Nam - Complaint No CB6984632 [2013] NZREAA 172 (11 June 2013)

Last Updated: 1 June 2014

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

And

In the Matter of Complaint No: CB6984632

In the Matter of John Nam

License Number: 10052544

Decision of Complaints Assessment Committee

Dated this 11th day of June 2013

Complaints Assessment Committee: CAC20002

Chairperson: Patrick Waite Deputy Chairperson: Deirdre McNabb Panel Member: Barrie Barnes

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 Mr. John Nam (the Licensee). The Licensee is licensed under the Real Estate Agents Act

2008 (the Act). He holds a salesperson’s license and is employed by James Law Realty Limited (the

Agency) as a licensed salesperson.

1.2. The complaint is about the conduct of the Licensee in relation to advertising her properties for sale.

The properties include her home, several apartments and a Health and Wellbeing Centre. She alleges that there were no listing agreements for the properties, no agreement about the sale price for each property and in addition the advertised asking price was much lower than expected. The Complainant says that this impacted the price she could get for the properties.

1.3. The Authority referred the complaint to the Complaints Assessment Committee (the Committee).

Pursuant to section 79(1) of the Act, the Committee considered the complaint on 31 October 2013 and made a decision to inquire into it.

1.4. The Committee invited the Licensee to provide a response to the complaint and this was received on 11 February 2013. The Complainant who was invited to respond to the Licensee’s response provided a copy of a court document: “Answers to interrogatories by the Complainant” which relates to a civil dispute over the sale of the home to X Developments. In addition the Complainant was interviewed by the Authority’s investigator on 19 April 2013. Her niece Ms S was present at the interview together with a business associate.

1.5. Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered by the Committee on 3 May 2013.

1.6. The hearing was conducted on the papers pursuant to section 90(2) of the Act and the Committee made its determination on the basis of the written material before it.

2. Material Facts

2.1. The Complainant retained the Licensee as her real estate agent when listing her properties for sale.

The properties include her home, several apartments and Health and Wellness Centre.

2.2. The Complainant maintains that she did not sign an Agency Agreement for her home although a General Agreement to Sell/Lease dated 18 November 2011 was provided by the Licensee which had been signed by Ms S, the Complainant’s niece. The Licensee believed from previous dealings with her that Ms S had authority to sign such documents for the Complainant. In an interview on 19 April

2013 with the Authority’s investigator, Ms S acknowledged that she did sign the Agency Agreement

but she said that she did not have a Power of Attorney to do so. This was apparently not known by the Licensee.

2.3. The Committee noted that Ms S had acknowledged in the Agreement that she had received an

REAA Approved Guide although when questioned at the interview on 19 April 2013 she advised that she can’t recall receiving it.

2.4. The Licensee received an offer for the home which was countersigned by the Complainant. The purchaser declined to go further with this agreement apparently due to water tightness issues.

2.5. The Licensee states that he was advised by the Complainant that he could continue to market the property as long as he got $580,000 so he advertised the property at $600,000 on Trade Me. The Licensee received a second offer for $560,000 on 3 January 2012. Despite this being lower than what the Complainant had said she wanted for the property she accepted this offer. The Complainant negotiated a commission of $5,000 on the sale of the property with the Licensee. When the Complainant returned from overseas a few days later she had changed her mind about selling pursuant to this contract and attempted to cancel the contract. This is now the subject of a Civil Court hearing.

2.6. The Complainant alleges that the Licensee advertised the apartments she owns without her approval and that he copied photographs from many different apartments from her website. The Licensee has provided a copy of a General Agreement to Sell dated 15 August 2011. The Complainant acknowledges that she had signed the general agreement and that she had provided the price of the apartment as well as a list that had the Body Corporate levies for each unit. The Complainant maintains that this Agency Authority was not for New Zealand but for a marketing programme overseas. The Committee notes that there is no restriction listed in the Agreement to that affect. The address supplied in the General Agreement is of the whole apartment building which houses over 30 floors of apartments. The Complainant owns some 40 apartments in the complex.

