Complaint No CB5647349 [2012] NZREAA 4 (10 January 2012)

Last Updated: 27 July 2012

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

And

In the Matter of Complaint No: CB5647349, CB5647376 and CB5647403

In the Matter of Licensees

Licence Numbers: XXXX, XXXX; and XXXX

Decision of Complaints Assessment Committee

Dated this 10th day of January 2012

Complaints Assessment Committee: CAC20004

Chairperson: Paul Morten Deputy Chairperson: Mike Vallant Panel Member: David Russell

Complaints Assessment Committee

Decision to take no further action

1 The Complaint

1.1 Mr and Mrs X (the Complainants) have complained to the Real Estate Agents Authority (the

Authority) about the conduct of Licensee 1, Licensee 2 and Licensee 3 (the Licensees).

1.2 The Licensees are licensed under the Real Estate Agents Act 2008 (the Act). They work for

Agency Z (the Agency).

1.3 The Agency listed a property in Lower Hutt for sale. They were approached by the Complainants, who wished to make an offer to purchase the property.

1.4 The complaint is about the conduct of the Licensees during the Complainants' attempts to purchase.

1.5 The Complainants allege that the Licensees misrepresented their client's terms and requirements in order to obtain a sale and purchase agreement outside the terms expected by the vendors.

1.6 They say that the Licensees misrepresented matters to both the vendors and purchasers, needlessly initiating a cancellation of the contract, which in turn led the Complainants and the vendors to incur unnecessary costs.

1.7 They say the misrepresentations led to the termination of the sale and purchase agreement.

1.8 The Complainants also raise concerns about the Licensees' reporting of events between the parties, and the accuracy of the information relayed by them.

1.9 They complain that the behaviour of the Agency was both unprofessional and disrespectful, both to them and to the vendors.

2 Material Facts

2.1 The Complainants state that they approached the Agency with a desire to make an offer on the property. They say that they were advised that the offer and conditions then presented to the vendors were accepted (verbally). They say that they were told the offer and conditions would be produced in writing and signed and agreed to by the vendors' lawyer within the next few days.

2.2 They signed a written contract presented to them by the Agency and waited for the vendors to countersign.

2.3 There were particular conditions inserted in the sale and purchase agreement relating to the sale of the purchasers' home, a title search, a building report, and finance.

2.4 Based on the verbal advice received from the Licensees, and on reliance of the six-week settlement period contained in the offer, the Complainants set about the sale of their property.

2.5 For the next two weeks they waited for the sale and purchase agreement. They were told that the delay was due to problems with access to the vendors' lawyer (who was ill) and the need for the vendors to check through the contract. They say they were told that everything was still going ahead.

2.6 In due course, they say they were told by Licensee 3, that the vendors were being difficult. The vendors apparently wanted to add a new clause to the contract which would mean there would be an open-ended settlement date, pending the vendors finding a suitable replacement home.

2.7 The Complainants say they told Licensee 3 that that was unacceptable. They tried to negotiate, but were advised that the vendors were being "too difficult" and would not budge. They say that that was confirmed by Licensee 2.

2.8 As a result, the offer was withdrawn by the Complainants who sought assistance from the Agency to recover some of the additional costs they had incurred. The Agency said that they had no responsibility for that; if anyone was responsible, it was the vendors because of their attitude and unreasonable behaviour.

2.9 The Complainants decided to talk to the vendors to find out what was going on. They say that the vendors told them that when the Agency listed the property, the vendors told Licensee 1 that they did not have a house to go to. They say that the vendors said Licensee 1 was the one who suggested the open-ended settlement date. They say that the vendors told them that when they received the Complainants' offer, the Agency tried to get them to remove the "open-ended" settlement date requirement.

2.10 The Complainants say that they arrived at an agreement with the vendors. The property was removed from sale while they found themselves a new home, allowing the Complainants to stay in as prospective purchasers. The Agency was to manage any new contract.

2.11 A new contract was prepared in August. The vendors, Licensee 1 and the Complainants arranged to meet at the vendors' property to go through the new contract and agree on final terms and dates to ensure the process was not delayed any further.

2.12 During the course of the meeting, there was discussion about whether the Agency ought to recognise their responsibility for the existing delays and reduce their commission accordingly. According to the Complainants, the vendors reiterated at the meeting that they had always wanted an open-ended settlement. The Agency refused to alter the commission terms.

