Complaint No CB7020317 [2013] NZREAA 160 (20 August 2013)

Last Updated: 1 June 2014

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

And

In the Matter of Complaint No: CB7198976

In the Matter of Bijay Prakash

Licence Number: 10007073

Decision of Complaints Assessment Committee

Dated this 20th day of August 2013

Complaints Assessment Committee: CAC20005

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

Complaints Assessment Committee

Decision finding unsatisfactory conduct

1. The Complaint

1.1 The Complainant has complained to the Real Estate Agents Authority (the Authority) about the conduct of Bijay Prakash (the Licensee). The Licensee is licensed under the Real Estate Agents Act

2008 (the Act). He holds a salespersons licence and at the time of the alleged conduct was working for Robert Wong, trading as Able Realty One (the Agency).

1.2 The Complainant maintains that the Licensee offered two Properties for sale, without a valid listing authority.

1.3 The Complainant maintains that the Licensee misled him by purporting to be acting on behalf of a

‘Franchise Group A’ real estate office, when in fact the Licensee worked for the Agency, a firm no

longer associated with Franchise Group A.

1.4 The Complainant maintains that the Licensee drafted two sale and purchase agreements, negotiated two sales contracts and collected a deposit made out to a trust account, without referring any documentation back to the Licensee’s real estate office.

1.5 The Complainant believes that the Licensee failed to disclose a close personal relationship with the

Prospective Purchaser.

1.6 The complaint was received by the Real Estate Agents Authority (the Authority) on 26 November

2012 and referred to a Complaints Assessment Committee (the Committee). The Committee considered the complaint on 14 December 2012 and received and considered an investigation report on 25 July 2013.

2. Material Facts

2.1 On or about December 2010, ‘Franchise Group A: Able Realty’ began trading as ‘Able Realty One’

having ceased to be a member of the cooperative.

2.2 On 3 July 2012, the Complainant, on behalf of his company, listed a third property for sale with the Licensee and the Agency. The listing authority, as supplied by the Licensee, shows a title Franchise Group A struck out, leaving ‘Able Realty’ noted as the listing agent.

2.3 Whilst marketing Property 3, the Licensee was introduced to the Properties by the Complainant and invited to seek potential purchasers for them.

2.4 In early September 2012, the Licensee, having identified a prospective buyer, contacted the Complainant in order to list and sell the Properties. Despite failing to obtain a listing authority, the Licensee disclosed the address of the Properties to the prospective buyer.

2.5 When the Prospective Buyer indicated an interest in purchasing the Properties, the Licensee made further contact with the Complainant in order to gain a listing authority and access.

2.6 The Complainant refused to list the Properties or arrange viewing without an offer in writing from the Prospective Buyer.

2.7 Agreements for sale and purchase were drafted by the Licensee and signed by both the Prospective Purchaser and the Complainant on 12 September 2012. The purchase price was $235,000 and settlement set for 28 September 2012, on both contracts.

2.8 The Prospective Purchaser added a ‘subject to inspection’ condition, into both contracts. The additional terms were not initialed by the Complainant, therefore leaving the agreements incomplete.

2.9 On 17 September 2012 the Complainant, Licensee and the Prospective Purchaser viewed the

Properties.

2.10 In a letter to the Licensee on 18 September 2012, the Prospective Purchaser declared the contract at an end due to her dissatisfaction with the property inspections.

3. Discussion

3.1 The Licensee maintains that from the outset, the Complainant wished for all transactions to be off

the record and ‘out side’ of the office in order to save commission.

3.2 The Licensee claims that the Complainant played on their previous professional relationship, having worked together at the Agency in 2000, in order to convince the Licensee that a listing authority would be signed once a buyer was secured.

3.3 The Licensee has conceded to offering the Properties for sale, without a valid listing authority.

3.4 The Complainant maintains that he was misled into believing that the Licensee was representing

‘Franchise Group A: Branch B’. The Complainant has provided the Committee with a copy of a listing authority for one of the Properties, clearly showing the agent as ‘Franchise Group A: Able Realty’. The authority is unsigned.