2.7. The Licensee advises that the Complainant gave him permission to use photographs from the website and also permission to either sell or lease apartment X. The Complainant has said that she was renting out that apartment, she had no intention of selling it and that the original Agency Agreement was for the properties to be sold at a business exhibition where she advertised her apartments for sale to a certain culture.

2.8. The Licensee has acknowledged that he had not provided a Current Market Appraisal (CMA) for either of the properties (home and apartment x).

3. Relevant Provisions

3.1 The Committee examined the information supplied by the Complainant in her written complaint to determine whether section 72 or section 73 of the Real Estate Agents Act 2008 (the Act) applied i.e. was there evidence which would indicate that the Licensee could be considered guilty of unsatisfactory conduct (section 72) or misconduct (section 73).

Section 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 of 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 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.

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

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

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.

9.5 An appraisal of land or a business must be provided in writing to a client by a licensee; must realistically reflect current market conditions; and must be supported by comparable information on sales of similar land in similar locations or businesses.

4. Discussion

4.1. At the core of the complaint is the allegation from the Complainant that the Licensee did not discuss with her or have approval from her home at a price as low as $600,000. In addition to the Licensee not having the authority to sell the property the Complainant alleges that she was, in fact, bullied by the Licensee into selling the property so cheaply due to the fact that she was led to believe that it was a dangerous building and had water tightness issues which she now disputes.

4.2. The chronology shows that on 18 November 2011, the Licensee had the Authority to List signed by the Vendor’s associate, Ms S, on behalf of the Vendor (Complainant) who was overseas. The Complainant was well known to the Licensee as he had had dealings with her earlier in August in relation to the sale of her units in the apartment block. It was his understanding that Ms S, the Vendor’s niece, had signing authority. Ms S has admitted that she did not.

4.3. The Licensee, in a signed statement dated 19 June 2012, affirms that the Complainant had organized on previous occasions for Ms S to sign documents on her behalf and he had been told by the Complainant that Ms S was her agent when she was away. On this basis it would seem to the Committee that is not unreasonable for the Licensee to make the assumption that Ms S had the authority to sign on behalf of the Complainant.

4.4. The Licensee states “In November 2011 the Complainant telephoned me, requesting James Law Realty to list her property. I visited the Complainant’s apartment office with a James Law Realty general listing agreement to sell her home. I provided the form to the Complainant’s niece. In my presence, Ms S telephoned and spoke to the Complainant then Ms S signed it and returned it to me. The form is dated 18 November 2011.”

4.5. At the request of the Complainant who he says told him that a neighboring property was sold for

$575,000 o/a weather tightness problems, the Licensee did a check with RPNZ for the value of the neighboring properties.

4.6. He admits that he did not provide a complete CMA for the home which is in breach of Rule 9.5 of the Professional Conduct and Client Care Rules and has not supplied the Committee with an explanation as to why he didn’t.

4.7. The Complainant states that the Licensee advised her that her property was in a dangerous condition and that it had water tightness issues. She says that he could not have known about the water tightness issues because the bedroom which clearly has serious damp problems was not opened up until the contract was signed.

4.8. The Licensee has provided a copy of an email to the Complainant dated 31 December 2011 which advised that 10 people had viewed the property but no definite offer has come out. He stated in his email: “It seems that everyone is worried about the damage inside part of the building, and structural damage make reasons to worry about everyone. If there is a problem with the structure, then need to build a new house in this case. Need to report to the City Council and apply for a CC which will cost too high. Here a developer has made an offer. Settlement 29 February. Please check and confirm.”

4.9. Two offers were received for the property, the first did not proceed as the purchaser became concerned at water tightness issues but the second for $560,000 was accepted by the Complainant. In this regard the Committee questions why an experienced property developer/trader such as the Complainant would agree to countersign an offer if she was not happy with it, without being certain that this is what she wanted to do. The Complainant did in fact change her mind after the contract was agreed and is now facing legal action from the purchaser.

