Company A - Complaint No CA4942875 [2011] NZREAA 225 (22 July 2011)

Last Updated: 2 August 2013

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

And

In the Matter of Complaint No: CA4942875

In the Matter of Company A

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 22nd day of July 2011

Complaints Assessment Committee: CAC10072

Chairperson: Michael Paul Vallant Deputy Chairperson: Sue Matehaere-Patten Panel Member: Joan Harnett-Kindley

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1 Mr C, (the Complainant) has complained to the Real Estate Agents Authority (the Authority) about the conduct of Mr L (Mr L) and Mrs L (Mrs L), whom where employed by Company A (the licensee) at the time of conduct. The Complainant owned a rental property (the Property) and approached one of the employees of the Licensee, Mrs L for an appraisal of the property with a view to selling.

1.2 Mrs L indicated to the Complainant that they (Mr and Mrs L) would be interested in renting the property.

1.3 Mr and Mrs L subsequently entered into a rental agreement with the Complainant. Mr and Mrs L vacated the property approximately 3 months after taking possession leaving a substantial amount of damage and rent arrears behind.

1.4 The Complainant now seeks compensation from the Licensee, holding the Licensee precariously liable for the actions of their employees.

2. Material Facts

2.1 The Complainant is the owner of a property which has been rented. On or about the middle of

2010 after the existing tenants vacated the property, the Complainant approached Mr and Mrs L to obtain information in respect to the local property market with a view to placing the property on the market for sale.

2.2 Mrs L indicated to the Complainant that the local property market at the time was stagnant and proposed an alternative that, together with her husband Mr L, that they move into the property fully furnished and “house sit”.

2.3 The Property was fully furnished, had an attractive garden and water features on which the Complainant spent considerable amount of money to establish and maintain. The Complainant was employing a number of local tradesmen to ensure that the property was maintained to a high standard. Mr and Mrs L indicated that they could not afford a market rent for the property but indicated that they were prepared to “home sit” the property, maintain the garden and water features rather than utilising local tradesmen. This would save the Complainant costs.

2.4 A residential tenancy agreement between the Complainant and Mr and Mrs L was entered into and they moved into the Property in or about September of 2010.

2.5 In respect to the preliminary correspondence and rent agreement between the parties it is important to note that:

(a) Correspondence between the Complainant and Mr and Mrs L was from the real estate company that employed Mr and Mrs L and the residential tenancy agreement was also on the company’s letterhead.

(b) The residential tenancy agreement also is quite specific and detailed in respect to the obligations of Mr and Mrs L to the Complainant in respect to maintaining the garden and water features.

(c) Mr and Mrs L also arranged for rent to be paid to the real estate company. An email from

Mrs L to the Complainant states:

“What I would like to do is run the “management” of the property through the ............. That way it ensures that everything is kept up to date and by the book. It also means that everything is totally transparent and you will get proper tax invoices each month and at the end of the financial year. But the good news for you is that I won’t be charging you a management fee or any other fees for the matter! Are you ok with that?”

The response from the Complainant stated:

“All good with everything you have suggested”.

2.6 Mr and Mrs L took possession of the Property on or about September of 2010. The rent went into arrears in November of 2010 and issues started to arise between the Complainant and Mr and Mrs L as to whether or not the gardens and the water features had been maintained to a satisfactory standard also at this time.

2.7 Matters got worse with an allegation that Mrs L assaulted Mr L in the master bedroom in January of

2011 causing considerable damage including significant blood staining on walls, bed and bedding.

2.8 In January of 2011 the rent was substantially in arrears, Mrs L had vacated the property and a trespass notice was issued against Mr L who vacated the Property on or about the 24 January 2011.

2.9 At the time Mr L vacated the Property the premises had not been cleaned, traces of blood remained on the chattels and walls and fixtures. The grounds were in a poor condition and there was a need to replace broken and damaged chattels, generally clean the Property and bring the Property back up to the standard that it was at the beginning of the tenancy.