2.13 An agreement for sale and purchase was executed by the parties on 2 August 2011.

2.14 An independent building report commissioned by the Complainants identified a number of issues, one of which was the discovery of Dux Quest plumbing. The Complainants' insurer said they would not insure the house unless the plumbing was replaced. The Complainants' solicitor advised the vendors that they would need to replace the plumbing.

2.15 On the morning of settlement, the Complainants were advised that the vendors had terminated the contract.

2.16 The Complainants say that Licensee 1 told them that the contract was terminated because the Complainants' solicitor insisted that the Complainants' plumber carry out the necessary plumbing alterations, a condition that the vendors were not prepared to accept.

2.17 The Complainants were surprised at that, and discussed the matter with their solicitors. In a letter dated 15 August 2011, the Complainants' solicitors had suggested to the vendors' solicitors that if the vendors were willing to re-plumb the property, there would need to be further discussions in respect of timing, the tradesman who would undertake the work, local authority requirements and "making good".

2.18 The vendors' solicitors replied by letter dated 16 August 2011, advising that their clients cancelled the contract and would proceed at their own leisure and with their own tradesman to undertake remedial action.

2.19 Licensee 2 has provided a very detailed response by e-mail dated 3 October 2011.

2.20 Among other things, he refers to the fact that Licensee 3 presented a conditional offer to the Complainants in May, which underwent a number of alterations. E-mail correspondence from the vendors dated 26 May 2011 indicates that apart from one spelling mistake, they were happy with the terms of the counteroffer. At that stage, there was no "delayed settlement" clause contained in the agreement.

2.21 On 30 May 2011 Licensee 1 met the vendors, who told him that they had had second thoughts and would only sign off on the contract if a new clause was added, allowing them time to find a new property. Licensee 1 added the new clause into the contract. The Complainants were not prepared to accept it.

2.22 Independently, by e-mail dated 28 September 2011, the vendors say that the Agency's Licensees are quite correct about the fact that it was the vendors who changed their minds when Licensee

1 and another licensee, Mr S, came with the original offer.

2.23 In the e-mail, they say that they had told the Agency that they had been looking for a new property for some time, and had not found anything suitable. They advise that they were concerned at the possibility that their house would sell quickly and they would end up with nowhere to live. They say that the Agency advised them that if this occurred, provision could be made in the sale and purchase agreement to protect them if it looked like there was going to be a quick sale.

2.24 They say this is precisely what happened when they were presented with the written offer.

2.25 In the e-mail, they refer to the meeting with the Complainants and the Licensees. In their view, they considered that the Licensees behaved completely professionally during the course of that meeting. For their part, the Complainants have asserted that the Licensees' behaviour was not professional.

2.26 Licensee 1 states that the Agency was not aware from discussions with the vendors before 30

May 2011 that the vendors would decide to insert a new clause at the last minute.

2.27 He states that the Agency and the Licensees regret the delays, but that they made every effort to address events as they arose. They had no control over the timing.

2.28 He states that the Agency considers it was not responsible for the Complainants putting their

house on the market, or for the fact that the vendors changed their mind and inserted a special condition regarding settlement, to enable them to find a new property.

2.29 The Licensees reject the suggestion that they have acted unprofessionally or aggressively, or that they have attempted to bully any of the parties.

2.30 The Licensees do not accept that the suggestion the vendors would not budge, or that the situation was "difficult", was unprofessional. They reject the allegation that they accused the vendors of being "unreasonable". They say that Licensee 2 and Licensee 3 are qualified licensed agents of more than 10 years standing in the industry.

2.31 As to any suggestion that the Licensees acted unprofessionally in respect of the cancellation of the agreement, the Licensees reject that allegation. They state that that was handled between the sellers and buyers lawyers and was not their responsibility.

2.32 Licensee 1 states that the Licensees were disappointed that the contract was cancelled. They approached the vendors to see whether there was some way of resolving the position, prior to the contract being cancelled. The course of action chosen by the vendors was based on advice and discussions the vendors had with their solicitors.

2.33 Once the repairs were completed by the vendors, Licensee 1 approached the Complainants to see whether they wanted to submit a new offer. He states that this is hardly the action of an agency that was trying to prevent the contract going through.

