Company A - Complaint No CA4113174 [2011] NZREAA 442 (19 August 2011)

Last Updated: 19 June 2020

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

And

In the Matter of Complaint No: CA4113174

And

In the Matter of Company A

Licence Number: XXXXXXX

Decision of Complaints Assessment Committee

Dated this 19th day of August 2011

Complaints Assessment Committee: CAC10044

Chairperson: Paul Morten Deputy Chairperson: Anna Tierney Panel Member: Barrie Barnes

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. Mr C (the Complainant) owned a property which went to auction on 11 July 2010.

1.2. Company A (the Agency) is a licensed agency. It was granted an exclusive agency by the

Complainant.

1.3. Two clauses in the listing contract are relevant:

1.3.1 Clause 1(e) The Agent may display any sign(s), photograph(s), electronic advertising, display material, or Open Home marketing as the Agent may consider necessary or as may be displayed or used for promotional purposes, and if any Open Home is held then the vendor acknowledges and agrees that the Agent shall not be liable for any loss or damage arising from any such Open Home.

1.3.2 Clause 3 The Agent is authorised to collect, publish and use for marketing or sale purposes all information pertaining to this authority including the price and supply such information to other agents, and to use such information for statistics complied by the Real Estate Institute of New Zealand or for any similar statistical organisation.

1.4. The Complainant says that after the successful sale of the property by auction, the Agency carried out a self-promotional marketing campaign, without his permission, publishing photographs taken for the sale of the property, and at auction.

1.5. This marketing campaign appeared in the August and September editions of the Local News, a free magazine delivered locally. The Complainant says the campaign used photographs taken before and at auction; and revealed the confidential selling price (the property sold on the day, but not during the course of the auction itself. It was passed in at $1.48 million, and a sale at

$1.5 million was negotiated later in the day).

1.6. The Complainant says that this conduct crosses the threshold of "unsatisfactory conduct".

2. Material Facts

2.1. On 3 July 2010, the property featured in an article in the National News. The parties agree that that was with the Complainant's consent.

2.2. An editorial was published in the August 2010 edition of the Local News which revealed the selling price of $1.5 million. The Editor said that he did not learn the selling price from the Agency.

2.3. The Local News also published a full two-page spread of the sale of the property, comprising photos pre-and post-auction, which the agency paid the Local News to have published. The feature comprised approximately nine separate photographs. Importantly, none of them are

photos of the inside of the house, or private photographs of the Complainant's family.

2.4. In the September 2010 edition, the Agency published an advertisement, which included photographs of a number of houses they had sold, under the label of "street record".

2.5. The Agency accepts that it did not seek permission from the Complainant to have the two-page feature published by the Local News some months after the auction had taken place.

2.6. The Agency also states that they had not planned in advance to publish the feature on the sale of the house. While it was their photographer who was present at the day of the auction, they did not pay the photographer to be there. They had not pre-planned the marketing campaign.

3. Relevant Provisions

3.1. Section 3 of the Real Estate Agents Act 2008 (the Act) provides:

Section 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.

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. Section 72 of the Act provides:

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 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.

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

relevantly provide:

9.3 A licensee must not take advantage of a client's, prospective client's or customer's inability to understand relevant documents, where such inability is reasonably apparent.

9.8 When inviting signature of an agency agreement a licensee must explain to a prospective client in writing—

(b) how the land or business will be marketed and advertised, including any additional expenses that such advertising and marketing will incur: it must be explained to the prospective client that he or she is not obliged to agree to such additional expenses:

9.12 An agent must not impose conditions on a client through an agency agreement that are not reasonably necessary to protect the interests of the agent.

9.21 A licensee must not disclose confidential personal information relating to a client, unless—

(a) the client consents in writing; or

(b) the licensee is required by law to disclose the information; or

(c) disclosure is necessary to answer or defend any complaint, claim, allegation, or proceedings against the licensee by the client.

