Robinson - Complaint No CB6874355 [2013] NZREAA 262 (30 July 2013)

Last Updated: 19 August 2014

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

And

In the Matter of Complaint No: CB6874355

In the Matter of Roderick Robinson

License Number: 10002572

Decision of Complaints Assessment Committee

Dated this 30th day of July 2013

Complaints Assessment Committee: CAC20007

Chairperson: Paul Biddington

Deputy Chairperson: Ann Skelton

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 Roderick Robinson (the Licensee). The Licensee is licensed under the Real Estate Agents Act 2008 (the Act) and holds a Branch Managers License. The Licensee is branch manager for Barfoot and Thompson Limited Pukekohe office (the Agency).

1.2 The complaint relates to the conduct of the Licensee regarding the sale of t h e p r o p e r t y t h a t w a s o w n e d b y t h e Trust.

1.3 The Complainant alleges that the Licensee:

(a) withdrew the advertising of the Property without advising the Complainant;

(b) had a conflict of interest by acting for both the Complainant and her ex-husband, Mr R;

(c) unfairly advantaged Mr R before the second mediation by not giving her the benefit of knowing that there was a Prospective Purchaser prepared to offer at least $1.4m for the Property;

(d) charged commission when there was no agency agreement with the Complainant and when there was no sale and purchase agreement, and no sale;

(e) harassed her regarding payment of the commission.

1.4 The Complaint was received by the Real Estate Agents Authority (the Authority) on 25 June 2012 and referred to a Complaints Assessment Committee (the Committee). The Committee initially considered the complaint on 25 June 2012 and made a decision pursuant to section 79(1) of the Act to inquire into the complaint. The Committee gathered further evidence which it considered at its hearing on 5 February 2013.

2. Material Facts

2.1 The Property was purchased by the Complainant and Mr R in 1999. In 2002, the Complainant and Mr R transferred the Property to the Trust. The Trustees were the Complainant, Mr R, and their independent Trustee, Ms C. On 25 February 2011 Ms C retired as a Trustee.

2.2 In October 2010, the Complainant and Mr R began an acrimonious separation. In order to achieve a matrimonial property resolution they needed to establish a value for the Property. Around January 2011, a number of agencies were approached to provide appraisals for the Property. Mr R was told by one of the agencies that the Property was worth $2.4million. The Rateable Valuation of the Property was $1.5million.

2.3 On 5 July 2011, the Complainant and Mr R attended mediation with a view to settling their Property issues. The Complainant and Mr R reached an agreement on the following terms:

(a) The Property will be marketed for sale by auction;

(b) The parties shall each appoint an agent and they shall have a joint sole agency;

(c) Each party shall advise the other of their choice of agent by 5p.m. 6 July 2011 via their counsel;

(d) The marketing programme for sale shall begin no later than 15 September 2011;

(e) The Property shall be auctioned for sale no later than 15 December 2011 on site.

2.4 On 13 September 2011, the Complainant signed a sole agency agreement with Ms B and Mr J from the Agency. The Property was to be auctioned on 29 October 2011. The listing agreement period was from 13 September 2011 until 13 December 2011. A copy of the mediated agreement was provided to the Agency by the Complainant’s solicitor at the time of the listing. The Listing agreement stated that the owner of the Property was the Trust, with the Complainant and Mr R as Trustees. Only the Complainant signed the listing agreement. The Complainant paid the auction marketing fees to the Agency. In the first week of the listing, prior to the auction, Ms B brought a Prospective Purchaser to view the Property.

2.5 Mr R went overseas from mid July 2011 and returned in September 2011. On 28 September

2011, Mr R went to the Agency and queried the Licensee on what authority the Agency had to market the Property as he had not authorised the Agency to do so. The Licensee submitted that he explained to Mr R the terms of the agreement between the Complainant and himself. Mr R wanted the Property taken off the market and all signage removed immediately.

