Complaint No C01522 [2013] NZREAA 198 (26 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: C01522

In the Matter of The Licensee

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 26th day of September 2013

Complaints Assessment Committee: CAC20003

Chairperson: Marina Neylon Deputy Chairperson: Alison Wallis Panel Member: John Auld

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. This is a complaint made by the Complainant against Licensee One. Licensee One is a licensed salesperson under the Real Estate Agents Act 2008 engaged by the Agency in City A.

1.2. The complaint concerns comments made by Licensee One about the Complainant’s Property.

Specifically that;

• Licensee One spoke with Licensee Two from the Agency stating that she (Licensee Two)

should be aware that the Property “had huge issues with it”;

• Licensee One advised a potential buyer for the Property that “a previous contract fell over

after an adverse building report”.

1.3 The Complainant states that Licensee One’s comments were malicious and slanderous and that

she had no right to make them as she was not working as the Complainant’s agent.

1.4 The outcome sought by the Complainant is that Licensee One be censured for her “irresponsible actions”.

2. Material Facts

2.1. Licensee One has never been appointed to act as an agent for the Complainant.

2.2. The Property was first put onto the market by the Complainant in 2005. The initial asking price was $579,000.

2.3. The Property was marketed by various agencies on and off over the next eight years. The price had reduced to $499,000 by February 2013.

2.4. In mid-2012, the Property was being marketed by Agency L The advertising for the Property

stated “Solid Construction, Rock Solid Address”

2.5. Buyers (Mr & Mrs C) made an offer to purchase the Property that was conditional upon a satisfactory building inspection report. The report indicated that moisture testing should be undertaken. An invasive test of the framing timber was undertaken and this showed unsatisfactory moisture readings in certain areas of the Property. The agreement was terminated for this reason.

2.6. Mr & Mrs C viewed several properties in the area with Licensee One in 2012. During this time Licensee One and Mr & Mrs C discussed the building report they had undertaken on the Property. Licensee One states that this conversation was memorable because Mr & Mrs C were annoyed that the due diligence on the Property had cost them around $2000 and they wanted to know if there was any way to recoup this outlay.

2.7. Licensee One admits that in March 2013 she passed on the information about the “issues with the building” to Licensee Two with Agency L, whilst Licensee Two was showing the Property to a prospective customer.

2.8. Around this time Licensee One was marketing another property in the same street. That property had an asking price of $639,000.

2.9. A customer (Ms S) met Licensee One at her open home. Ms S then visited the open home at the Property on the same day. Ms S stated that she asked the Agency L salesperson if the Property “had any water leaking issues” and was assured by the agent that the owner was a retired building inspector who had fully checked the house and repaired a small wet area under the dining room window, but otherwise there were no issues with the Property.

2.10. Ms S spoke to Licensee One about what she had been told about the Property by Agency L the following day. Licensee One encouraged Ms S to make contact with Mr & Mrs C whom she said had a building inspection report on the Property which showed “major structural problems.” Ms S did not purchase the Property after that advice.

2.11. The Property was subsequently sold to another party in May 2013 for $470,000.

3. Relevant Provisions

Real Estate Agents Act 2008

S72 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.

Professional Conduct and Client Care Rules 2009

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

4. Discussion

4.1. The Committee determined to inquire into the complaint on 6 May 2013. Our investigation required a response from Licensee One to the issues raised by the Complainant.

4.2. The Complainant has suggested that in making the comments about the Property, Licensee One has been malicious and slanderous. The Committee must decide whether or not this conduct (if proven) is a breach of Section 72 or a breach of the Professional Conduct and Client Care Rules

2009. These were the rules that were in place at the time of the alleged conduct.

4.3. In her response to the allegations, Licensee One denied being malicious in passing on information to the listing agency and other potential customers. Licensee One points out that the information she passed on had come to her directly from the prospective buyers who had found the problems in the Property. In support of this Licensee One included a statement from Mr & Mrs C confirming the matters discussed about the building report they had commissioned.

4.4. Licensee One stated that she had acted professionally in assisting potential buyers. In support of this she included a statement from Ms S who confirms the advice given to her by Licensee One about the Property was appreciated and professional in Ms S’s opinion.

4.5. The Complainant makes the point that Licensee One had no right to make the comments as she was not in a contractual relationship with him. The Committee agrees there was no working relationship between Licensee One and the Complainant. The Committee did not agree that the lack of an authority from the Complainant took away the ability of Licensee One to discuss the Property with prospective customers, provided the information given was true.

4.6. Licensee One contends that she was acting as an advisory agent to customers who had come to see a property she had listed in the same street. The close proximity of the properties meant that potential customers often viewed both properties and that Licensee One was frequently asked about the Complainant’s Property.

4.7. In the view of the Committee, Licensee One did have the right to comment in relation to her duty to those customers. Licensee One stated that, in general, when customers queried the price differential between the properties or any matter related to the Complainant’s Property, she did direct the customers to the listing agency. The Committee believes this was the correct option to take.

4.8. Licensee One further states that she also suggested getting professional advice (builder’s reports) if the customer wanted to pursue the Property. The Committee finds that this advice is consistent with best practice and the Rules because Licensee One knew (based on her conversation with Mr & Mrs C) that the Property was a potential risk.

4.9. The Committee accepts Licensee One’s position that this was not done to reduce the chances of the Complainant selling the Property or to advantage her own client, but rather to give potential customers the best advice she could.

4.10. Licensee One then went on to state that she “found it difficult when asked direct questions by the buying public, not to give straight forward honest answers”. She stated “ I did my best to refer in general terms to the most at risk type of housing ... of which (the Property) is an obvious example ”. The Committee is satisfied that although it may appear to the Complainant to be unfair, this was a reasonable course of action for a competent licensee.

4.11. The Committee finds that Licensee One was in a difficult position. When she became aware of the adverse building report, that knowledge could not be ignored when dealing with a member of the public who asked specifically if she had any knowledge about the Property.

4.12. The Committee is satisfied that Licensee One did not make the comments with malicious intent.

4.13. The Complainant’s second concern was in regard to the Licensee One’s disclosure of the building report findings to her listing agent. The Committee has no evidence to show the extent of the

“issues” that the invasive testing disclosed, if the Complainant had repaired the problem areas, or if the Complainant himself had already disclosed those findings to his agent.

4.14. The evidence before the Committee from the listing agency is very vague. Licensee Two cannot recall the conversation between Licensee One and herself. The listing salesperson recalls Licensee Two phoning her, after being spoken to by Licensee One, to ask about the weather tightness of the Property.

4.15. The Committee has insufficient evidence to decide on whether or not the listing agent was aware of any issue in regard to the weather tightness of the Property or, if the findings from the

2012 invasive testing had been passed on to them by the Complainant. However, the Committee

is satisfied that Licensee One, in stopping to speak to Licensee Two, was endeavouring to protect a fellow licensee from inadvertently misleading a customer.

4.16. The Committee is aware that the real estate industry in general has become proactive around disclosure of defects in recent years. The onus on agents to clarify and confirm potential risks to customers has been well publicised by the Authority and set as part of the on-going educational requirements for all licensees in 2013.

4.17. In summary, the Committee is satisfied that Licensee One’s conduct has not been proven to be malicious or slanderous. The Committee will therefore take no further action on the 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 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

Marina Neylon

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 26 September 2013