Warren - Complaint No C00419 [2013] NZREAA 320 (21 August 2013)

Last Updated: 19 October 2014

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

And

In the Matter of Complaint No: C00419

In the Matter of Peter Warren

License Number: 10013182

Decision of Complaints Assessment Committee

Dated this 21st day of August 2013

Complaints Assessment Committee: CAC20007

Chairperson: Paul Biddington Deputy Chairperson: Ann Skelton Panel Member: Joan Harnett-Kindley

Complaints Assessment Committee

Decision finding unsatisfactory conduct

1. The Complaint

1.1. The Complainants have complained to the Real Estate Agents Authority (the Authority) about the conduct of Peter Warren (the Licensee). The Licensee is licensed under the Real Estate Agents Act 2008 (the Act). He holds a salespersons license and is a franchise holder with Mike Pero Real Estate Limited (the Agency).

1.2. The complaint relates to the Licensee’s actions in the preparation of an agreement for the purchase a Property, following an agreement in principle by the Complainants and the Vendor.

1.3. The Complainants allege that the Licensee:

(a) Failed to complete the sale and purchase agreement correctly listing individuals as the Vendors when the Property was owned by a family trust – meaning the sale and purchase agreement was void.

(b) Failed to realise that the sale and purchase agreement was invalid and the Complainants found themselves in a multi-offer situation.

1.4. The complaint was received by the Real Estate Agents Authority (the Authority) on 5 February 2013 and referred to a Complaints Assessment Committee (the Committee). The Committee initially considered the complaint on 28 February 2013 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 10 June 2013.

2. Material Facts

2.1. The Complainants were introduced to the Property during a three week deadline sale programme.

The Complainants showed strong interest in the Property but declined to put in an offer by the deadline date stating that they would be looking at other properties.

2.2. On 19 October 2012, the Licensee emailed the Complainants information relating to the Property.

The information described the owners as Owner 1, Owner 2, and Owner 3. A sale and purchase agreement had been prepared by the Agency on behalf of the Vendors in anticipation for a deadline sale (4pm, 1 November 2012) and accompanied the information. This agreement described the owners as Owner 1, Owner 2, and Owner 3. Also included in the information were earthquake claims and a scope of works. These described the owner of the Property as The H Family Trust.

2.3. On 9 November 2012 the Complainants phoned the Licensee expressing an interest in purchasing the Property for $450,000 and wanted the Licensee to convey this to the Vendor verbally to see if they would be interested at that price. The Licensee stated that he explained to the Complainants that this was not appropriate and that the offer should be in writing. However, the Complainants refused to do so and insisted that the Licensee put the offer verbally to the Vendor.

2.4. The Complainants were subsequently informed that the Vendors would not accept any offer below

$480,000. The Complainants declined to proceed any further stating that the Vendor’s expectations

were too high and they would not be purchasing the Property.

2.5. It was at this time that the Licensee informed the Complainants that there was another party interested in the Property and they were keen to put in an offer but wanted to confirm that their house had sold.

2.6. On 13 November 2012 the Complainants instructed the Licensee to draw up a contract and email it to their Solicitor for review prior to presenting the offer, unsigned, to the Vendors. The Licensee stated that he had earlier explained to the Complainants that this was inappropriate. Notwithstanding this advice, the Complainants instructed the Licensee to allow the Vendors to decide if they wanted to sign the contract.

2.7. The Licensee stated that he then contacted the compliance manager for the Agency, Mr. F, and explained the situation. Mr. F advised that it was not “best practice” and to make sure he warned the Vendors accordingly. The Licensee further stated that he then contacted the Vendors and explained that he had an unsigned offer and that it was not the best practice to present such an offer, however the Vendors had been happy to review the offer because the price was right. The Licensee stated that when he presented the offer to Vendor they pointed out that the contract needed to be in the name of The H Family Trust however the agreement was not changed.

2.8. On 14 November 2012 the Licensee emailed the sale and purchase agreement to the Complainants, signed by the Vendor, and also sent a copy to their Solicitor for review. The Licensee stated that he requested that he be advised when they had heard from their Solicitor. The Complainants signed the sale and purchase agreement and took it to their Solicitor.

