Complaint No CO2219 [2013] NZREAA 241 (19 November 2013)

Last Updated: 3 August 2014

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

And

In the Matter of Complaint No: CO2219

In the Matter of Licensee 1

Licence Number: XXXXXXXX

Licensee 2

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 19th day of November 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 Real Estate Agents Authority (the Authority) received a complaint from the Complainants in regard to Licensee 1 and Licensee 2. The Licensees each held a salespersons licence in 2008 and at the time of selling the Property that is the subject of this complaint, were employed by the Agency. Both are no longer working in real estate and have voluntarily surrendered their licences.

1.2 The complaint is essentially the allegation that when dealing with the Complainants the selling agent gave no attention to or explanation about the exterior of the property being of weatherside construction and what that would mean in relation to maintenance and resaleability of the property.

1.3 In this case Licensee 1 was the selling salesperson who dealt with the Complainants and Licensee

2 was the listing salesperson.

1.4 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 22 July 2013 and made a decision to enquire further.

1.5 The Committee invited both the Licensees to provide a response to the complaint which was received and the Complainants to provide further comments to their complaint which they did.

1.6 Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered by the Committee on 29 October 2013.

1.7 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 Complainants purchased a residential property in April 2008 for $320,000. The sale and purchase agreement was conditional on the purchasers obtaining “a Building Inspection Report from a qualified Builder or Building Inspection Company” within five working days from the date of the Agreement.

2.2 The Listing Agreement signed by the vendor of the property records the cladding as ‘Hardies weatherside’.

2.3 The Complainants obtained a Building Inspection Report from Mr F of a Home Inspection Agency, dated 22 April 2008. Other than referring to the exterior cladding being in average condition no other mention was made in the report of the type of cladding or issues that may arise as a result of the type of cladding used.

2.4 The Complainants obtained a written valuation from valuer Mr G dated 24 April 2008 which, in addition to valuing the property at $327,000, comments in regard to saleability: “The property

has really good saleability, as it provides for a spacious three bedroom, three living room home with good indoor-outdoor living. Although this is offset by the exterior cladding.”

2.5 In their complaint the Complainants state that they viewed the house twice in April 2008 with Licensee 1 and there was no mention of the type of construction of the property at the time. They state they needed a valuation and a builders report and that Licensee 1 mentioned a builder who they utilized. They are not sure whether the Licensee gave them the name of the valuer but they infer that this could have been the case. They refer to the fact that the valuation mentioned the saleability of the property being offset by the exterior cladding, however the builders’ report confirmed the construction as weatherside cladding but gave no elaboration of any issues or problems with the product.

2.6 The Complainants are seeking reimbursement of the estimated cost to reclad the property as well as compensation for delays the issue caused in the resale of their property. They have not elaborated on the later issue, however they have provided a quotation of $27,000 as an estimate to reclad the property.

3. Relevant Provisions

3.1 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 which relates to March-June 2008.

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

Section 172 Allegations about conduct before commencement of this section

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 their 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 Licensees 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.

4. Discussion

4.1 The difficulty for the Committee in establishing whether there is a basis to substantiate the complaint is the fact that the property purchase occurred in 2008 and parties associated with the purchase have either left the industry or live overseas and are difficult to locate. The two Licensees have voluntarily suspended their licenses and left the real estate industry and the building inspector left the industry in 2010 and has moved to Australia. Unfortunately the Authority has not been able to establish his whereabouts and the company that he worked for appears to now be in liquidation.

4.2 Licensee 1 who was the selling salesperson involved has advised that he had never seen the building or valuation report. He confirms however that at the time he had a good understanding of the weatherside product as it was used in many homes on that Coast. His understanding about this product was that if you maintained it correctly there were no issues, but if you didn’t it would break down rapidly. It was his normal practice to discuss with the buyer that weatherside is an inferior product and that it would need to be maintained.

4.3 After five years Licensee 1 cannot recall specifics about the house but he believes that with a house of this age and type it would be expected that some maintenance would be required. He believes that nothing would have been hidden so if the problems were apparent they would have been discussed. Normally with inspection reports of this nature they take photos of any issues and the buyers discuss these with the building inspector directly. In addition the valuer’s comment in his report “offset by the exterior cladding” should have caused them to seek advice before the contract went unconditional.

4.4 The Complainants whilst acknowledging that they recall Licensee 1 telling them that the product was Hardiplank believe that there was no discussion about the consequences they were facing

buying a house clad in weatherside.

4.5 In regard to the building inspection, Licensee 1 has stated that it was company policy that salespersons could not recommend any specific specialist to buyers. It was normal practice to provide buyers with contact details of at least 3 choices for each profession chosen. Salespersons were to leave the buyers to make the choice and that was a strict company requirement.

4.6 The Complainants however refute this and have stated that they were not given the three options for the building inspection as claimed by Licensee 1 who they say arranged the builder for them.

4.7 Licensee 2 has stated in his submission that he was the listing salesperson only and did not deal with the purchasers and has no idea what was said to the purchasers at the time.

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 It has proved difficult to determine what in fact was told or not told to the Complainants. There is certainly a clear discrepancy between statements made by the parties and there is no independent evidence available to support either party’s views.

5.3 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.

5.4 Because of the length of time that has elapsed (over 5 years) and the lack of independent evidence on which to base a decision the Committee has determined under section 80(2) 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.ju st ice. go vt .n z /t rib u nals .

Signed

Patrick Waite

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 19th November 2013