Sapra - Complaint No CB7038425 [2013] NZREAA 313 (20 June 2013)

Last Updated: 16 October 2014

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

And

In the Matter of Complaint Nos: CB7038425, CB7045769 & CB7070915

In the Matter of Sukhbir Sapra & Rupinder Sapra

License Nos: 10017284 & 10012856

And

Shelter Realty Limited
License No: 10020724

Decision of Complaints Assessment Committee

Dated this 20th day of June 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 Mr Sukhbir (Bobby) Sapra (Licensee 1) and Mrs Rupinder Sapra (Licensee 2). Both Licensee 1 and Licensee 2 are licensed under the Real Estate Agents Act 2008 (the Act). Licensee 1 holds an agents license and is the principal officer working out of Shelter Realty Limited (New Lynn). Licensee 2 holds a salespersons license and also works out of Shelter Realty Limited (New Lynn). Shelter Realty Limited (the Agency) trades as Harcourts New Lynn.

1.2 The complaint relates to the conduct of Licensee 1 and Licensee 2 when the Complainant purchased the Property. The Complainant alleges that Licensee 1 and Licensee 2 did not disclose that the Vendor was an Employee of the Agency.

1.3 The Complainant further alleges that Licensee 1 and Licensee 2 misrepresented the level of interest in the Property. The Complainant also alleges that they were only provided with the cover of the NZ Residential Property Sale and Agreements Guide at the time of purchase.

1.4 The complaint was received by the Real Estate Agents Authority (the Authority) on 29 August 2012 and referred to a Complaints Assessment Committee (the Committee). The Committee initially considered the complaint on 17 September 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 26 November 2012 and 11 February 2013.

2. Material Facts

2.1 In August 2008, the Property was transferred to the Vendor. The Vendor is the Property manager of the Agency.

2.2 On 8 May 2012, Licensee 1 and Licensee 2 completed an appraisal of the Property “between high

300’s to low 400’s”. As part of the investigation, comparable sales information was obtained by the Authority Investigator. One of the three Properties provided to support the appraisal was listed after the Property was sold. This suggests that this information was not available at the time of listing and that no written appraisal had been given. A listing agreement was completed the next day. Licensee 1 and Licensee 2 allege that the Vendor prepared the listing agreement and they checked and signed it.

2.3 The Complainant initially viewed the Property at around 6 or 6.30pm on 10 May 2012. The Complainant stated that this was important as the Property was covered by power lines, which the Complainant and his wife did not see at that time of night. They only saw the power lines when they were shown the Property again by Licensee 2 after the sale became unconditional. Both Licensees state that the Complainant and his wife could clearly see the power lines and were aware of them when they first viewed the Property.

2.4 The Complainant states that after the first viewing he wanted to put in an offer on the Property of

$380,000 but was told that the Vendor was an old man and he would not accept that, so they increased their offer to $390,000. Licensee 2 arrived at the Complainant’s house at 9pm and asked

if they would go up to $395,000 as the Vendor would be more likely to accept. The offer was accepted that night.

2.5 The Complainant stated that the approved guide was not given to them, just the cover of the booklet, when they signed the offer. Both Licensees refuted this and state they did provide the guide booklet and point out that the Complainant signed on the sale and purchase agreement that he had been provided with one.

2.6 The Complainant further states that Licensee 2 told him and his wife that eighteen Customers had been through the Property. Both Licensees state that it was four or five who went through the day the Complainant purchased the Property. The Vendor states that the Complainant was the only one to look at the Property. In an email dated 27 November 2012, Licensee 2 acknowledged that there were no open homes and that three people had been through the Property. Two of those had been introduced through another Licensee from the same Agency, and the other was taken by Licensee

1.

2.7 The Complainant states that he and his wife were never informed that the Property was owned by a Property Manager from the Agency. Further, they were told that the Property was owned by an old man. Both Licensees, in response, state that when the Complainant was shown the Property, he and his wife were informed that the Vendor was an Employee of the Agency although no written disclosure was provided.