2.6 Mr R provided these instructions in writing to the Licensee. The Licensee removed all advertising and withdrew the Property from the market. Shortly after the 28 September 2011, the Complainant became aware that the Property was no longer on Trademe when she went to show a friend the Property. The Complainant contacted the Agency and spoke to the Licensee and requested why the Property been withdrawn. The Complainant stated that the Licensee advised her that the Agency had removed the Property from the market because Mr R had objected to the listing on the basis that he was one of the Trustees and they needed his consent. The Licensee emailed the Complainant later that same evening at 5:06p.m to advise the Complainant that the Property had been removed from the web site for legal reasons and believed that all the issues would be resolved the following day. The Licensee stated that he thought that the Property could go live the next day.

2.7 On 14 October 2011, the solicitor acting for Mr R advised the Licensee that her client would be listing the Property with Agency Two. The solicitor requested the Licensee to make contact with the parties to get them to sign their respective listing agreements and to forward copies to both solicitors. The Licensee stated he had several meetings with Agency Two in relation to a possible joint auction campaign, however, it became impractical as no agreement could be reached on the process of handling the auction. Agency Two withdrew as the selling agent for Mr R.

2.8 On 12 November 2011, Mr R agreed to sign a new listing agreement with the Agency for the

Property to be auctioned on 15 December 2011. The listing agreement expiry date was 27 January

2012. The listing agreement stated that the Owners of the Property were the Complainant and Mr R. No mention was made of the Trust being the owner. The Complainant did not sign this listing agreement after Agency Two agent, in an email dated 26 October 2011 to Mr R’s solicitor (copied to licensee, complainant ’s solicitor, and trust solicitor) that the signatures of all Trustees would be required on all contractual documentation. The Agency now had two listing agreements with different expiry dates and two different auction dates. Both agreements had only one signature of each Trustee.

2.9 Later that same day, Mr R emailed the Licensee enquiring whether commission would be payable if the Complainant was to buy him out or if he bought her share. The Licensee replied that in that event a reduced commission of $10,000 + GST would be payable and should have been discussed and negotiated at the time the listing agreement was signed. No mention of this was recorded on the listing agreement signed by Mr R, and neither the Complainant nor her solicitor was copied into these emails.

2.10 The Licensee sent an email on 14 November 2011 to Mr R’s solicitor suggesting that should

one of the Owners buy the other out, he thought $10,000 + GST was a fair commission.

2.11 On 14 November 2011, the Complainant met Ms B, and M r J , and the Licensee at the Agency’s office. The Complainant stated that she asked Ms B what her Prospective Purchaser was prepared to offer. The Complainant stated that she was not told a figure, only that the offer was low. At this meeting the Complainant stated that she wished to buy Mr R’s share for $1.6 million or $1.65 million at most. The Complainant further stated she wanted to buy well and felt that Mr R’s opinion of over $2.0 million would make reaching agreement impossible. The Licensee stated the Complainant asked if the Licensee could make Mr R see her offer was fair and reasonable and to work in her best interests. The Licensee further stated that he advised the Complainant that was not their role and they had to work in the best interests of both clients.

2.12 On 16 November 2011, two days before the mediation, the Licensee sent an email to Mr R’s solicitor offering his opinion as to the value of the Property and said if he was ‘asked to set a reserve it would be $1.7m’. “[In] Doug’s interest, if an offer of $1,600,000(in full) or above was made (as I understand it could be) then I believe he would be doing well to accept it. $1,650,000 would be excellent” .... ‘another interested party would offer $1,400,00, unsure if he would reach $1,500,000.’ The Licensee stated that he did not copy this to the Complainant or the Complainant’s solicitor as he was sure all the points regarding price had been covered off with the Complainant at the meeting on 14 November 2011.

2.13 A second mediation between the Complainant and Mr R was scheduled for Wednesday 16

November 2011.

2.14 On 18 November 2011, Mr R’s solicitor emailed the Licensee to confirm that the mediation had been successful with the Complainant agreeing to purchase Mr R’s share. The solicitor further advised that the Complainant had assumed responsibility for any costs owed to the Agency.