4.10. During a meeting with the Authority’s investigator the Complainant was adamant that the Licensee had added a clause onto the Sale and Purchase Agreement after she had fully signed the document and that clause had not been signed by her. She provided a copy of the Sale and Purchase Agreement which does not show this clause. However the Licensee provided a copy of the Sale and Purchase Agreement with this additional clause added at number 20 and which had been signed by the Complainant. The clause states: ‘the vendor agrees to allow the purchaser and their contractors to work on the outside’, and crossed out is ‘and inside’ of the house, after unconditional date.”

4.11. The Complainant has alleged that the Licensee advertised the apartments on the internet site, Trade

Me, at a lower price and that he took photographs from the website without permission.

4.12. The Committee noted that there is a Listing Authority signed by the Complainant on 15 August 2011 which the Licensee maintains was his authority to sell these properties. The Complainant however maintains that she signed this authority to allow the Licensee to sell her properties in a different country and that the list of prices she gave him were for that purpose only. The Committee reviewed the Authority signed by the Complainant which has no specific clauses in it relating to the sales being overseas only in which certainly, at least in terms of the document itself does not support the Complainant’s assertion that she gave authority to sell the apartments.

4.13. The Licensee states that she gave him permission to use photographs from the website and also permission to either sell or lease the apartment X whilst the Complainant advises that she had no intention of selling any of the apartments in New Zealand as she did not want people in New Zealand or her bank manager to know that she was selling her apartments.

4.14. The Complainant’s response is rather contradicted by the fact that on 2 February 2012 she countersigned an offer on one of the apartments. The Licensee says that he was instructed to sell the apartments for $295,000 and he got an offer at $280,000 but the Complainant countersigned at

$388,000 which was more than the asking price. When he challenged her on that she told him that she wanted to get more than $295,000.

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 come to the conclusion that on the balance of possibilities, it is satisfied that the Complainant was fully aware of what she was doing at all stages of the transactions including giving authority to her niece to sign the Listing Agreement for the home and subsequent acceptance of an offer on the property including negotiating a set commission with the Licensee for the sale. In relation to the apartments whilst the Complainant may have believed that she wanted the apartments only to be marketed overseas it is clear to the Committee that the Licensee has acted in the belief that he had the authority to sell the apartments in New Zealand, this belief is supported by the Complainant’s actions in countersigning an offer she received through the Licensee from a buyer in New Zealand for one of the apartments.

5.3. The Committee is concerned however that the Licensee failed to provide the Complainant with a complete Current Market Appraisal which is in direct breach of s.9.5 of the Professional Conduct and Client Care Rules and accordingly in relation to this specific failure the Committee has determined under section 89(2)(b) of the Act that it has been proved, on the balance of probabilities, that Mr. John Nam has engaged in unsatisfactory conduct.

6. Orders

6.1. The Committee will conduct a separate hearing on the papers to decide what orders, if any, should be made under section 93 of the Act.

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 apologize 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.

6.2. The Committee requires the Case Manager to obtain a record of any previous disciplinary decision in respect of the Licensee under either the Real Estate Agents Act 1976 or the Act, if any such decision exists, and provide it to the Committee, the Licensee and the Complainant.

6.3. The Licensee and the Complainant may file submissions on what orders, if any should be made. The Complainant may file a submission within 10 working days from the date of the decision. The Committee directs that such a submission from the Complainant is limited to aspects to do with the Listing Agreement only. This submission, if any, will then be provided to the Licensee, with a timeframe for filing final submissions.

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. The Committee has deferred making any decision on publication until its hearing to decide what orders, if any, should be made.

8. Right of Appeal

8.1. A person affected by a determination of a Complaints Assessment Committee may appeal by way of written notice to the Real Estate Agents Disciplinary Tribunal (the Tribunal) against a determination of the Committee and must do so within 20 working days from the date of the determination.

8.2. The Committee considers that the 20 working day appeal period does not commence until it has finally determined this complaint by deciding what orders should be made, if any.

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

Signed

Patrick Waite

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 11th June 2013