Li - Complaint No CB6766256 [2013] NZREAA 206 (22 May 2013)

Last Updated: 2 July 2014

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

And

In the Matter of Complaint No: CB6766256

In the Matter of Yemao Li

Licence Number: 10008341

Decision of Complaints Assessment Committee

Dated this 22nd day of May 2013

Complaints Assessment Committee: CAC20001

Chairperson: Dean O’Leary Deputy Chairperson: Graham Rossiter Panel Member: Joan Harnett-Kindley

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 Yemao (Brian) Li (the Licensee). The Licensee is licensed under the Real Estate Agents Act 2008 (the Act). He holds a salesperson’s licence and is working for Barfoot & Thompson.

1.2 The Complainant viewed the Property with the Licensee in attendance. The Complainant alleges that after an unconditional agreement was concluded with the Vendor, the Licensee included tenancy details when the Complainant believed that he was purchasing the Property with vacant possession.

2. Material Facts

2.1 The Complainant viewed the Property with the Licensee in approximately the middle of July 2011.

The Property was vacant at the time of the viewing.

2.2 Although there are differing accounts between the parties, it would appear that it is common ground that the Complainant and the Vendor attended the Licensee’s premises to negotiate the purchase price for the Property.

2.3 Following the negotiation of the purchase price, both the Complainant and the Vendor signed an

Agreement for Sale and Purchase (the ASP) which was unconditional.

2.4 A few days after the ASP was signed by the parties, the Complainant obtained a copy of the ASP.

The Complainant discovered that a tenancy provision had been added to the ASP which was inconsistent with the provisions concerning vacant possession.

2.5 The Licensee maintains that he made it clear that the Property was potentially subject to a tenancy arranged by the Vendor.

2.6 The Complainant, in contrast, asserts that he was not aware that the Property would be subject to a tenancy and was always under the impression that it would be sold with vacant possession.

2.7 A later dated version (2 August 2011) of the ASP indicates a reduction in the purchase price from

$845,000 to $842,000.

2.8 The Vendor was offered a deduction of $3,000 from the commission payable by the Vendor to the

Licensee.

3. Relevant Provisions

3.1. The relevant law is the definition of ‘unsatisfactory conduct’ in section 72 of the Real Estate Agents

Act 2008 (the Act).

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 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.

3.2 In addition, consideration may need to be given to the following rules of the Real Estate Agents Act

(Professional Conduct and Client Care) Rules 2009.

3.2.1 Rule 5.1 provides;

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

3.2.2 Rule 6.2 provides;

A Licensee must act in good faith and deal fairly with all parties engaged in a transaction.

3.2.3 Rule 6.4 provides;

A Licensee must not mislead a customer or client, nor provide false information, nor

withhold information that should by law or in fairness be provided to a customer or client.

4. Discussion

4.1. The Authority has conducted a number of interviews with the various parties to assist this Complaints Assessment Committee (the Committee) in understanding how events transpired. Unfortunately, the evidence provided by both parties is inconsistent and, more often than not, each account conflicts with other. We have not been aided in our task in that the Licensee has confirmed that he does not keep diary notes and that no diary notes were kept in respect of the transaction.

4.2. The Committee has had to rely on the evidence of the ASP and from the Vendor to draw inferences as to the correct version of events.

4.3. The Licensee maintains that he communicated to the Complainant throughout the process that the Vendor was looking to tenant the Property. The Licensee asserts that he made it clear to the Complainant the Vendor was looking to rent out the Property unless the Vendor could get the right price. The Licensee goes on to state that the Vendor had assured him that if he could get the right price then the Vendor would sort out the tenancy. In short, the Licensee took this to mean that because the parties reached the right price he need not concern himself with the prospect that the Vendor had been in the process of arranging a tenancy when presenting the ASP to the parties for signature. The fact that the Vendor may have been arranging a tenancy should have been in forefront of the Licensee’s mind when preparing the ASP which the parties signed as unconditional.

4.4. Even if the Committee was of a mind to accept the Licensee’s position (which it does not), then it does not justify the Licensee including in the ASP, after the ASP is signed by both parties, a tenancy provision without reference to, or agreement by, both of the parties. Once an agreement is unconditional a Licensee must not unilaterally insert a provision after the fact without reference to,

and agreement by, both the parties.

4.5. If the ASP was potentially subject to a tenancy, as maintained by the Licensee, when it was signed by the parties then the Committee is at a loss as to why a possession date of ‘15 Aug 2011 or sooner or 15 September 2011’ was included in the ASP. The tenancy details added to the ASP state a fixed term of 1 year which would not have yielded vacant possession until approximately July 2012. This tends to suggest that the Property was initially to be sold with vacant possession to the Complainant and that the addition of the tenancy details after the ASP was signed by the parties was an afterthought, which the Licensee should have turned his mind to at the time the ASP was signed. If at the time the ASP was signed by the parties it was envisaged that vacant possession would be provided, subject to any tenancy arranged by the Vendor, then a specific clause should have been added to the ASP which dealt with this situation.

4.6. By failing to address the tenancy issue in the ASP before it became unconditional, the Licensee placed the parties in a position whereby the Complainant could have reasonably expected vacant possession and the Vendor was potentially in breach of contract, in that he would be unable to provide vacant possession to the Complainant as stipulated when the ASP was signed as unconditional.

4.7. Both parties’ version of events tends to suggest that there has either been a breakdown in communication between the Vendor and the Licensee, or that the Licensee simply failed to turn his mind to the fact that the Property was to be sold subject to the tenancy at the date the ASP was signed by both parties. The Vendor in his evidence is adamant that the Licensee was aware that the Property would be sold subject to a tenancy.

4.8. We note that the purchase price payable by the Complainant was reduced by $3,000 and the Commission payable by the Vendor was similarly reduced. We believe it a reasonable conclusion to draw from the evidence presented that such deductions were solely due to the fact that the tenancy arrangement was not addressed in the ASP when it was signed and became unconditional.

4.9. We also do not accept the Licensee’s explanation that Vendor would sort out tenancy arrangement if he received the right price. Presumably the Vendor received the right price, as evidenced by an unconditional contract, yet the tenancy details were still inserted after the execution of the ASP. The Committee believes that the Licensee is guilty of unsatisfactory conduct in failing to ascertain the position of the tenancy prior to the ASP being executed by the parties, and similarly by inserting the tenancy provision into the ASP after the agreement was unconditional without reference to or agreement by the Complainant

5. Decision

5.1. The Committee believes that the Licensee’s conduct in these circumstances is unsatisfactory conduct by virtue of sections 72(a), (b), (c) and (d) of the Real Estate Agents Act 2008.

5.2. 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.

5.3. The Committee has determined under section 89(2)(b) of the Act that it has been proved, on the balance of probabilities, that the Licensee 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 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.

6.2. 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 submissions within 10 working days from the date of the decision. These submissions, 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 has yet to finally determine this complaint because the parties are being given an opportunity to make submissions on orders before the Committee determines what orders should be made, if any.

8.3. 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.

8.4. 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

Dean O’Leary

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 22 May 2013