Complaint No C00213 [2013] NZREAA 112 (19 June 2013)

Last Updated: 3 May 2014

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

And

In the Matter of Complaint No: C00213

In the Matter of Licensee 1

License Number: XXXXXXXX

And

In the Matter of Complaint No: C00275

In the Matter of Licensee 2

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 19th day of June 2013

Complaints Assessment Committee: CAC20005

Chairperson: Stuart Rose Deputy Chairperson: Chris Rogers Panel Member: Denise Bovaird

Complaints Assessment Committee

Decision to take no further action

1. The Complaint and Material Facts

1.1 The Complainants have complained to the Real Estate Agents Authority (the Authority) about the conduct of Licensee 1 and Licensee 2 (together “the Licensees”). The Licensees are licensed under the Real Estate Agents Act 2008 (the Act). Both licensees hold individual salespersons license s and worked for the Agency.

1.2 The Complainants retained the Licensees as the real estate agents when listing the property.

1.3 The Complainants signed a sole agency agreement on 30 August 2012, for a period of three months. The contract stated that “at the expiry of this exclusive and sole agency authority, this agency appointment shall continue on general authority terms”.

1.4 The Licensees contacted the Complainants on 28 November 2012, to renew the listing. The Complainants then signed an “extension to listing authority” believing they say that this was for a general agency agreement. The extension document that the Complainants signed did not state that it was for a sole agency. The Complainants’ belief that the document they signed was for a general agency only was reinforced by the fact that the Licensees did not place any advertising for the Property for 21 days as they were obliged to do under a sole agency agreement. In addition, no advertisements were placed in the Property Press.

1.5 The Complainants contacted the Licensees on 13 December 2012 to advise that they wish ed to take their property off the market. They were informed that they could not do so as they were on a current sole agency agreement. The parties met on 18 December 2012, to discuss cancelling the agreement.

1.6 The Complainants say at this meeting the Licensee said to them “we know what you’re up to. We’ve heard rumours that you are going to do a “swap” and so you are trying to get out of paying us our commission”.

1.7 The complaint was received by the Authority on 18 December 2012 and referred to a Complaints

Assessment Committee (the Committee). The Committee considered the complaint on 8 January

2013 and again on 31 May 2013 and now issues its decision in this matter.

2. Relevant Provisions

2.1 The Real Estate Agents Act 2008 establishes a statutory basis for the licensing and hearing of complaints against real estate agents, amongst other things. The Act provides for the setting up of Complaints Assessment Committees to hear the complaints and allegations about licensees. It also establishes a Disciplinary Tribunal to hear complaints at the next level

Section 3 of the Act sets out the purpose of the A ct

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 is independent transparent and effective.

2.2 When committee considers a complaint it must decide whether it breaches the standards of conduct that are set out in section 72 and 73 of the act and also the Rules of Professional Conduct and Client Care as set out in the Real Estate A gents Act (Professional Conduct and Client Care) Rules

2012.

Section 72 of the Act 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. Section 73 of the Act provides:

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.

2.3 Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009. (the rules)

The Rules set out the standards of conduct and client care that agents, branch managers or salespersons (licensees) are required to meet when carrying out real estate agency work and dealing with clients. Whilst these rules are not meant to be exhaustive list, they set minimum

standards that licensees must observe and are a reference point for disciplinary decisions. Examples of the Rules that may be relevant in this complaint are:

5.1 A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

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

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.

9.1 A licensee must act in the best interests of a client and act in accordance with the client ’s

instructions unless to do so would be contrary to law.

9.2 A licensee must not engage in any conduct that wo uld put a client, prospective client or customer under undue or unfair pressure.

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.

3. Discussion

3.1 The Complainants signed a sole agency agreement with the Agency for a period of three months beginning on 30 August 2012. They say that they were reasonably happy with the advertising and the service they received during this time but were disappointed that the Property wasn’t advertised on Trade Me or in the Property Press.

3.2 The Complainants say that on the expiration of the ir sole agency contract they were intending to move to a general listing because during the period of their s ole agency they had found a property that they were interested in purchasing. As their house had not sold during the sole agency period they decided to go onto a general contract so that they could negotiate a swap of properties with the Vendor of the property they were interested in.

3.3 Bearing that in mind the Complainants say that they would have been fool hardy to commit to a sole agency with that prospect of a swap of properties available to them. The Complainants say that with their sole agency period coming to an end they believed that it automatically continued on as a general authority as stated in the listing agreement.

