Complaint No C03404 [2013] NZREAA 269 (6 December 2013)

Last Updated: 13 September 2014

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

And

In the Matter of Complaint No: C03404

In the Matter of Licensee

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 6th day of December 2013

Complaints Assessment Committee: CAC20008

Chairperson: Graham Rossiter

Deputy Chairperson: Ellen Ryan

Panel Member: Joan Harnett-Kindley

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). She holds a salesperson’s licence.

1.2 The complaint is that the Licensee failed to disclose to and inform the Complainants of a bylaw change that meant that the woodburners in a house they were buying would be ‘non-compliant.’ The Complainants say that they have been put to extra cost as a result of this new bylaw. It is contended that the Licensee was under a duty, which she breached, to make them aware of this development.

2. Material Facts

2.1 In February 2012 the Complainants bought a house in Rotorua, which had two woodburners. A building inspection report was obtained by the Complainants. This made reference to the woodburners but did not refer to any issue or possible problem in relation to them.

2.2 In May 2012, a new bylaw took effect which meant that the two woodburners became non- compliant. The Complainants contend that making the woodburners compliant would cost them

$3,500 to $4,000. They state that if the Licensee had advised them of the pending bylaw change,

they would have reduced their offer or ‘walked away’ from the transaction.

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’).

3.2 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.

3.3 In addition, consideration is required of Rule 6.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 (‘the Rules’). Rule 6.4 states that 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.”

4. Discussion

4.1 Rule 6.4, as reproduced above, provides for an important aspect of a licensee’s professional obligations, namely to ensure there is appropriate disclosure to a customer of information that may affect a customer’s decision as to whether to buy a property and, if so, on what terms. The duty of disclosure might extend to pending legal changes, including local council bylaws that could negatively impact on the costs to householders. It is this line of argument that underpins the complaint in this case. It is contended that the Licensee in this case ought to have been aware of the pending bylaw change regarding woodburners and drawn that to their attention.

4.2 There was, from the evidence placed before us, an extensive publicity campaign within the real estate industry with respect to the pending bylaw change. The Licensee should have been aware of this. The change took effect three months after settlement of the purchase of this property by the Complainants. Ideally and optimally, we might have hoped that this was information that could, possibly, have been drawn to the attention of customers.

4.3 Further to paragraph 4.2 above, the basic question we have to consider, however, in this case is whether the Licensee’s omission to inform the Complainants of the bylaw change amounted to a failure to act as might be reasonably expected of a competent real estate agent, in terms of, and with reference to, the obligations provided for in rule 6.4. On balance, and having considered the totality of the circumstances here, the Complaint Assessment Committee’s (the Committee) conclusion is that no breach of professional duty has here occurred. In coming to this view we have taken into account, amongst other things, the statement from the Licensee, as supported by her counsel’s submission. An initial but important starting point is that the Licensee had no reason to suppose or believe that the woodburners in the subject property were not compliant. It would be going too far to suggest that an agent should have, at this time, mentioned to every putative purchaser who expressed interest in a house in this district that had a woodburner that there was a bylaw change a few months down the track that could affect the use of this particular fixture or chattel, however it might be characterised.

4.4 The Licensee had, in response to a question from the Complainants, said that she did not know if the fireplaces in this property were ‘compliant.’ The context of this remark is not entirely clear. The Licensee did advise the Complainants to obtain a building inspection report and also suggested that their building inspector check the local council file. A copy of the building report obtained by the Complainants was included in the material submitted to the Committee. It is noted that this report (from, presumably, a competent and suitably qualified person) does refer to the woodburners but does not suggest any compliance issue. Coming back to the discussion in paragraph 4.3 above, it would appear that whether a woodburner is or is not compliant turns on its age. In simple terms, if such a device is less than a certain vintage, there is no problem or issue in this regard. An agent could not possibly know if a woodburner is or is not compliant without either a) knowing its actual age or b) having reason to inquire further regarding that particular question.

4.5 The Committee is not unsympathetic to the position of the Complainants and can understand the reasons for this complaint being submitted. However, for the reasons given, we are unable to uphold it. In short, we reiterate that we are not satisfied to the required standard that the Licensee’s actions fell short of relative and applicable industry standards. No further action will, therefore, be taken in relation to 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 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.

6.3 The Committee directs publication of its decision, but omitting the names and identifying details of the Complainants (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 unless an application for an order preventing publication has been made to the Real Estate Agents Disciplinary Tribunal (Tribunal). Such an application can only be made as part of an appeal to that Tribunal. In order to ensure publication of the decision does not take place it is important that you serve a copy of your application on the Authority. Publication of the decision will not take place until the Tribunal has made a decision on the application.

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

Graham Rossiter

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 6 December 2013