Morison - Complaint No CO1190 [2013] NZREAA 291 (1 October 2013)

Last Updated: 16 September 2014

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

And

In the Matter of Complaint No: CO1190

In the Matter of Duncan Morison

License Number: 10055635

And

Gail Morison
License Number: 10055643

Decision of Complaints Assessment Committee

Dated this 1st day of October 2013

Complaints Assessment Committee: CAC20002

Chairperson: Patrick Waite Deputy Chairperson: Deirdre McNabb Panel Member: Barrie Barnes

Complaints Assessment Committee

Decision finding unsatisfactory conduct

1. The Complaint

1.1 The Complainants has complained to the Real Estate Agents Authority (the Authority) about the conduct of Mr. Duncan Morison (Licensee 1) and Ms. Gail Morison (License 2). The Licensees are licensed under the Real Estate Agents Act 2008 (the Act). Both hold a Salesperson license and work for Premium Real Estate Limited (the Agency).

1.2 The complaint is that the Licensees have marketed a Property saying ‘new marina under construction’ when the building has not yet been approved by the Council. The Complainant is concerned the proposed Marina has been used as an advertising tool and it is misleading to Prospective Purchasers as it is unlikely to be built. “This is not only misleading Potential Buyers, it is grossly unfair to those buyers who may lose hundreds of thousands of dollars. There is no marina under construction.”

1.3 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 15 April 2013 and made a decision to inquire into it.

1.4 The Committee invited the Licensees to provide a response to the complaints which was received on 8 May 2013. Mr. and Ms. Morison were interviewed separately by the Authority’s Investigator on

19 July 2013.

1.5 The Complainant was invited to comment on the response from the Licensees which was received from her on 25 June 2013.

1.6 Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered by the Committee on 3 September 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 Licensees listed a Property on 12 September 2012.

2.2 An advertisement for the Property was viewed by the Complainant on 13 March 2013. The

advertisement quotes: “a new marina under construction, opportunity at your fingertips.”

2.3 The Complainant lodged a complaint with the Authority on 13 March 2013 alleging that as the building has not been approved by the Council the advertising is misleading to Prospective Purchasers.

2.4 The Committee is satisfied that a full disclosure of all documents relevant to this investigation has taken place. Comment has been sought from all parties relating to the issues under inquiry.

3. Relevant Provisions

3.1 The Committee examined the information supplied by the Complainants in their written complaint to determine whether section 72 or section 73 of the Real Estate Agents Act 2008 (the Act) applied i.e. was there evidence which would indicate that the Licensee 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 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.

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

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

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

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.

4. Discussion

4.1 Issue 1: The Licensees used misleading advertising.

The Complainant has stated in her complaint:

• For several years resource consent for a proposed Marina has been sought by a small group of people.

• The Marina Society has finally received Resource Consent for the Marina after a lengthy battle through Resource Consent hearings and the Environment Court, however it is doubtful the Marina will ever be built.

• Throughout the process, real estate companies have used the proposed Marina as a direct or indirect advertising tool and in recent times have turned to talking about the Marina ‘definitely going ahead” at Open Home events.

• Although consented, no prospectus has been issued. No final plans have been put before the

Community Liaison Group (ordered by the Environment Court) and no building consent issued.

• Potential Investors hoping to get a Marina constructed could indeed lose many thousands of dollars value if the Marina project fails which the community believes is a strong possibility.

4.2 The Licensees in their response and in interviews with the Authority’s Investigator have disputed the accusation of false advertising.

• To create a Marina, several parts of the project need to be brought together and indeed some of those parts have already been actioned by the Yacht Club.

• The Licensees provide a definition of the word ‘construction’ which is “to be built by the forming of parts”.

• The Licensees provided an email and newsletter updates from the Steering Committee and

Commodore of the Yacht Club outlining progress to members regarding the new Marina.

• The Licensees provided a photograph of a sign at the Marina which reads “Marina to be built –

Marina Consent Granted.”

• The Licensees believe that they were correct in advertising the Marina as ‘under construction’ and

believe that the Marina will proceed.

• In March 2013, Mr. Morison was aware the Resource Consent for the Marina had been granted but he was not aware there was a need for building consent.

• The Licensees were working hard for their Vendor and just wanted more people in that were interested in the Property.

• The Property eventually sold about a month after the advertisement to Purchasers who are

“boating kind of people.”

• The Licensees believe the complaint to be a vexatious reaction from an environmentalist protestor who is frustrated at being thwarted in her goal to stop the project.

• The Licensees stated that they did not intend to mislead or offend any member of the public.

• They consider that they would be just as guilty if they failed to inform them of the ongoing Marina project.

4.3 The Licensees’ Supervising Agent provided a letter in their support. He believes “ it is unreasonable to argue that the Morison’s in any way misled the market based on the information generally abroad in the market place. The interpretation of ‘under construction’ is marginal and the meaning employed by the Complainant is mischievous and convenient. It could be argued that they (the Morison’s) could be found in breach for not advising Potential Buyers that a Marina was approved to be built on the basis that its completion may have been a reason for some persons to not want to purchase in that location.

4.4 The Steering Committee Organizer was interviewed. The main points of his interview were:

• All the necessary consents for the Marina have been obtained by the Yacht Club.

• Construction H has signed the Contract to do the construction.

• The Prospectus is in the process of being completed, and then the money for the Marina can be collected.

• Everybody has been told things are underway and building is hoping to commence at the end of

October 2013.

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 Whilst the Licensees have denied they used the phrase “under construction’ with the intention of misleading any Potential Purchaser and have provided definitions of the term to explain their understanding of what “under construction” means to them, the Committee remains concerned that the term used could be misconstrued by people viewing the advertisement who had no involvement or understanding of what was happening with the Proposed Marina.

5.3 The Committee is not convinced that the definition used by the Licensees of the word “construction” which they, it seems, believe means to “build by the forming of parts”. The Committee favours the more standard definition of ‘under construction’: “The time period that exists after a building construction has started but before a certificate of occupancy has been presented”.

5.4 Whilst the Committee noted that the recent announcements by the Marina Society would indicate that progress is being made, the issue for the Committee to consider is that at the time that the advertisement was published (1) no construction was taking place, (2) there was no evidence that funds had been collected sufficiently to start construction, and (3) the granting of a Resource Consent did not, in the view of the Committee, constitute “under construction”.

5.5 Whilst the Committee accepts that the Licensees may not have deliberately set out to mislead people, the Committee considers the advertising used by the Licensees with the phrase “under construction” was inaccurate” and potentially misleading. The Committee has concluded that in advertising the Marina development in the way that they did the Licensees have breached 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.

5.6 Accordingly the Committee has determined that under section 89(2)(b) of the Act that it has been proved, on the balance of probabilities, that Mr. Duncan Morison and Ms. Gail Morison, have 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 Licensees under either the Real Estate Agents Act 1976 or the Act, if any such decision exists, and provide it to the Committee, the Licensees and the Complainant.

6.3 The Licensees 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 Licensees, 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 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.

8.3 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

Patrick Waite

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 1st October 2013