2.15 After the mediation the Complainant learnt that the Licensee had sent an email to Mr R’s solicitor expressing his opinion on the value of the Property. On 20 November 2011, the Complainant emailed the Licensee and expressed her disappointment that the Licensee would provide an opinion on the value of the Property to Mr R’s solicitor and not to her. The Complainant stated that it gave Mr R a negotiating advantage and had cost her another $100,000 in settlement, and this was the information that she had requested at the meeting on 14 November 2011 and was not told.

2.16 On 21 November 2011, the Licensee emailed the Complainant and stated that he was at odds to understand why the Complainant should think he had disadvantaged her as she had requested the Licensee to supply the information on the value of the Property to Mr R and his solicitor, to help dispel his opinion of a value in excess of $2,000,000. The Licensee further stated that both the Agency and Agency Two had agreed that $1,700,000 was a reasonable reserve if the Property had been auctioned and that the Complainant’s purchase of $100,000 below, that would indicate good buying.

2.17 In an email on 20 November 2011, the Complainant advised the Licensee that his request for

$10,000 + GST for work that he had done, was not in any contract she had signed. It was not discussed at their meeting on 14 November 2011, and she did not owe the Agency any money. The Complainant also stated that when she agreed to pay costs after the second mediation, she understood it to be the advertising costs not any commission. Furthermore, the Complainant stated that the Licensee had worked for Mr R and not her.

2.18 The Licensee stated that the Agency would charge the normal commission or reduce the fee by up to 50% when an internal transfer is concluded between Owners, but in this case proposed to further

reduce the fee by another 50% to help finalise the situation. The Licensee further stated that the commission charge of $10,000 plus GST was reasonable in the circumstances.

2.19 On 23 November 2011, the Licensee in an email to the Complainant stated that the Purchaser referred to in the email to Mr R’s solicitor had been going to make an offer and then decided to get prepared for the auction. The Agency knew that the offer was not at a level that either owner had stated they would accept and reiterated that it was not his role to work for one client against the other.

2.20 The Complainant’s solicitor sent an email to the Licensee on 1 December 2011 stating that the Licensee was misinformed about the nature of the transaction that was occurring. She further stated that the Complainant was not purchasing Mr R’s share of the Property. The Property was owned by the Trust. The Complainant and Mr R were Trustees of the Trust. Mr R was resigning as a Trustee and the Property was being retained by the Trust. No sale was occurring, therefore no commission was payable as the Property had not been sold, and had been withdrawn from the market. The Licensee, however stated that commission was payable as the title of the Property showed that the proprietors were the Complainant and Mr R. No trust was named on the title. In response, the Complainant’s solicitor in an email on 22 December 2011 advised the Licensee that section 128(1) of the Land Transfer Act 1952 stated that no entry shall be made in the register of any notice of Trusts.

2.21 On 5 April 2012, the Complainant’s solicitor wrote to the Agency to invite the Agency to withdraw its claim for commission prior to the matter proceeding to the hearing in the Disputes Tribunal on

13 April 2012. The claim for $10,000 + GST by the Agency proceeded to the hearing. In response

the Complainant counter claimed for stress and losses for breach of the Licensee’s fiduciary duty to her and not being given the information she requested about another Potential Buyer. Both claims were dismissed.

3. Relevant Provisions

3.1 A complaint can only be made in relation to alleged unsatisfactory conduct (section 72 of the Act)

or alleged misconduct (section 73 of the Act)

3.2 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 regarded by agents of good standing as being unacceptable.

3.3 Section 73 of the Act provides:

73 Misconduct

For the purpose 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

(c) 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 Agency work is defined in section 4 of the Act as real estate agency work or agency work-

(a) means any work done or services provided, in trade, on behalf of another person for the purpose of bringing about a transaction; and

(b) includes any work done by a branch manager or salesperson under the direction of, or on behalf

of an agent to enable the agent to do the work or provide the services described in paragraph

(a);but

(c) does not include-

(iv) the provision of general advice or materials to assist owners to locate and negotiate

with potential buyers; or

(v) the publication of newspapers, journals, magazines, or websites that include

advertisements for sale or other disposal of any land or business; or

(vi) the broadcasting of television or radio programmes that include advertisements for the sale or other disposal of any land or business; or

(vii) the lending of money on mortgage or otherwise; or

(viii) the provision of investment advice; or

(ix) the provision of conveyancing services within the meaning of the Lawyers and

Conveyancers Act 2006

3.5 The Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 (the Rules) set out the standard of conduct and client care that agents, branch managers or salespersons (licensees) are rules are not meant to be an exhaustive list, they set minimum standards that licensees must observe and are a reference point for discipline.

