Complaint No COO490 [2013] NZREAA 176 (6 September 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: COO490

In the Matter of Licensee

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 6th day of September 2013

Complaints Assessment Committee: CAC20002

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

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 holds an agent’s license and is working for The Agency.

1.2 The complaint is about the conduct of the Licensee in 2004 in relation to the purchase of 10 apartments and 10 car parks in the Property. Specifically:

• At no time did the Licensee mention, let alone recommend the standard LIM report. The Licensee must have known about Property Two and colluded to secure buyers from abroad who would not know about the problem and the blighted units might even be unsalable.

• Criminal non-disclosure

• Multiple conspiracy to defraud

• Multiple criminal misrepresentation

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

12 March 2013 and made a decision to inquire into it.

1.4 The Committee invited the Licensee to provide a response to the complaint which was received in April 2013 via his legal advisor. In addition the Licensee provided an Affidavit dated 23 April

2013 together with copies of listing agreements and the front page of sale and purchase agreements. These materials were provided to the Complainant who responded by email on 10

July 2013.

1.5 Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered again by the Committee on 16 August 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 is an overseas investor who, following a visit to New Zealand for the first time in October 2004 when he was shown the intended position of the property and after meeting with the Licensee who he claims said that they were to have ‘million dollar views” purchased 10 apartments and 10 car parks in the property development. The Complainant claims he was not

advised to get a LIM report by either the Licensee or his legal advisor. (The Committee notes that the Complainant has lodged a complaint with the New Zealand Law Society against his legal advisor on this matter.)

2.2 In 2005 construction of the Property Two began on the neighbouring site. They impaired the view of the Property One apartments. The Complainant claims that the Owner of Property One had knowledge of the intended Property Two construction, as the Owner had taken civil proceedings against the Owner of Property Two in 2003 to prevent consent being granted.

2.3 The Complainant moved with his family to New Zealand in 2007, bringing with him £2 million.

This coincided with the completion of Property One’s apartments. When he visited the finished apartments he states that he was “horrified” to see the impact of Property Two’s apartments on his apartments.

2.4 The Complainant believes that there was collusion between the Licensee, the Vendor and the vendor’s solicitors. He alleges that the Licensee did not recommend that he obtain a LIM report presumably because it would have disclosed the planned Property Two. The Licensee in response has said:

• It was not his practice in 2004 to recommend to purchasers that they obtain a LIM report

• He himself did not obtain a LIM when he purchased his 20 apartments in the same development as the Complainant
• The Solicitors for Wellington City Council have advised that no party obtained a LIM report in respect to the Property in 2004.
• It was the Vendor’s decision to delete the LIM condition in all sale and purchase agreements to be used by Purchasers. The Complainant did not seek to reinstate that condition.
  

3. Relevant Provisions

Because the complaint relates to a period prior to the commencement of the Real Estate Agents Act 2008; it was necessary for the CAC to satisfy itself that it had the authority to consider this complaint.

Section 172 of the Real Estate Agents Act 2008 is applicable in this situation.

Section 172 Allegations about conduct before commencement of this section

3.1 A Complaint Assessment Committee may consider a complaint, and the Tribunal may hear a charge, against a licensee or a former licensee in respect of conduct alleged to have occurred before the commencement of this section but only if the Committee or the Tribunal is satisfied that,-

(a) at the time of the occurrence of the conduct, the licensee or former licensee was licensed or approved under the Real Estate Agents Act 1976 and could have been complained about or charged under that Act in respect of that conduct; and

(b) the licensee or former licensee has not been dealt with under the Real Estate

Agents Act 1976 in respect of that conduct.

3.2 Having satisfied itself that it had the jurisdiction to examine the complaint the CAC examined the

information supplied by the Complainant in his written complaint to determine whether section

72 or section 73 of the Real Estate Agents Act 2008 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)

3.3 The Committee examined the information supplied by the Complainant in his 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 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.

