Franklin - Complaint No CB6766832 [2013] NZREAA 338 (21 November 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: CB6766832

In the Matter of Edward Franklin

Licence Number: 10014254

Decision of Complaints Assessment Committee

Dated this 21st day of November 2013

Complaints Assessment Committee: CAC20008

Chairperson: Graham Rossiter

Deputy Chairperson: Ellen Ryan

Panel Member: Joan Harnett-Kindley

Complaints Assessment Committee

Decision on Orders

1. Background

1.1 This Complaints Assessment Committee (the Committee) has made a finding of ‘unsatisfactory conduct’ against Mr Edward Franklin (the Licensee), salesperson licensee of Hamilton. The complaint arose out of Mr Franklin’s handling of a transaction regarding a house property in respect of which the Complainants were the purchasers. A breach of rules 6.2 and 6.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 was found to have been committed in that the Licensee misled the Complainants regarding the effect of certain documents submitted by Mr Franklin for their execution. Those documents purported to provide for a bid by the Complainants at a forthcoming auction of the subject property while, at the same time, binding them not to withdraw that bid and/or offer, however that might be characterised.

2. Relevant Provisions

2.1 Having made a finding of unsatisfactory conduct against Edward Franklin, the Committee must now decide what orders, if any, should be made under section 93 of the Real Estate Agents Act 2008 (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.

3. Discussion

3.1 Any determination as to what orders, if any, should be made following, as in this case, a finding of unsatisfactory conduct, must, as a starting point, be in terms of, and with reference to, the basic objects and purposes of this Committee’s empowering statute, i.e. the Real Estate Agents Act 2008. These are set out in section 3 of the Act and are to “promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work.” Thus, it follows that the Act is all about a) consumer protection and b) the maintenance of industry standards.

3.2 Submissions have been received from counsel for the Complainants and Mr Franklin. What has been received from the former is relatively concise and to the point. It is suggested that the Committee should censure or reprimand Mr Franklin, order him to “undergo further training or education” and, finally, order him to reimburse the sum of $4,750.20, being legal costs apparently “ incurred in respect of the Committee’s investigation and hearing.” We are told that an order censuring or reprimanding Mr Franklin will underline the seriousness in which his conduct is viewed by the Committee and act as a deterrent to other licensees from engaging in any such conduct. Further, the Complainants “have been left out of pocket by having to instruct (their lawyers) to assist them in bringing Mr Franklin to account.”

3.3 Mr Franklin begins the main part of his submission by stating that he “fully accepts and regrets that in transacting the Complainants’ contract (he) made procedural errors.” This acknowledgement is welcome because whether there is or is not some insight on the part of a licensee with respect to whatever has been done wrong is an important consideration. However, a point of some possible concern and difficulty is identifying just what it is Mr Franklin is accepting as having been inappropriate conduct on his part.

3.4 Further to paragraph 3.3 above, Mr Franklin says that he should not have had the Vendors sign the terms and conditions which had been signed by the Complainants. He goes on to say, however, it is the view of his principal and its franchisor that “the pre-auction documentation binds the purchaser.” Our view is different. Mr Franklin goes on to say that his ‘insistence’ to the Complainants that they could not withdraw came from his principal’s procedures. His view of the matter reflects the “clear understanding of (the principal and its franchise) that a pre-auction offer binds the buyer until other interest is ruled out or an early auction is held.”

3.5 Our view is that the unsatisfactory conduct of Mr Franklin must be and is met with a censure and reprimand by this Committee. Further to that, we consider that the overall merits and justice of the case will be sufficiently satisfied by a requirement that the Licensee make a reasonable contribution to the Complainant’s legal costs. A fine is not required and the Committee has an impression that a situation such as this will be handled differently and better by the Licensee in the future.

3.6 As to the amount the Licensee should be ordered to contribute to the Complainant’s legal costs, the processes of the Authority are consumer friendly and relatively straightforward. The basic aim of the Authority is that its procedures should be as lawyer-free as practicable. That said, it is understandable that the Complainants had to seek legal assistance with regard to the issues arising from their complaint, which clearly did have some complexity.

3.7 With respect to the amount sought of legal costs, i.e. $4,750.20, with no disrespect to the Complainant’s lawyers, their invoices are somewhat lacking in detail and do, we have to say, suggest some element of overlap. Overall, the Committee considers a reasonable contribution by Mr

Franklin to the Complainant’s legal costs would be $2,000.00. We so find and order.

4. Decision

4.1 This Committee has determined as follows:

a) Mr Edward Franklin is censured and reprimanded for the unsatisfactory conduct referred to in this decision, and

b) Mr Franklin is ordered to pay the Complainant, not later than 10 working days from the issue of this decision, the sum of $2,000.00 as a contribution to the Complainant’s legal costs incurred with respect to the subject matter of the complaint.

5. Publication

5.1 One of the Committee’s functions pursuant to section 78(h) of the Act is to publish its decisions.

5.2 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.

5.3 The Committee directs publication of its decision, but omitting the names and identifying details of the Complainant (including the address of the property), and any third parties in the publication of its decision. The name of the Licensee and the company he works for should be published.

5.4 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.

6. Right of Appeal

6.1 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.

6.2 Appeal is by way of written notice to the Tribunal. You should include a copy of this Notice with your Appeal.

6.3 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: 21 November 2013