3.6 In relation to this complaint the following Rule(s) may apply:

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

Rule 9.1 A Licensee must act in the best interests of a client and act in accordance with the

client’s instructions unless to do so would be contrary to law.

Rule 9.4 A licensee must communicate regularly and in a timely manner and keep the client well informed of matters relevant to the client’s interests.

Rule 9.8 When inviting a signature of an agency agreement a licensee must explain to a prospective client in writing-

(a) the conditions under which commission must be paid and how commission is calculated, including an estimated cost (actual dollar amount) of commission payable by the client, based on the appraisal price of the land or business.

Rule: 9.10 A licensee must not submit an agency agreement or a sale and purchase agreement or other contractual document to any person for signature unless all material particulars have been inserted into or attached to the document.

4. Discussion

4.1 Following the agreed terms of the mediation agreement, the Complainant listed the Property with the Agency on 13 September 2011 appointing Mr J and Ms B to handle the sale. This listing agreement listed the Owner of the Property as the Trust with the two Trustees, the Complainant and Mr R.

4.2 This agreement only had one Trustees signature, that of the Complainant. The listing agreement stated that the party executing the agreement had the authority of the other Owners, if any, of the Property to make the appointment.

4.3 The Committee accepts that Mr R was out of the country when the listing agreement was signed.

Nevertheless, Mr J and Ms B were provided with a copy of the mediated agreement at the time and were aware or should have been aware of why they were being appointed and should have confirmed with the Complainant whether she had authority to sign on behalf of Mr R. The Committee is of the view that the listing agreement was not valid as it did not have the signature of the other Trustee. Accordingly, the Committee finds that the Licensee has breached the Rules and the Act.

4.4 When Mr R approached the Agency and asked on whose authority the Property had been put on the market, the Licensee explained that the Complainant had appointed the Agency as per the terms in the mediated agreement. Mr R instructed the Agency in writing to take the Property off the market and remove all signage. The Licensee followed Mr R’s instructions and removed the Property immediately. The Complainant contacted the Licensee on the same day it was removed asking why this had happened. The Licensee advised the Complainant later the same day that the Property had been removed for legal reasons and that it would be reinstated on the website once the issues had been resolved. The Committee is of the view that it would have been prudent for the Licensee to have contacted the Complainant as soon as he had received Mr R’s instructions. When the Complainant was advised of this later the same day she was satisfied with the explanation. Accordingly, the Committee finds that the Licensee has not breached the Rules or the Act in this part of the Complaint.

4.5 The Licensee was advised by Mr R’s solicitor that Mr R would be appointing an agent of his choice and could the Licensee make contact with the other agent to sign their respective joint listing agreements. It soon became apparent that it was impractical for the two agencies to handle the sale of the Property and Mr R’s agent withdrew as a selling agent.

4.6 The Licensee was then approached by Mr R to be his listing agent in the sale of the Property.

The Licensee drafted a listing agreement naming the Owner of the Property as the Complainant and Mr R. No mention was made of the Trust. The Licensee was aware or should have been aware of the terms of the mediated agreement that both the Complainant and Mr R had to appoint an agent of their choice and advise the other Trustee via their solicitor of such appointment. This advice was not given to the Complainant’s solicitor.