3.4 Section 80 Decision to take no further action on complaint

(1) A Committee may, at its discretion, decide to take no action or, as the case may require, no further action on any complaint if, in the opinion of the Committee, (a) the length of time that has elapsed between the date when the subject matter of the complaint arose and the date when the complaint was made is such that an investigation of

the complaint is no longer practicable or desirable; or (b) the subject matter is inconsequential.

4. Discussion

4.1 The Committee, whilst recognising that the complaint relates to conduct of the Licensee which occurred from October 2002 onwards and prior to the introduction of the Real Estate Agents Act

2008, has considered the information supplied in order to form a view as to whether the actions

by the Licensee could be viewed as unsatisfactory conduct or misconduct.

4.2 The Committee also considered whether in terms of section 80 (1) of the Act it would be appropriate for the Committee to conclude that “the length of time that has elapsed between the date of the subject matter is such that an investigation of the complaint is no longer practicable or desirable.”

4.3 In reaching a conclusion on this issue the Committee took into account the following factors:

• There is scant documentation available on which it can form a view and in fact the Complainant offers no evidence in support of the allegation that the Licensee and XXXXXXX’s Solicitors were in some sort of collusion, and actively trying to attract overseas investors to buying apartments in Property One who would be ignorant of the Property Two threat. Indeed if there was any duplicity between the three at the time the Committee concluded that, in the absence of any documentary evidence and relying purely on the recall of the parties, it would be extremely difficult to prove that some nine years later.

• Because of this paucity of evidence/documentation the Committee in its deliberations has considered the following factors;

1. The Complainant raised these allegations against the Licensee through his solicitor in 2007 but despite the Licensee offering through his legal advisor to engage in mediation or negotiation at that time this offer was not responded to by the Complainant. For whatever reason the Complainant did not pursue this matter until 2013 when he filed a complaint with the Authority.

2. The Complainant describes himself as a property investor/developer and in a letter to the NZ Police Commissioner he states “since 1995 by myself and with others, I have been a successful full time property investor/developer both in the UK and half a dozen countries abroad. In mid 2004 along with a business partner decided to purchase some property in Dubai.....”

3. The Committee would question why as an experienced international property investor he did not undertake his own due diligence and evaluation of properties he intended to acquire.

4. The Complainant has claimed that he suffered a loss, from purchasing the apartments, of some $1,000,000 to both he and his former business partner. He goes on to say that, because his partnership has since dissolved, he is only seeking $500,000 loss for himself leaving it to his former partner to pursue his share of the loss should he so desire. The Committee does not accept his claim on its face value as there is no evidence to show that the Complainant completed the purchase. In fact in his email to the Authority on 12 June 2013 the Complainant admits that “once I discovered the blight due to the development of Property Two in May 2007 this exacerbated the (then) pending

dispute with my former business partner, which directly resulted in the failure to settle”. Other than legal and other fees that the Complainant claims he has incurred, the only direct cost would seem to be a loss of 50% of deposits which is estimated to amount to a loss of $37,500.

5. The Licensee purchased and settled for 20 apartments which would support his

claim that he was not aware of Property Two and any adverse impact it might have on Property One.

6. The Committee notes that despite at least three requests to the Complainant (going back to mid April 2013) to supply (a) any marketing material for the apartments that he may have in his possession, (b) a signed copy of the Sale and Purchase agreement, and (c) notes of any legal advice he may have received at the time of purchase, nothing has been received.

7. The Licensee has supplied considerable material to support his defence of the complaints.

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 concluded that for the reasons listed in 4.3, including the length of time since the conduct occurred; it is neither practical nor equitable to all parties to make a determination on the complaints made by the Complainant. Accordingly it has determined that it will, as provided for in section 80(1) of the Act, take no further action in regard to these complaints on the basis that “the length of time that has elapsed between the dates of the subject matter is such that an investigation of the complaint is no longer practicable or desirable.”

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 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.

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

Patrick Waite

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 6th September 2013