3.5 The Licensee maintains that there has never been an agency named ‘Franchise Group A: Branch B’ and that the Complainant was well aware of this having working with the Licensee at ‘Franchise Group A: Able Realty’ in early 2000.

3.6 The Licensee does concede however, to providing the Complainant with a listing authority showing the Agency to be ‘Franchise Group A: Able Realty’ after failing to amend the form to read ‘Able Realty One’.

3.7 The Licensee maintains that the Complainant was still well aware of the Agency name change to

‘Able Realty One’ as he had listed Property 3 with the Licensee working under the Agency name on

3 July 2012.

3.8 By utilising out of date listing authority forms, that required amending in order to accurately describe the real estate agency, the Licensee has created the potential for confusion and accusations of misrepresentation. In this particular circumstance the Committee believes that, due to past employment with the Agency and prior dealings with the Licensee when listing Property 3, the Complainant was not confused and was well aware of the correct agency name and status. Listing authorities for the Properties were not signed by the Complainant.

3.9 The use of outdated and inaccurate forms cannot be considered good agency practice. Failure to correctly amend such forms, prior to signatures being obtained, may lead to charges of misrepresentation or agency activities being conducted on invalid authorities.

3.10 The Complainant maintains that the Licensee drafted two sale and purchase agreements, negotiated two sales contracts and collected a deposit made out to a trust account, without referring any documentation back to the Licensee’s real estate office.

3.11 The Complainant maintains that the agreements for sale and purchase were signed and dated by him and that the Licensee showed him a deposit cheque for $20,000 payable to his solicitor’s trust account.

3.12 The Licensee maintains that after the sale prices were agreed verbally between the Complainant and the Purchaser directly, the Complainant completed the sale and purchase agreement forms himself and signed and dated them.

3.13 The Licensee claims he then told the Complainant that the contracts would only be effective once the Purchaser had accepted them.

3.14 The Licensee maintains that when the Purchaser then added a subject to viewing clause, the Complainant declined to sign again until after a viewing and taken place. Presumable this is when the dates on the first page were struck out by the Licensee.

3.15 The Licensee maintains that nothing went back to the Agency office because there were no listing authorities to process and the agreements for sale and purchase were never completed, due to the Complainant declining to sign the final counter offer from the Purchaser and the Purchaser in any event deciding terminate her interest. The Licensee denies ever receiving a deposit.

3.16 Copies of the agreements for sale and purchase for the Properties, provided to the Committee by the Licensee, show the date on the first page deleted and a further term of sale initialed by the Purchaser only. This evidence supports the Licensee’s position.

3.17 We cannot determine if a cheque made out for $20,000 existed however the Licensee’s position is

supported by the Purchaser who has stated that no deposit was paid.

3.18 The Complainant believes that the Licensee failed to disclose a close personal relationship with the

Prospective Purchaser.

3.19 The Licensee denies that there was any prior relationship with the Purchaser and this position is supported by the Purchaser in a written statement to the Committee.

3.20 The Complainant maintains that at the point when both he and the Licensee assumed the agreements would be completed, the Licensee insisted on being paid $10,000 as a secret commission.

3.21 The Complainant has provided the Committee with a hand written note, apparently drafted by the

Licensee at the time and given to the Complainant to sign, that reads:

‘I owe you the sum of $10,000. Payment will be made as soon as my solicitors confirm latest by 18/9/12’

The note is unsigned.

3.22 The Complainant maintains that he refused to pay any money to the Licensee who in turn refused to provide copies of the sale and purchase agreements to either the Complainant or his solicitor.

3.23 The Licensee denies asking the Complainant for a secret commission and maintains that on several occasions the Complainant was asked to sign listing authorities in order to ratify the transactions and that the agreements themselves had ‘Able Realty One’ noted as the agent to whom any commission would be paid.

3.24 The Licensee does concede to writing the note regarding the payment of $10,000, as detailed in

3.21 above, but claims that the wording was dictated by the Complainant and the Licensee agreed to draft the note because in the end it might be the only evidence of a listing and a commitment by the Complainant to pay any commission if and when a sale occurred.