9.22 Where a licensee discloses information under rule 9.21(b) or (c), it may be only to the appropriate person or entity and only to the extent necessary for the permitted purpose.

9.23 A licensee must not use information that is confidential to a client, for the benefit of any other person or of the licensee.

4. Discussion

5.1 The first issue that arises is whether or not the Agency's publication of this material, post-sale, constitutes "real estate agency work". The issue is significant, because a licensee can only be guilty of unsatisfactory conduct where the licensee has carried out real estate agency work that falls short of the stipulated standards.

5.2 It is the Complaint Assessment Committee's view that the publication of the two-page feature photographs, and the separate photograph under the banner "street record", after the sale of the property had been completed, does not constitute real estate agency work as defined.

5.3 On that basis alone, the Complainant has failed to establish unsatisfactory conduct by the

Agency.

5.4 In relation to publication of the sale price of the property, it is clear from information provided by the editor of the Local News that the information was not provided by the Agency. The Complainant has failed to establish unsatisfactory conduct relating to publication of the sale price of the property.

5.5 Out of deference to the submissions made by the parties, the Complaints Assessment Committee (the Committee) goes on to consider whether the marketing campaign was authorised by the clauses in the listing contract referred to above; or otherwise breaches any of the Rules.

5.6 In paragraph 3.5, the Committee sets out relevant extracts from the Rules.

5.7 If an Agency wishes to rely on particular clauses in the listing contract to justify post-sale marketing, then it is obliged to explain in writing at the time the listing contract is entered into how the property would be marketed: Rule 9.8.

5.8 It is clear that the Complainant does not consider that the listing contract permits the Agency to use information derived for the purposes of the sale of the property for self-marketing purposes, ad infinitum. If an agency wants to use photographs for marketing purposes after the sale is completed, would clauses such as these constitute sufficient explanation in writing, as Rule 9.8 requires?

5.9 The Committee does not consider that clause 1(e) constitutes a proper written explanation of the fact that the Agency considers it can use any photographs it has obtained for the purposes of marketing the house for self-marketing, perhaps some time after the agency contract is at an end. On the face of it, the clause is limited to the use of photographs and so on for the sale of the house. It has nothing to do with self-marketing by the Agency itself.

5.10 Clause 3 is similarly imprecise. It simply authorises the Agency to collect, publish and use information "pertaining to this authority" for marketing and sale purposes. On the face of it, that means marketing and sale of the property. Again, it does not appear to have anything to do with self-marketing by an agency, for instance following the termination of its agency contract.

5.11 The Committee does not consider that a condition in an agency contract obliging the vendor to agree to use of all and any photographs, for self-marketing purposes by an agency, is "reasonably necessary to protect the interests of the agent". Arguably, the inclusion of such a condition in the contract might constitute a breach of Rule 9.12.

5.12 Had these contractual clauses been the Agency's sole basis of defence, then the Committee would have rejected it.

5.13 In this case, however, the Committee considers that there is little difference between the street- front photograph published by an agency of the property under the label "sold by us", and the two-page feature spread in the newspaper, comprising nine separate photos, showing innocuous before and after photographs gathered during the course of the sale of the house. Significantly, all of the photos are "outside shots".

5.14 On the facts of this case, we do not consider any of the photos can properly be described as "confidential". But in a different case, on different facts, post sale publication of confidential photographs could also breach provisions set out in Rule 9.21.

5.15 On the facts of this case, the Complainant has not identified any breach of Rule 9.3.

5.16 Even if the conduct was "real estate agency work", as defined in section 4 of the Act, on the facts of this case the Committee would have found that the Complainant had not established that the conduct by the Agency was unsatisfactory.

5. Decision

5.1. After conducting an inquiry into the complaint, pursuant to section 89(1) of the 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) of the Act to take no further action with regard to the complaint or any issue involved in the complaint.

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 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 Committee may appeal to the Tribunal against a determination of the 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

Paul Morten

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 19 August 2011