Coull Battell Limited - Complaint No CB5844575 [2013] NZREAA 50 (20 March 2013)

Last Updated: 2 March 2014

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

And

In the Matter of Complaint No: CB5844575

In the Matter of Coull Battell Limited

License Number: 10071630

Decision of Complaints Assessment Committee

Dated this 20th March 2013

Complaints Assessment Committee: CAC20002

Chairperson: Patrick Waite

Deputy Chairperson: Deirdre McNabb

Panel Member: Barrie Barnes

Complaints Assessment Committee

Decision finding unsatisfactory conduct

1. Background to the Complaint

1.1. The Complainant complained to the Real Estate Agents Authority (the Authority) about the conduct of Mr. John Reid (the Licensee) and Coull Battell Limited (the Agent). Coull Battell Limited traded as s Professionals Real Estate Limited. Mr. Reid worked for them as a salesperson. The Complaint was received by the Authority on 17 November 2011. The Committee noted that whilst the Licensee was licensed under the Real Estate Agents Act 2008 (the Act) over the period that the complaint referred to, his license had in fact expired on 31 March 2011 and he had since retired as a salesperson.

1.2. The complaint is about the conduct of the Licensee and the Agent during the period January to April

2011 in relation to the sale of a building. The Complainant was a shareholder of the company that owned the property.

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 16 January 2012 and made a decision to inquire into it.

1.4. The Committee invited the Licensee to provide a response to the complaint and a response was received on 1 February 2012. This was followed up with an interview with the Licensee on 29 May

2012 by the Authority’s investigator, an interview with the Agent Licensee of Coull Battell Limited and a Complainant interview on 8 June 2012.

1.5. Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered by the Committee on 3 July 2012.

1.6. 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.

1.7. On 20 July 2012 the Complaints Assessment Committee (the Committee) of the Real Estate Agents

Authority (the Authority) found that Licensee Mr. John Reid was guilty of unsatisfactory conduct.

1.8. Whilst not forming part of the Complaint against Mr. John Reid, in its investigation the Committee identified that an agency agreement was not completed as required by section 126. It is acknowledged that a sale of the property was successfully completed in which Mr. Reid was involved however the Act is very clear that an agency agreement is required under section 126. In addition the Committee viewed with concern that despite the fact that an agency agreement had not been completed, Coull Battell Limited proceeded to distribute commission on the sale to the Licensee and other sales persons in contravention of section 126 which provides:

An agent is not entitled to any commission or expenses from a client for or in connection with any real estate agency work carried out by the agent for the client unless-(a) the work is performed under a written agency agreement signed by or for or on behalf of –(i) the client; and (ii) the agent.

1.9. In light of the above the Committee then considered the contribution that the Agent Licensee had made to the situation around which the complaint was based and invited him to respond to their concerns. In his letter of 18 July 2012, he states “Obviously I did not check that all listings were in

place as from 1 July 2010 when I became sales manager of Professionals after the merger .” The Committee found that statement of concern as it would have expected that the Agent Licensee would understand his responsibility as agent licensee of a team of salespersons to ensure that (a) all listings were correct in every detail, (b) when he became aware that Mr. Reid had achieved a sales agreement for the property that was the subject of the complaint against Mr. Reid, he would have immediately checked that everything was in order.

1.10. If the Agent Licensee had followed these steps he would have discovered that an agency agreement had not been completed and could have provided assistance to Mr. Reid in order to avoid the problems that subsequently arose with the property sale as evidenced by the complaint.

1.11. On 31 October 2012 the Complaints Assessment Committee (the Committee) of the Real Estate Agents Authority (the Authority) considered Agent Licensee’s response and concluded that he had failed to provide adequate supervision and as a result found him guilty of unsatisfactory conduct.

1.12. Having satisfied itself that it had now fully completed its inquiry into the complaint, the matter was again considered by the Committee on 15 February 2013 to determine whether the Agent, Coull Battell Limited, had taken sufficient care to ensure that adequate supervision had been put in place to avoid the situation that had arisen with their salesperson Mr. Reid.

1.13. 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. Relevant Provisions

2.1. The Committee examined the information supplied by the Complainant in his 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 Agent 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.

Section 126 No entitlement to commission or expenses without

Agency Agreement.

(1) An agent is not entitled to any commission or expenses from a client for or in connection with any real estate agency work carried out by the agent for the client unless-

(a) the work is performed under a written agency agreement signed by or for or on behalf of –

(i) the client; and

(ii) the agent; and

(b) the agency agreement complies with any applicable requirements of any regulations made under section 156; and

(c) a copy of the agency agreement signed by or on behalf of the agent was given by or on behalf of the agent to the client within 48 hours after agreement was signed by or on behalf of the client

2.2. 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

8.3 An agent who is operating as a business must ensure that licensees engaged or employed by the agent are familiar with the Act and other legislation relevant to real estate agency work, associated regulations, and any rules made by the Authority, including these rules.

8.4 An agent who is operating as a business must ensure that licensees engaged or employed by the agent are aware of and have the opportunity to undertake any continuing education required by the Authority.

3. Discussion

3.1. The issue for the Committee is the lack of supervision of Mr. Reid. The Committee would have expected that the Agent would have ensured that processes were in place that would have identified the lack of an agency agreement. If so that would have been dealt with before the sales transaction was completed so that ALL NECESSARY DOCUMENTS WERE IN PLACE. Had the Agent and its management followed what the Committee considers to be “Best Practice”, the lack of an Agency Agreement could have been rectified before the complaint issues arose.

3.2. The Committee views with some real concern that Mr. Reid and others were paid commission for the sale of the property in a manner that contravenes section 126: An agent is not entitled to any

commission or expenses from a client for or in connection with any real estate agen cy work carried out by the agent for the client unless-(a) the work is performed under a written agency agreement signed by or for or on behalf of –(i) the client; and (ii) the agent.

4. Decision

4.1. 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.

4.2. The Committee has determined under section 89(2)(b) of the Act that is has been proved, on the balance of probabilities, that Coull Battell Limited has engaged in unsatisfactory conduct.

5. Orders

5.1. 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.

5.2. The Committee requires the Case Manager to obtain a record of any previous disciplinary decision in respect of the Agent under either the Real Estate Agents Act 1976 or the Act, if any such decision exists, and provide it to the Committee, the Agent and the Complainant.

5.3. The Agent may file submissions on what orders, if any should be made.

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. The Committee has deferred making any decision on publication until its hearing to decide what orders, if any, should be made.

7. Right of Appeal

7.1. 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.

7.2. 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.

7.3. 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.

7.4. 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

Patrick Waite

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 20th March 2013