the

Licensees is misleading.

4.36. Unsatisfactory conduct which attracts professional discipline, even at the lower end of the scale, must be conduct which departs from acceptable professional standards. That departure must be significant enough to attract sanction for the purposes of protecting the public. A finding of "unsatisfactory conduct" is not required in every case, even where error is shown. The question is not whether error was made, but whether the conduct in question was an acceptable discharge of professional obligations.

4.37. In terms of section 72 (a) of the Act, does the conduct of the licensee fall short of the standard of conduct that a reasonable member of the public would expect from a reasonably competent licensee? In this case, the Committee considers that the answer to that question is "no".

4.38. In terms of section 72 (b), does the conduct contravene any rules made under the Act? Again, the Committee considers that the answer is "no", for the reasons set out in the previous section of this decision.

4.39. The advertisement is not misleading; and it does not provide "false information" about the status of the person who designed each of the homes. Mr Tatton is, literally and technically, an architect. He has the degree to prove it. But he is not a registered architect. There is no breach of rule 6.4.

4.40. It follows that the Committee does not consider that this is conduct which is likely to bring the

industry into disrepute, so there is no breach of rule 6.3. This is not conduct which, if known by the public generally, would lead them to think that licensees should not condone it or find it to be acceptable. Acceptance that such conduct is acceptable would not tend to lower the standing and reputation of the industry. Contrast for instance, in a different professional context, Complaints Committee of the Canterbury District Law Society v W (CIV 2007-485-2648, Wellington High Court, 13 October 2008, at paragraph [91]).

4.41. The Committee does not consider that there is any evidence suggesting the Licensees are either incompetent or have acted negligently. There is no breach of section 72(c) of the Act.

4.42. That leaves section 72(d). A licensee is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that would reasonably be regarded by agents of good standing as being unacceptable. The Committee does not consider that agents of good standing would regard an advertisement stating that a property was designed by an architect, albeit one not registered under the Registered Architects Act, as "unacceptable.

4.43. The Licensees had an obligation to ensure the advertisement was accurate. Somewhat accidentally, it transpires the advertisement was accurate. A breach of section 72(d) of the Act has not been established.

5. Decision

5.1. After conducting an inquiry into the complaint, pursuant to section 89(1) Act, the Committee held a hearing with regard to that complaint. In accordance with section 90(1) of the Act, the Committee conducted the hearing on the papers, and pursuant to section 90(2) the Committee’s determination was made on the basis of the written material before it.

5.2. The Committee has determined under section 89(2)(c) the Act that is has not been proved, on the balance of probabilities, that the Licensees have engaged in unsatisfactory conduct. The Committee determines to take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

6. Publication

6.1. One of the Committee’s functions pursuant to section 78(h) of the Act is to publish its decisions.

6.2. The Committee directs full publication of its decision.

6.3. Publication is deferred for 20 working days from the date of notice of this determination, to enable the Licensees or the Complainant to exercise any appeal rights under section 111 of the Act.

7. Right of Appeal

7.1. A person affected by a determination of a Complaints Assessment Committee may appeal by way of written notice to the Real Estate Agents Disciplinary Tribunal (the Tribunal) against a determination of the Committee and must do so within 20 working days from the date of the notice of the determination.

7.2. Appeal is by way of written notice to the Tribunal. Further information on lodging an appeal is available by referring to the Guide to Lodging an Appeal at www.justice.govt.nz/tribunals.

Signed

Paul Morten

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 14 June 2011