2.10 Mr and Mrs L also left their employment, moved out of the town and at that time could not be located.

2.11 As a result of the above the Complainant has suffered considerable loss which has been quantified at $21,355.78 and is seeking compensation from the Licensee on the basis that the Licensee is vicariously responsible for the actions of their employees that are carrying out the business of the Licensee. This is even if the employee is acting in an unauthorised or prohibited matter.

3. Relevant Provisions

3.1 Pursuant to section 4 of the Real Estate Agents Act 2008 (the Act) real estate agency work or agency work is defined as:

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); 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

3.2 And further pursuant to section 4 of the Real Estate Agents Act 2008 (the Act) transaction is defined as:

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 V illages Act 2003:

(e) the sale, purchase, or other disposal or acquisition of any business (either with or without any interest in land).

3.3 Section 72 provides:

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.

3.4 Section 73 provides:

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.

4. Discussion

4.1 The Complaints Assessment Committee (the Committee) is of the view that for it to have jurisdiction to deal with this matter the Complainant must show:

(a) That the actions of Mr and Mrs L relate to agency work as defined by section 4 of the Act.

(b) That the actions of Mr and Mrs L arose out of a transaction as defined by section 4 of the

Act.

(c) That the Licensee is responsible for the actions of their employees when they are carrying

out real estate agency work.

4.2 If the Complainant can establish that the facts relate to a transaction involving real estate agency work and that the Licensee is liable for the actions of their employees while carrying out such work the Committee can then consider whether the Licensee’s actions were unsatisfactory as defined by section 72 or misconduct as defined by section 73 of the Act.

4.3 It is in the opinion of the Committee quite clear from the facts that matter between the Complainants and Mr and Mrs L was a tenancy arrangement which is specifically excluded in the definition of transaction (b) under section 4 of the Act.

4.4 If the Committee is however wrong on that point it is the Committee’s view that the transaction between the Complainant and Mr and Mrs L was a private matter. There were to be no fees or commissions charged and no management or services in respect to the Property were to be undertaken by Mr and Mrs L. The only reason the rent was paid to the Licensee’s real estate company was as a matter of convenience and ease for the parties.

4.5 In the Committee’s view it was never intended that the arrangement between the Complainant and

Mr and Mrs L was of a commercial nature but a private arrangement between the individuals.

4.6 A matter can still be misconduct if the conduct is disgraceful even though it does not amount to real estate agency work. In these circumstances the behaviour, even taken at its worst, could not amount to misconduct.

4.7 The Committee’s view therefore is that this is a matter which is cannot amount to unsatisfactory conduct and does not amount to misconduct under the Act. It would appear that if the Complainant has cause of action against Mr and Mrs L it is under the Residential Tenancies Act 1986.

4.8 As the matter cannot be unsatisfactory conduct and it is not misconduct, it is not necessary to consider whether the Licensee is responsible for the actions of its employees in these circumstances.

5. Decision

5.1 Having received the complaint and considered all matters the Committee has determined that under section 79(2)(a) that the alleges neither unsatisfactory conduct nor misconduct and dismiss it accordingly.

5.2 Further the facts of the case are such that they do not come within the jurisdiction of the Act.

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 Publication gives effect the purpose of the Real Estate Agents Act of ensuring that the disciplinary process remains transparent, independent and effective. The Committee also regards publication of this decision as desirable for the purposes of setting standards and that it is in the public interest that the decision be published.

6.3 The Committee directs publication of its decision, but omitting the names and identifying details of

the complainant (including the address of the property), the licensee and any third parties in the publication of its decision.

6.4 The Authority will publish the Committee’s decision after the period for filing an appeal has ended.

Any application for an order preventing publication must be made to the Real Estate Agents

Disciplinary Tribunal (the Tribunal).

7. Right of Appeal

7.1 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.

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

Appeal.

7.3 Further information on lodging an appeal is available by referring to the Guide to Lodging an

Appeal at www.justice.govt.nz/tribunals.

Signed

Michael Paul Vallant

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 22 July 2011