2.9. On 14 November 2012 the Licensee stated that he contacted the Complainants to say that the other Purchasers interested in the Property had now sold and the Complainants were now in a multi – offer situation. The Licensee further stated that the Complainants were unavailable for most of the day and that he was uncertain whether the Complainants had signed the agreement or not. The Licensee stated that he had not requested the Vendors to sign the other offer until he had received confirmation from the Complainants that they had signed or not signed their contract. The Complainants contacted the Licensee to say that they had signed the contract.

2.10. On 14 November 2012 the Complainant’s Solicitor advised the Complainants that she had received a call from the Vendors Solicitor advising that the Property was owned by a family trust and one of the Trustees had not signed, therefore it was not a binding contract.

2.11. The Complainants stated that the Licensee suggested amending the sale and purchase agreement to reflect the correct Owner. The correction was made between the Solicitors. The Licensee then presented the agreement to the Vendor to initial the changes. The Licensee s tated that he contacted the Complainants and advised that the Vendor had signed. The Complainant requested a copy of the agreement and when the Complainants received a copy they found that the third Trustee had not signed. The Complainants contacted the Licensee and were advised that the contract was with the Vendor ’s Solicitor who was the third Trustee and that he would forward a completed copy to the Complainants once he received it back.

2.12. The Property settled on 20 December 2012 and the Complainants were instructed by the Licensee that they could collect the keys for the Property from his home address. The Complainants arrived at the Property and when they entered they found that the Property was alarmed. The Complainants contacted the Licensee and were given the alarm code. The Licensee stated that he had no knowledge that the alarm would be on or off as he had not been given the alarm code during the time he had had the Property for sale.

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 in comp ete nt o r 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 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 licensees fitness to be a licensee.

3.4. 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.

3.5. 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: 9.10

A licensee must not submit an agency agreement or a sale or 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. The Committee accepts that the process of purchasing the Property the way the Complainants had insisted on was inappropriate, but not uncommon. The Licensee’s conduct in checking with his manager on how to proceed was commendable and his advice to the Vendors was appropriate. However, the Committee is of the view that the Licensee’s conduct of not inserting the correct Owner’s name in the sale and purchase agreement, after being put on notice by the Vendors, falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent Licensee. In his evidence, the Licensee acknowledged that he should have inserted the correct name of the Owner, when he was alerted by the Vendors, and it was a mistake on his part not to have done so. Nevertheless, the Licensee proceeded to complete the sale and purchase agreement with the Complainants.

4.2. Furthermore, after being alerted by the Vendors that the Property was in a Trust, the Licensee knew or should have known that a third signature was required to make the sale and purchase agreement valid. However, the Licensee forwarded the sale and purchase agreement to the Complainant’s Solicitor without first obtaining the remaining Trustees signature. The Complainant’s Solicitor advised the Vendor’s Solicitor that the sale and purchase agreement was invalid due to not having the correct name of the Owner and no acceptance by the third Trustee. The third Trustee was the Vendor’s Solicitor. After being advised, the Licensee then proceeded to have the correct name of the Owner inserted and obtained all the necessary signatures.

4.3. The Committee is of the view that the conduct of the Licensee in relation to not inserting the name of the correct Owner and not obtaining the appropriate signatures falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent Licensee. Accordingly, the Committee finds that the Licensee has breached the Rules and the Act in this part of the complaint.

4.4. In relation to that part of the complaint, where the Complainants alleged that the Licensee placed them in the position of a multi-offer situation, the Committee is of the view that the conduct of the Licensee by advising the Complainants of a possible multi-offer was appropriate. Furthermore, the conduct of the Licensee by not having the Vendors sign the second offer until he had confirmation from the Complainants that they had signed their agreement was also appropriate. The C ommittee is also of the view that the conduct of the Licensee never placed the Complainants in a position where they may lose the Property to another Purchaser. Accordingly, the Committee finds that the Licensee has not breached the Rules or Act in this part of the complaint.

4.5. The Committee is of the view that the inconvenience of not having the alarm code at the time of settlement was not something the Licensee was aware of, as he had not been given the code while selling the Property, however he was able to assist the Complainants to correct the matter. 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 Peter Warren 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: 21 August 2013