Complaint No C00983 [2013] NZREAA 125 (28 June 2013)

Last Updated: 4 May 2014

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

And

In the Matter of Complaint No: C00983

In the Matter of Licensee

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 28th 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

1.1 The Complainant has complained to the Real Estate Agents Authority (the Authority) about the conduct of the Licensee. The Licensee is licensed under the Real Estate Agents Act 2008 (the Act). He is a licensed salesperson and works for the Agency.

1.2 The Complainant purchased a section. The Complainant alleges that the Licensee did not present his offer to purchase the Property to the Vendors in a timely manner and also that the Licensee lied to him regarding the existence of another potential purchaser for the Property in an effort to get him to increase his offer above the vendors asking price.

1.3 The complaint was received by the Authority on 1 March 2013 and referred to a Complaints

Assessment Committee (the Committee). The Committee considered the complaint on 11 April

2013 and again on 13 June 2013 and now issues its decision in this matter.

2. Material Facts

2.1 On 20 February 2013 at around midday, the Complainant’s wife completed a sale and purchase agreement in writing offering the Vendors of the Property their asking price, in an offer that was subject only to their solicitor’s approval. On receipt of this offer the Licensee informed them that before presenting the offer he would wait until 4 pm that day to give another interested party time to submit an offer on the Property.

2.2 At 2:41 p.m. on that day the Licensee phoned the Complainant’s wife to inform them that the other party would be making an offer and in light of that did they want to change their offer. Around this time the Licensee gave the Complainants signed offer to fellow a licensee, Licensee 2.

2.3 At around 5 p.m. on that day Licensee 2 who was the co–listing agent had an appointment with another prospective purchaser who was interested in the Property.

2.4 At 6:20 p.m. on that day the Licensee phoned the Complainant to give an update and to advise that he was waiting for the offer from the third interested party, which was coming from another agent.

2.5 At 6:30 p.m. on that day the Licensee phoned the Complainant to advise that the third potential purchasers would not be placing an offer on the Property, as they were now interested in another section (Property 2). The Licensee advised the Complainant that his offer had been put to the Vendors and was likely to be accepted the next day.

3. Relevant Provisions

3.1 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 Act.

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.

3.2 When a 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 Agents 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.

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

9.4 A Licensee must communicate regularly and in a timely manner and keep the client well

informed of matters relevant to the client’s interest.

4. Discussion

4.1 The first part of the complaint is the allegation that the Licensee failed to present what the Complainant refers to as their “unconditional acceptance of the vendor’s offer of sale” to them in a timely manner as required by Rule 9.4 - “A licensee must communicate regularly and in a timely manner and keep the client well-informed of matters relevant to the client’s interest”. The Complainant believes that this action prevented the vendors accepting the offer of sale on the day that they offered to purchase the Property.

4.2 The second part of complaint is that the Licensee deliberately lied to the Complainant in claiming that another offer was being made on the Property, which they say they had already agreed to purchase, and that he then tried to manipulate them into offering more than the asking price when they had already done so and when they had already indicated that they wished to accept the vendors offer of sale unconditionally.

4.3 We note that the Complainant seems to be confused about how the law of contract operates. The law of contract requires an offer and acceptance of that offer, with consideration, and an intention to create legal relations. It is often confusing to the public to find that a Vendors marketing of a property for sale at a particular price is not their making an offer for the property which is capable of acceptance and thus creating a contract. The law of contract regards the Vendors advertising of the property as what is known as an “invitation to treat”. Because of that the Complainant's making of an offer on the Property at the asking price did not conclude the contract. It was instead the first step of an offer to purchase made to the vendor of the Property that is capable of the vendors acceptance (or otherwise), and thus creating a contract.

4.4 We now need to consider the delay between the making of the Complainant's offer and the presenting of that offer to the Vendors. Mr M, the manager of the building company has supplied a supporting statement for the licensee which says "Mr and Mrs L wanted to put an offer on Lot 18 [the Property]. On the morning of the 20th of February I called Mr P to arrange a meeting at our show home with Mr and Mrs L and Mr P. Mr P informed that Mr and Mrs L there was an offer coming in from another buyer as well and that Mr and Mrs L’s offer would be in competition with that offer. Mr P and Mr L decided to meet with Mrs L later in the day to put an offer on Lot 18. Mr L indicated that he would pay more than the asking price for Lot 18 to secure it if needed." We have a copy of an agreement for sale and purchase which was drawn up for the Property by Mr P for this purpose which shows a purchase price of $175,000 when the asking price was $170,000.

4.5 Ms M in her statement of support for the Licensee says that “The Licensee acted absolutely correctly by starting the process of multi-office situation. He would have been derelict of his duty if he had not done so”.

4.6 There is no dispute that the Licensee approached the Complainant to advise him there was another offer about to be made on the Property. The question for the Committee is whether that advice was premature as that offer had not, at that stage, been made, and when, if at all, what is known in the industry is a multi-offer document should have been prepared.

4.7 Mr L, who was the person also interested in the Property, said that in the final event they never made an offer on the Property as they were told by Mr P when he came to meet them at their home later on the night of the 20th February that it was already sold.

4.8 In the execution of their duties Licensees often have to balance a number of competing interests between Vendors and Purchasers and indeed their own interests. A multi-offer situation or a potential multi-office situation is one of these occasions. Licensees can be criticised for not advising potential purchases that they are in a multi-office situation if they then miss out on a property due to a higher or better offer, and likewise as in this case can be potentially in trouble if they advise of a possible competing purchaser which does not eventuate, as the purchaser can quite rightly feel that they have been mislead into increasing their offer unnecessarily. Exactly how this situation is handled is normally part of office policy and can differ from agency to agency. . We must decide if what actually occurred was in breach of the Act or the Rules.

4.9 In reaching a decision and making a finding on a complaint the Committee has to look carefully at the evidence before it and then come to its decision based on its assessment of what we believe is more likely than not to have occurred or in other words on what we see as the balance of probabilities in this case.

4.10 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 establish 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.

4.11 After our review of the evidence is clear to the Committee that the competing purchaser was not fictitious or made up in an effort to push the Complainant to a higher offer price for the Property. What actually happened appears to have been exacerbated by the fact that there were two licensees involved in the sale of the Property and the difficulties encountered here were possibly due to communication issues between them.

4.12 After consideration of all the evidence before us we accept the Licensee’s explanation of what happened and although, with the benefit of hindsight, matters no doubt could have been handled better, we do not believe that the Licensee has reached the threshold of unsatisfactory conduct as required by the Act and have therefore decided to take no further action in relation to this complaint.

5. Decision

5.1 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 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 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.

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 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: 28 June 2013