3.4 The Complainants say that on 28 November 2012 the y were asked to go to the Agency to renew the listing and at the time they were not aware they were signing up for a new sole agency. They say that when they first signed up for a sole agency th ey explained that they would only do this for three months. That period correlates to the period in the sole agency agreement which says that it expires after three months and automatically becomes a general contract.

3.5 The Complainants say that the form they signed on 28 November 2012 did not have any wording referring to it being a renewal of the sole agency. They say that the time of signing the Agency asked them if they would like to pay $280 to advertise in the Property P ress. This further confirmed in their mind that they were now on a general agency contract as sole age ncy contracts provide that the Licensees advertise at no cost to the vendors either in the Property Guide or Property Press.

3.6 The Complainants say that after 29 November 2012 the Licensees did not advertise for two weeks in the Local Advertiser and this resulted in a period of 21 days without any advertising for the Property. They say that in the previous three months whilst they were o n a sole agency contract the Property was advertised every week in the Local Advertiser. This lack of advertising led them to believe they were on a general agency contract.

3.7 The Complainants say that it wasn’t until 13 December 2012 when they emailed the Agency advising that they wished to take the house off the market that they were told the y were still on a sole agency contract.

3.8 The Licensees claim in response that at no time did the Complainants indicate to them that they wanted to move to a general agency. They say that towards the end of the first sole agency contract period they organi sed two meetings with the Complainant ’s both of whi ch the Complainant’s cancelled. They concede that that may have indicated a hesitancy on the part of the Complainants but say that at no time did they indicate wanting to transfer to a gen eral agency and neither of the Complainants questioned as to what they were signing when the y extended the listing contract on 28 November 2012.

3.9 They say that they follow standard scripts and dialogues when they extend an exclusive listing which includes a request for verbal acknowledgement of the changes to the listing. In this case the two key points were the change of dates and confirming the conditions of the original listing w ere to remain the same. They say that they gave the vendors a chance to read through the documents and confirm their understanding of them and of the discussion at that time , and that the Complainant looked at the document and verbally acknowledge d they understood it and then signed the listing form together.

3.10 The Licensees indicate that the Agency’s listing extension form clearly states that it is an extension of the existing authority of 30 August 2012.

3.11 This threshold has been considered by the Disciplinary Tribunal in its decision: Hodgson v CAC & Arnold [2011] READT03. In that decision the Disciplinary Tribunal said that the onus to establ ish a complaint rests with the complainant. The consequence of this is that unless we are able to form a view that what the complainant alleges is more likely than not what happened, or if we believe that the conduct complained of does not reach the threshold set out in section 72 of the act, we must dismiss the complaint.

3.12 The Licensees say that it should have been clear to the Complainants that they were signing an extension of the sole agency as there was no need for them to come into the office and sign a document if the listing was simply moving to a general listing. They say that nowhere in the form are the words “general listing ”.

3.13 Although the Committee accepts that there is no wording on the document saying that it is a general listing there is also no wording saying that it is an extension of a sole agency. We are strongly of the view that in terms of best practice this whole problem would have been avoided if the document had been clearer as to exactly what was being signed. We believe that with the general movement to a consumer focus that licensees would be well advised to adopt clearer plain English language that avoids any misunderstanding about the purpose of the document.

3.14 Notwithstanding these comments after analysing the facts and evidence in this case we do not find any evidence to suggest that the Licensees acted improperly or delibe rately intended to mislead the Complainants and because of that will be taking no further action under this part of the complaint.

3.15 The second part of the complaint is that the Complainants do not believe the Licensees were acting in their best interests. They elaborate on this by saying that in a sole agency contract the Licensees were required to advertise in the Property Press but did not do so.

3.16 The Licensees response to this is that before they continue on with any sort of free advertising they must have the sole agency agreement signed . It took a while for this to occur. They also say that the normal allocation for free advertising in the Local Advertiser is for two or three spots per month and that the advertising for the Complainants property exceeded this number on all of the three months of the listing.

3.17 The Licensees say that they missed the deadlines for the Local Advertiser because of the uncertainty of whether the Complainants were going to extend the sole agency or not. After full consideration of the evidence we accept this as a valid explanation.

3.18 In light of the above conclusions w e have determined to take no further action under this complaint.

4. Decision

4.1. After conducting an inquiry into the complaint, pursuant to section 89(1) of the Real Estate Agents Act 2008 (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 mater ial before it.

4.2. 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.

5. Publication

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

5.2. 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 and that it is in the public interest that the decision be published.

5.3. 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.

5.4. 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) .

6. Right of Appeal

6.1. 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.

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

Appeal.

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

Signed

Stuart Rose

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 19 June 2013