3.25 The Committee finds the note itself and the evidence regarding it from both Complainant and Licensee to be very irregular and on the evidence before us, we are unable to determine the veracity of either party’s version of events.

3.26 In the final analysis it seems to the Committee that

• The Licensee failed to obtain listing authorities for the Properties and offered them for sale in breach of the Act.
• The listing forms presented to the Complainant for signature, were out of date and did not show the correct agency details.

• An offer to purchase was made and sale and purchase agreements were drafted by the

Licensee but most likely were amended by the Complainant.

• The agreements were not completed due to the Complainant not signing acceptance of the

‘subject to viewing’ clause.

• No deposit was paid – although a cheque for the amount required may have been written out.

• There is no evidence to show that the Licensee had any prior relationship with the

Purchaser.

4. Relevant Provisions

4.1 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). 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 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.

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

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

9.16 A licensee must not advertise any land or business on terms that are different from those authorised by the client.

5. Orders

5.1 Section 93 provides:

93 Power of Committee to make orders

(1) If a Committee makes a determination under section 89(2)(b), the Committee may do 1 or more of the following:

(a) make an order censuring or reprimanding the licensee;

(b) order that all or some of the terms of an agreed settlement between the licensee

and the complainant are to have effect, by consent, as all or part of a final determination of the complaint;

(c) order that the licensee apologise to the complainant; (d) order that the licensee undergo training or education;

(e) order the licensee to reduce, cancel, or refund fees charged for work where that work is the subject of the complaint;

(f) order the licensee:

(i) to rectify, at his or her or its own expense, any error or omission; or

(ii) where it is not practicable to rectify the error or omission, to take steps to provide, at his or her or its own expense, relief, in whole or in part, from the consequences of the error or omission;

(g) order the licensee to pay to the Authority a fine not exceeding $10,000 in the case

of an individual or $20,000 in the case of a company;

(h) order the licensee, or the agent for whom the person complained about works, to make his or her business available for inspection or take advice in relation to management from persons specified in the order;

(i) order the licensee to pay the complainant any costs or expenses incurred in respect of the inquiry, investigation, or hearing by the Committee.

(2) An order under this section may be made on and subject to any terms and conditions that the Committee thinks fit.

6. Decision

6.1 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.

6.2 The Committee has determined under section 89(2)(b) of the Act that is has been proved, on the balance of probabilities, that Bijay Prakash has engaged in unsatisfactory conduct.

6.3 The Committee orders the following:

6.4 Licensee Bijay Prakash is to be censured under section 93(1)(a) of the Act.

6.5 The Licensee shall, within 20 working days of these orders, pay to The Authority the sum of $2,000 as a fine - under section 93(1)(g) of the Act.

6.6 Under the provisions of section 93(1)(d) of the Act, the licensee shall within one month of this order provide written confirmation of enrolment in the following national unit standard courses:

Standard ID 23135 – Demonstrate knowledge of the law of contract and the law of agency

Standard ID 26149 – Demonstrate knowledge of licensing and code of professional conduct under the Real Estate Agents Act 2008

In addition the licensee must provide written evidence to the Authority of having completed and passed the courses within 3 months of this decision.

The Licensee may choose any appropriate provider of the unit standard courses.

6.7 No other orders are considered necessary or appropriate.

7. Publication

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

7.2 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.

7.3 The Committee directs publication of its decision, but omitting the names and identifying details of the Complainant (including the address of the property), and any third parties in the publication of its decision. The name of the Licensee and the Company he/she works for should be published.

7.4 The Authority will publish the Committee’s decision after the period for filing an appeal has ended unless an application for an order preventing publication has been made to the Real Estate Agents Disciplinary Tribunal (Tribunal). Such an application can only be made as part of an appeal to that Tribunal. In order to ensure publication of the decision does not take place it is important that you serve a copy of your application on the Authority. Publication of the decision will not take place until the Tribunal has made a decision on the application.

8. Right of Appeal

8.1 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.

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

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

Signed

Chris Rogers

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 20 August 2013