2.8 The Complainant states that he wanted to obtain a LIM report and a building report but was told by Licensee 1 that he did not need to. Both Licensees state that the Complainant was told he could get a LIM if they needed one. The Complainant and his wife signed on the sale and purchase agreement “No” to a LIM. Both Licensees further state that the Complainant was told by his wife that the Property was brick and tile and they did not need a building report.

2.9 Licensee 2 failed to inform the Complainant that the heat pumps did not come with the Property and that the Vendor planned to take them with him. On 17 May 2012, a variation of the offer was made that included the heat pumps.

2.10 After the Property became unconditional on 19 May 2012, the Complainant went to view the Property and stated that’s when he noticed the power lines. The Complainant and his wife state that before the Property went unconditional, any attempts they made to organise a viewing were, they allege, declined by Licensee 1. The Complainants pointed out the power lines to Licensee 1 who it is alleged responded saying it was their fault for “not keeping their eyes open.” One of the other Prospective Purchasers who viewed the Property around 6.15 or 6.30pm stated that the power lines were “so visible and it is a huge thing”. She is certain that she saw the power lines.

2.11 The Complainant and his wife were informed that on settlement day Licensee 1 would be there and the Property would be cleaned. When they arrived the Property was dirty and Licensee 1 was not there. Licensee 2 and the Vendor were at the Property. According to the Complainant, Licensee 2 and the Vendor pretended not to know each other.

3. Relevant Provisions

3.1 A complaint can only be made in relation to 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 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 the Act; or

(c) is incompetent or negligent; or

(d) would reasonably be regarded by agents of good standing as being unacceptable.

3.3 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 or rules made under this Act; or

(iii) regulations or rules made under the 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.

3.4 133 Approved guide to be provided when contractual document provided

(1) An agent must ensure that subsection is complied with before a person signs a contractual document if the contractual document-

(a) relates to the proposed sale of residential property in respect of which the agent is carrying out real estate work; and

(b) was provided to the person by the agent or by a licensee on behalf of the agent.

(2) The agent or the licensee on the agent’s behalf must have-

(a) provided the person with a copy of the approved guide; and

(b) received a signed acknowledgement from the person that the client has been given the approved guide.

(3) In this section- Approved guide means a guide that- (c) is about the sale of residential property:

(d) has been approved by the Authority for the purposes of this section.

(4) A contravention of this section does not affect the validity of any contract.

3.5 136 Disclosure of other benefits that licensee stands to gain from transaction

(1) A licensee who carries out real estate agency work in respect of a transaction must disclose in writing to every prospective party to the transaction whether or not the licensee, or any person related to the licensee, may benefit financially from the transaction.

(2) Subsection does not apply to any matter disclosed under section 128 or 134.

(3) The licensee must make the disclosure required by subsection before or at the time that the licensee provides the prospective party with any contractual documents

that relate to the transaction.

(4) For the purposes of this section, an agent does not benefit financially from a transaction merely because of any commission payable to the agent under an agency agreement in respect of the transaction.

(5) A contract entered into in contravention of this section may not be cancelled merely because of that contravention.

3.6 137 Meaning of Licensee and person related to licensee in section 134 to 136

(1) In sections 134 to 136, a person is related to a licensee if the person is - (a) a partner of the licensee under a partnership agreement:

(b) an employee of the licensee:

(c) a branch manager or salesperson engaged by the licensee: (d) the licensee’s spouse or civil union partner:

(e) the licensee’s de facto partner:

(f) a child, grandchild, brother, nephew, or niece of the licensee or of any person referred to in paragraphs (d) or (e):

(g) any other child who is being, or is to be, cared for on a continuous basis by the

licensee or any person referred to in paragraph (d) or (e):

(h) any parent of the licensee or of any person referred to in paragraph (d) or (e):

(i) an entity that has an interest in the licensee or an entity (not being an entity listed on the New Zealand Stock Exchange) in which the licensee has an interest.

3.7 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 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 discipline.

3.8 In relation to this complaint the following Rule(s) may apply.

Rule 9.5 An appraisal of land or a business must be provided in writing to a client by a licensee; must realistically reflect current market conditions; and must be supported by comparable information on sales of similar land in similar locations or businesses.