2.34 Subsequently, on 3 October 2011, they state that the Complainants contacted them requesting they submit a new offer.

2.35 The Complainants have replied to the Licensees' submission. They accept that they cannot establish when the new clause was added by the vendors, or the reasons for the delay abou t which they complain.

2.36 They suggest that the Licensees' ought to have told them upfront, prior to the transaction, that the vendors had been looking for a new property for some time but had not found one. They say they were not told at the time of signing the contract that the vendors wanted some sort of open-ended settlement date. They feel that they ought to have been told that.

2.37 They suggest it was up to the Agency, as the signing agent, to ensure that the settlement date issue was not going to be an ongoing issue with the vendors.

2.38 As to the complaint about unprofessional behaviour by the Licensees, they state responsibly that neither party is able to provide proof of what was said, but all they could do was comment and report on what they heard and felt at the time, and that this was a case of the Agency's view, versus their view.

2.39 They state that the view on the Agency's lack of professionalism has not changed, despite the Agency's feedback, but accept that both parties will have to continue to disagree with each other.

3 Provisions

3.1 Section 72 of the Real Estate Agents Act 2008 provides:

Section 72 of the Act provides 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.

3.2 The onus to establish a complaint is on a complainant: Hodgson v CAC & Arnold [2011] NZREADT

03.

3.3 In Cooke [2011] NZREADT 28, the Disciplinary Tribunal said: "While the threshold for [unsatisfactory conduct] is not as high as misconduct, it is still a serious departure from expected behaviour."

4 Discussion

4.1 Applying the tests set out above, the Complaints Assessment Committee (the Committee) has carefully considered whether or not the Complainants have established "a serious departure from expected behaviour" by any of the Licensees.

4.2 In the Committee's view, the Complainants have failed to satisfy that onus.

4.3 We have set out in section 2 above the Complainant's contentions, and the Licensees' responses.

4.4 We have noted that the vendors make no complaint about the professionalism of any of the

Licensees. Quite the contrary: they say that at all times the Licensees have acted professionally.

4.5 Significantly, the vendors confirm that they were the ones who insisted that a special clause be inserted in the original sale and purchase agreement, delaying settlement, in order to give them more time to find a new property to live in once their house was sold.

4.6 The delays that ensued, and the inconvenience that the Complainants suffered (particularly in light of the fact that they put their house on the market, in good faith, expecting a written contract to follow from the indication of acceptance they had received back through the Licensees) all appeared to stem from that decision by the vendors, not from any conduct, unsatisfactory or otherwise, by the Licensees.

4.7 There is no evidence that the Licensees made any misrepresentations whose sole purpose was to lock the Complainants into a sale and purchase agreement, which we infer to be the thrust of one of the complaints made by the Complainants.

4.8 We are unable to identify any representation by the Licensees that led to the cancellation of the contract—whether the first contract that the Complainants signed, or the second contract that

they signed in August 2011.

4.9 Even if the Committee was to find as a fact that the Licensees described their client as "difficult" or "unreasonable", the Committee would not consider that that conduct constituted unsatisfactory conduct in terms of the Act.

4.10 As the Complainants appear to accept, different people have different views about some of the events that took place. The Committee does not consider that the Licensees have inaccurately reported events, or incorrectly relayed information.

4.11 The Complainants suggest that the Licensees were obliged, to ensure that the settlement date issue was not going to be an ongoing issue with the vendors. We disagree. The Licensees are agents for the vendors, and take instructions from the vendors. While we are sure that many agents would be delighted if their clients followed their advice without fail, the reality is that clients the world over have minds of their own and act accordingly. It was not within the power of the Licensees in this case to prevent their clients from altering the terms of the sale and purchase agreement that had been provided to them by the Agency.

4.12 For these reasons, the Committee considers that the Complainants have failed to prove their complaints.

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 The Committee directs publication of its decision, but omitting the names and identifying details of the Complainants (including the address of the property), the Licensees and any third parties in the publication of its decision.

6.3 Publication gives effect to 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: it is in the public interest that the decision be published, so that members of the public and the industry can see clearly what constitutes "unsatisfactory conduct" under the Act.

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 filing an appeal is available by referring to the Guide to Filing an Appeal

at www.justice.govt.nz/tribunals.

Signed

Paul Morten

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 10 January 2012