Complaint No C00953 [2013] NZREAA 139 (19 July 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: C00953

In the Matter of Licensee

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 19th day of July 2013

Complaints Assessment Committee: CAC20007

Chairperson: Ann Skelton Deputy Chairperson: Paul Biddington Panel Member: Joan Harnett-Kindley

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. The Complainants have 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 (Act). He holds a Branch Manager licence and works for the Agency. There is also a parallel complaint about the conduct of the Agency and its supervision of the Licensee.

1.2. The Complainants allege that the Licensee knew of information relating to a suicide at the Property but withheld that information. The Complainants allege that the Licensee has breached his obligations of disclosure to them and as a result they have suffered a financial loss by way of a decrease in the value of the Property.

1.3. The complaint was received by the Authority on 28 February 2013 and referred to a Complaints

Assessment Committee (Committee). The Committee considered the complaint on 27 March

2013 and made a decision pursuant to section 79(1) of the Act to inquire into the complaint. The Committee met again on 10 June 2013 to consider further evidence provided and to decide whether the Licensee’s alleged conduct:

a. Amounted to Unsatisfactory Conduct (section 72 of the Act) or Misconduct (section 73 of the Act) or neither

b. Breached Rules 6.2, 6.4 of the Real Estate Agents Act (Professional Conduct and Client

Care) Rules 2009.

2. Material Facts

2.1. On 21 January 2012 the Complainants entered into an agreement to purchase the Property. The

Complainants understood that the Property was vacant but had formerly been tenanted.

2.2. The Complainants submitted that they were uneasy in the Property after moving in and felt it was “dark and felt sad and depressing”. Five months after taking possession the Complainants put the Property back on the market and subsequently entered into an unconditional sale. After the ‘sold’ sign went up at the Property, a neighbour inquired whether they had re-sold so quickly because of the suicide. The Complainants were unaware of any suicide. The neighbour indicated that he had discussed the suicide with the Licensee yet the Complainant’s submitted that the Licensee had not mentioned anything to the Complainants.

2.3. After receiving this information the Complainants then consulted their own selling agent, his manager and their agency’s lawyer as to whether they should disclose the fact of the suicide to these subsequent purchasers. It was agreed that the purchasers should be informed. Prior to settlement, once informed of the suicide, the purchasers re-listed the Property for sale as they did not want to move into the Property. The Complainants stated that they had no proof at that stage that the Licensee had known of the suicide, only what the neighbour had told them.

2.4. On 21 February 2013 the Complainants dealt with a letting agent from Century 21 regarding a

rental property. The letting agent turned out to the same letting agent who was managing the Property when the suicide took place. The Complainants then spoke to the Branch Manager of another Agency. Mrs E told the Complainants that about 12 months after the suicide the Vendor placed the Property on the market through them, while it was still tenanted. Mrs E stated that her Agency disclosed the matter of the suicide to all prospective purchasers. They were unable to sell the Property.

2.5. On 2 December 2011 the other Agency and the Agency became joint listing agents. According to Mrs E, she told the Licensee that a former tenant had committed suicide in the Property. Then again, about two weeks later, Mrs E stated that she personally visited Mr S of the Agency, who stated that he would speak with the Licensee about it.

2.6. Mr S evidence was that he then had a discussion with the Director of the Agency, and they decided there was no requirement to disclose the suicide to prospective purchasers.

2.7. According to the Licensee, once Mrs E told him of the suicide, he sought guidance from his manager. Mr S apparently advised him that the family continued to live in the Property for over a year after the suicide and that as enough time had elapsed there was no need to disclose the suicide to the Complainants or any other prospective purchasers.

2.8. Mr S confirmed both the Licensee’s and Mrs E’s evidence. Mr S also confirmed that he sought advice from the Principal and they did not refer the query to the Authority but decided that the suicide did not need to be disclosed.

2.9. Both the Principal and Customer Relations Manager for the Agency provided statements to the Committee. The Customer Relations Manager referred to Rule 6.4 of the Rules (set out below) and submitted that the Rule only contemplated disclosures relating to information relating to the land such as boundary issues and the condition of the land, rather than defects or matters relating to people occupying the property. He distinguished a matter that related to the personal matters of the people occupying the property and did not see the suicide as a matter that needed to be disclosed.

2.10. The Principal’s evidence was in line with the Customer Relations Manager’s evidence. The Principal added that in making the decision whether to disclose the suicide, they had to weigh the tenant’s right to privacy against the purchasers’ right to know such information. He submitted that he would like to think that the fact that such disclosures make a property harder to sell was not a factor in their decision whether to disclose the suicide or not.

3. Relevant Provisions

3.1. 3.1 A complaint can only be made in relation to alleged unsatisfactory conduct (section 72 of the Act) or alleged misconduct (section 73 of the Act).

3.2. 3.2 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.

3.3. 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 willful 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.

3.4. The Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 (the Rules) set out the standard 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 an exhaustive list, they set minimum standards that licensees must observe and a reference point for discipline.

3.5. In relation to this complaint the following Rules may apply:

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

Rule 6.3: A licensee must not engage in any conduct likely to bring the industry into disrepute.

Rules 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.

4. Discussion

4.1. The Committee accepts the Licensee’s evidence that he was aware of the suicide at the Property at the time he was marketing it. The Committee also accepts that the Licensee consulted his Branch Manager as to what was the best approach to take in relation to this information.

4.2. The Committee finds that the Licensee did all he could in discharging his obligations under Rule

6.4 by checking with his supervisor and then following that advice. The Committee does not find any breach of the Rules or Act by the Licensee in this matter.

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.

6.1. 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.

6.2. 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 their company, and any third parties in the publication of its decision.

6.3. The Authority will publish the Committee’s decision after the appeal period has ended. Any application for an order preventing publication must be made to the Disciplinary Tribunal.

7. Right of Appeal

7.1. A person affected by a determination of a Committee may appeal to the Disciplinary 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

Ann Skelton

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 19 July 2013