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.

4. Discussion

4.1 The Complainant stated that at the time he and his wife purchased the Property they were led to believe that the Vendor of the Property was an old man.

4.2 The Complainant later discovered on settlement day that the Vendor was an Employee of Licensee

1 and worked as the Agency’s Property Manager.

4.3 Licensee 1 stated that he understood that disclosure was required in writing to every Prospective Purchaser when the Property being sold was owned by a Licensee. However, Licensee 1 didn’t believe that he had an obligation to disclose when the Vendor was an Employee of the Agency. The

Act is clear on this point and disclosure under section 136(1) is mandatory. Accordingly, the Committee finds Licensee 1 and the Agency has breached the Act and the Rules in relation to this part of the complaint.

4.4 The Complainant stated that the first time they viewed the Property was around 6 or 6.30pm with Licensee 2 and that they did not notice that the Property was covered by power lines as it was difficult to see at that time of night. Furthermore, they state that they only saw the power lines once the Property became unconditional. A different Licensee with the Agency submitted that he introduced two other Prospective Purchasers to the Property at a similar time as the Complainant viewed it, and both stated that the power lines were visible above the Property. The Committee prefers the evidence of the Prospective Purchasers that the power lines were visible. The Complainant stated that they did not become aware of the power lines until the Property became unconditional, however, the Complainant could have or should have driven past the Property before confirmation. Accordingly, the Committee finds that the Licensee 1 and Licensee 2 have not breached the Act or the Rules in relation to this part of the complaint.

4.5 In relation to the number of people who viewed the Property before and during the time the Complainant purchased, the Complainant stated that Licensee 2 advised him that he was the eighteenth person to view the Property the day they made their offer. Furthermore, Licensee 1 stated that he had had four or five people view the Property. In an email dated 27 November 2012, Licensee 2 confirmed that there had been no open homes on the Property, two people had been introduced to the Property the different Licensee, one family by Licensee 1 and Licensee 2 had introduced the Complainant. The Committee is of the view that Licensee 1 and Licensee 2 misled the Complainant and his wife in relation to the number of people who viewed the Property in an effort to create urgency, so as to persuade the Complainant to make an offer on the Property. Accordingly, the Committee finds that Licensee 1 and Licensee 2 had misled the Complainants and have breached the Act and the Rules in relation to this part of the complaint.

4.6 The Complainants stated that the approved guide was not given to them, just the cover of the booklet, when they signed the offer. Licensee 1 and Licensee 2 refute this and state that they did provide the “guide booklet” and point out that the Complainant signed that he had been provided with one on the sale and purchase agreement. The Committee is of the view that on the balance of probabilities, the Complainant did receive a copy of the approved guide and not just the cover and the Committee finds that Licensee 1 and Licensee 2 have not breached the Act or the Rules in relation to this part of the complaint.

4.7 In relation to the appraisal letter Licensee 1 and Licensee 2 gave the Vendor of the Property stating that the value was “between high 300’s to low 400’s,” the Committee is of the view that the appraisal was not sufficient to meet the requirements of the Act and the Rules. As part of the investigation, comparable sales information was sought from Licensee 1 by the Authority Investigator. In an email of 17 October 2012, Licensee 1 provided comparable sales information. The Committee noted that one of the three comparable sales was listed after the Property was sold which suggests that the information was not available at the time of listing. The Committee is of the view that on the balance of probabilities no written appraisal was provided to the Vendor with comparable sales and no analysis of those sales was undertaken to reflect the Property’s current market value. Accordingly, the Committee finds that Licensee 1 and Licensee 2 have breached the Act and the Rules.

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 Sukhbir Sapra and Rupinder Sapra has engaged in unsatisfactory conduct.

5.3 In regard to Shelter Realty Limited, the Committee has determined under section 89(2)(b) of the Act that the Agency is guilty of unsatisfactory conduct for failing to notify in writing to every prospective party to the transaction that the vendor was an employee and stood to benefit from the sale.

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.

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 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: 20 June 2013