4.7 The Agency now had two listing agreements for the Property with different expiry dates and a different auction date. The Committee is of the view that the mediated agreement lacked clarity and frustrated the approach that the Licensee could take in regard to the matter. However, having said that, the Licensee had an obligation to follow the terms of the mediated agreement. The Complainant and Mr R had appointed agents of their choice, albeit in the same Agency. The Committee is of the view that the Licensee should have considered the possibility of a conflict of interest before proceeding with what could be considered an unusual situation. Furthermore, the Committee accepts that the Licensee clearly stated to the Complainant that the Agency worked equally for both the Complainant and Mr R as their clients. Accordingly, the Committee finds that the Licensee has not breached the Rules or the Act in this part of the complaint.

4.8 The Committee must now consider the drafting of both listing agreements. As earlier stated, the Committee is of the view that the listing agreement between the Complainant and the Agency was invalid. It is also of the view that the listing agreement with Mr R is also invalid for two reasons. Firstly, the legal Owner of the Property was the Trust which was not inserted in the listing agreement and secondly, the Complainant had not signed the listing agreement, when advice had been given by Mr R’s solicitor that both Trustees must sign all contractual documents.

4.9 The Committee finds that the Licensee in his position as branch manager of the Agency should have exercised more care, competence and diligence in the listing of the Property. The Licensee knew or should have known that it is best practice to insert the name of the Trust and have every Trustee sign to minimise the risk of later challenges to the validity of the documents. For both listings of the Property to be incorrectly executed in relation to ownership, signing authority and the failure to include an estimated cost in an actual dollar amount of the commission payable, falls short of the standard that a reasonable member of the public would be entitled to expect from a reasonably competent Licensee. Accordingly, the Committee finds that the Licensee has breached the Rules and the Act.

4.10 When the Complainant met with the Licensee prior to the second mediation she asked the Licensee what figure the Potential Purchaser was prepared to offer and the Complainant stated that she was advised it was “low low” and the Licensee refused to tell her the figure. The Complainant later learnt after the mediation that the Licensee had advised Mr R of a Potential Buyer for $1.4 million. The Complainant considered she was at a disadvantage not knowing such an offer existed yet it was provided to Mr R and she felt that it compromised her negotiating position. However, the Committee finds the evidence on this point to be conflicting.

4.11 The Licensee stated that the P otential Buyer was going to make an offer then decided to get prepared for the auction. The Licensee further stated the Agency knew the price the Buyer intended to offer and it was not at a price the Complainant or Mr R would accept. Furthermore, the Licensee stated that opinions on the value of the Property had been shared with the Complainant at their meeting prior to the mediation and it was the Complainant who requested the Licensee to advise Mr R of current market values. On that basis the Committee finds on the balance of probabilities the Licensee has not breached his fiduciary duty to the Complainant or breached the Rules or the Act in this part of the complaint.

4.12 After the second mediation, the Licensee learnt that an agreement had been reached between the Complainant and Mr R in relation to the sale of the Property. Mr R had asked the Licensee earlier if any commission would be payable, if the Complainant was to buy him out, or if he bought the Complainant’s share. The Licensee replied that $10,000 plus GST would be fair. The Licensee received advice from Mr R solicitor after the mediation the Complainant would assume responsibility for any costs owed to the Agency. The Licensee then contacted the Complainant in relation to the commission payable and was told she would not being paying any commission. The

Complainant had agreed to pay costs at the mediation but had assumed it was for advertising not commission.

4.13 The Complainant’s solicitor advised the Licensee that the Property had not been sold, only that one of the Trustees had bought the other’s share and no commission was payable. Furthermore, the Complainant’s solicitor also advised the Licensee that the Property was owned by a Trust and that the names of Trusts are not recorded on certificate of title. The Agency pursued its claim for commission through the Disputes Tribunal with the Complainant counter claiming. Both claims were dismissed.

4.14 The Committee is of the view that the Licensee, whether rightly or wrongly, had the right to chase commission he believed was owed for the sale of a Property. Furthermore, the Committee is of the view that the Licensee did not intentionally harass the Complainant in relation to the commission, but only pursued what he believed was a prudent business decision. Accordingly, the Committee finds that the Licensee has not breached the Rules or the Act in this part of 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) (b) of the Act that is has been proved, on the balance of probabilities, that Roderick Robinson 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.

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

Paul Biddington

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 30 July 2013