Complaint No C00251 [2013] NZREAA 252 (27 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: C00251

In the Matter of Licensee

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 27th day of November 2013

Complaints Assessment Committee: CAC20005

Chairperson: Stuart Rose Deputy Chairperson: Chris Rogers Panel Member: Denise Bovaird

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1 The Complainants have 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) and is a licensed branch manager with the Agency.

1.2 The Complainants are the purchasers of a property (the Property).

1.3 The Complainants say that the Licensee withheld information from them about a legal dispute that the Vendors of their Property had with the developer regarding the non-registration of restrictive land covenants on the neighbouring properties titles.

1.4 The Complainants believe that they have suffered actual and potential future financial loss through the Licensee’s conduct which they would like to see “rectified” as well as an acknowledgement from the Licensee regarding this matter.

1.5 The complaint was received by the Authority on 5 December 2012 and referred to a Complaints

Assessment Committee (the Committee). The Committee initially considered the complaint on 24

January 2013 and made a decision pursuant to section 79(1) of the Act to inquire into the complaint. The Committee considered further evidence gathered on 15 October and now issues its determination in this matter.

2. Relevant Provisions

2.1 The Real Estate Agents Act 2008 establishes a statutory basis for the licensing and hearing of complaints against real estate agents, amongst other things. The Act provides for the setting up of Complaints Assessment Committees to hear the complaints and allegations about Licensees. It also establishes a Disciplinary Tribunal to hear complaints at the next level.

2.2 Section 3 of the Act sets out the purpose of the Act.

Purpose of Act

(1) The purpose of this act is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work.

(2) The act achieves its purpose by –

(a) Regulating agents, branch managers, and salespersons: (b) Raising industry standards:

(c) Providing accountability through a disciplinary process is independent transparent and effective.

2.3 When a committee considers a complaint it must decide whether it breaches the standards of conduct that are set out in section 72 and 73 of the act and also the Rules of Professional Conduct and Client Care as set out in the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012.

2.4 The Real Estate Agents Act 2008

Section 72 of the Act provides:

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. Section 73 of the Act provides:

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.

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

The Rules set out the standards of conduct and client care that agents, branch managers or salespersons (Licensees) are required to meet when carrying out real estate agency work and dealing with clients. Whilst these rules are not meant to be an exhaustive list, they set minimum standards that Licensees must observe and are a reference point for disciplinary decisions.

Examples of the Rules that may be relevant in this complaint are:

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

Rule 6.2 A Licensee must act in good faith and deal fairly with all parties engaged in a transaction.

Rule 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.

3. Parties submissions/evidence and Discussion

3.1 In reaching a decision and making a finding the committee has to look carefully at the evidence before it and then come to a decision based on our assessment of what we believe is more likely

than not to have occurred or in other words on what we see as the balance of probabilities in this case.

3.2 This threshold has been considered by the Disciplinary Tribunal in its decision: Hodgson v CAC & Arnold [2011] READT03. In that decision the Disciplinary Tribunal said that the onus to establish a complaint rests with the Complainant. The consequence of this is that unless we are able to form a view that what the Complainant alleges is more likely than not what happened, or if we believe that the conduct complained of does not reach the threshold set out in section 72 of the act, we must dismiss the complaint.

3.3 The Complainant advised that on settlement date their solicitor identified an easement had been created and registered since their agreement to purchase the Property became unconditional. They subsequently discovered that the Vendors of the adjoining properties have been involved in a dispute with the developer about the failure to register these covenants, and that the Licensee knew about this.

3.4 The Licensee in response says that the reason he did not inform the Complainants about the potential for an easement being registered on the title was that he was unaware of this. He says the listing agreement made no mention of the potential easement and the Vendors did not inform him of its likelihood. He says the listing agreement for the Property also has no reference to any easement issues related to the Property and he was not aware of any financial settlement regarding this matter.

3.5 He says that he first heard about the easement on the day before settlement when the Vendors told him about it. He was told it was being dealt with by the parties solicitors. For this reason he did not contact the Complainants about the easement in his belief that the solicitors were dealing with it. He says that he would have disclosed to the Complainants any issue about an easement or potential easement being registered had he known about it.

3.6 He says that the Vendors had told him that there had been a dispute between them and the owner of another property (Property X) but that it had been settled. The Licensee was told that the dispute arose because two dwellings have been built on the Property at the same number. The Vendors gave no indication to him that an easement would be registered on the Property as part of that settlement or that the settlement affected the Complainants Property in any way.

3.7 The Complainants argue that the fact the Licensee knew there had been a dispute between neighbours was, or should have been, sufficient to put him on notice and that he had a duty to inform them as purchasers of the fact of the dispute.

3.8 While we would agree as a general rule that Licensees have a duty to inform purchasers of all material facts that are known to them regarding properties they are selling on the evidence available to us it does not appear that the Licensee knew anything about this issue regarding the easement. On the evidence and facts before us, we do not believe this is a case of wilful blindness or accept that he should have made further enquiries. We accept the Licensee’s comments that he was aware there had been a dispute but he understood and believed it to be settled.

3.9 Ms B the owner of Property X advised the committee that the covenants were in place when she purchased her property and that it was not until the Vendor of the Property spoke to the owner of Property X that they found out that there were no covenants on Property X. She says that a week before the Complainant’s Property settled the Vendor visited to get her to sign the variations so that the sale could go ahead. She says that she and the neighbour received financial settlements from the developer regarding this. She says she was paid compensation in June 2010 and that her neighbours were paid sometime earlier. She says that she is “pretty sure” she told the Licensee about the easement issue but that it was after the Complainants had purchased their Property.

3.10 This view is backed up by the evidence that Ms B listed her property for sale on 21 December 2011 and the Complainant’s agreement to purchase was signed on 1 December 2011.

3.11 We also note that on completing the listing agreement the Vendors of the Complainants Property ticked the box that said “I have not withheld any material information known to me relating to the property”.

3.12 The Vendors of the Property also confirmed to the committee’s investigator that they were unaware of the need to have a variation of the covenant completed until after the sale and purchase agreement with the Complainants had been signed.

3.13 After consideration of the above we believe there is no evidence that the Licensee knew of any issue concerning the covenants until just prior to settlement and we also find that there is no evidence that suggests the Licensee should have known about this or should have made further enquiries even given his understanding that previously there had been some dispute between the neighbours. In light of our above findings we have determined to take no further action on this matter.

4. Decision

4.1 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.

4.2 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.

5. Publication

5.1 One of the Committee’s functions pursuant to section 78(h) of the Act is to publish its decisions.

5.2 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.

5.3 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.

5.4 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).

6. Right of Appeal

6.1 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.

6.2 Appeal is by way of written notice to the Tribunal. You should include a copy of this Notice with your

Appeal.

6.3 Further information on filing an appeal is available by referring to the Guide to Filing an Appeal at www.justice.govt.nz/tribunals.

Signed

Stuart Rose

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 27 November 2013