Davies - Complaint No CB7073867 [2013] NZREAA 65 (10 April 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: CB7073867

In the Matter of Bobbie-Lee Davies

Licence Number: 10051812

Decision of Complaints Assessment Committee

Dated this 10th day of April 2013

Complaints Assessment Committee: CAC20005

Chairperson: Chris Rogers Deputy Chairperson: Stuart Rose Panel Member: Denise Bovaird

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 Bobbie-Lee Davies (the Licensee). The Licensee is licensed under the Real Estate Agents Act 2008 (the Act). She holds a salespersons licence and at the time of the alleged conduct was working for Monarch Real Estate Limited trading as Harcourts Hillcrest, Hamilton (Harcourts).

1.2. The Complainant maintains that an Auctioneer was wrong to allow the Licensee to continue bidding at an auction when there had been no appropriate disclosure by the Licensee.

1.3. The Complainant maintains that the Licensee was in breach of the Act by not disclosing an intention to bid at a property auction.

1.4. The complaint was received by the Real Estate Agents Authority (the Authority) on 18 September

2012 and referred to a Complaints Assessment Committee (the Committee). The Committee considered the complaint on 5 October 2012 and received and considered an investigation report on 1 March 2013.

2. Material Facts

2.1. The Property was scheduled to be sold by Harcourts at public auction on 30 August 2012.

2.2. After making the appropriate arrangements with Harcourts, the Complainant was introduced to the

Property by a Salesperson working for another local real estate agency.

2.3. The Complainant and his wife attended the auction and made several bids before withdrawing prior to the Property being sold or passed in.

2.4. The Licensee then began bidding against the remaining third party.

2.5. When bidding slowed the auctioneer called a halt to proceedings in order to establish the status of the Licensee and discuss the situation with the vendor. The auctioneer recommenced the auction after announcing to the attendees that a Licensee was bidding on her own behalf.

2.6. The auction continued with the Licensee eventually holding the top bid at $383,000.

2.7. The Property was ‘passed in’ as the top bid was below the reserve.

2.8. The Licensee was then invited to negotiate with the vendors at the reserve price.

2.9. The vendor signed a copy of form 2 ‘Client consent for licensee to acquire interest in property’ satisfying the provisions of section 134 of the Act. An agreement for sale and purchase was then signed by the Licensee.

3. Discussion

3.1. The Complainant maintains that their enthusiasm for bidding at the auction was ‘Knocked off’ by

the change in atmosphere in the room when the Licensee began bidding.

3.2. In submissions from the Licensee, the Auctioneer and the Vendor, there is general agreement that the Complainant had already pulled out of the bidding prior to the Licensee making a bid.

3.3. The Salesperson from another local agency, who introduced the Complainant to the Property, has stated that the Complainant had been outbid by a third party and perhaps was already over their financial limit for the property, prior to the Licensee bidding.

3.4. The Complainant’s wife has stated that they had stopped bidding by the time the Licensee began bidding.

3.5. It is clearly evident that the Complainant had stopped bidding at the auction before being aware of the Licensee’s interest in the property.

3.6. The Complainant maintains that ‘it felt like something dodgy was going on’ and that the Licensee should have been prevented from continuing to bid therefore giving the Complainant a better chance of being the party to negotiate an agreement with the Vendor when he property was passed in.

3.7. After interrupting the auction to determine the status of the Licensee the Auctioneer approached the Vendor to inform them that a Licensee was bidding on her own behalf and the Vendors consented verbally to her continuing. The Auctioneer then announced to the attendees that the Licensee was bidding on her own behalf and further bids from the floor were called for.

3.8. The Complainant believes that the property was passed in to a third party who then withdrew their interest, however the property was in fact passed in to the Licensee at $383,000 with an under bidder (not the Complainant) at $382,000.

3.9. There is no compelling evidence to indicate that the Complainant would have been likely to negotiate with the Vendor in preference to the under bidder even if the Licensee had not continued bidding.

3.10. The Complainant maintains that the Licensee was in breach of the Act by not disclosing an intention to bid at a property auction.

3.11. In normal private treaty property transactions a licensee wishing to acquire land belonging to a client for whom that licensee is carrying out real estate agency work is only required to gain the appropriate consent of the client in writing before a contract for sale and purchase is actually signed by the client. There is no requirement under the Act for disclosure to be made prior to that situation arising.

3.12. Attempting to buy the property at auction produced a different circumstance, one where the Licensee could well have been the top bidder in excess of the reserve, therefore creating a contract for the sale and purchase of the property before any consents had been sought as per the provisions of section 134 of the Act.

3.13. As it transpires the Licensee has in fact complied with the Act in so far as the Vendor did give consent in the prescribed form, prior to signing and accepting an offer from the Licensee. However the Licensee’s eventual compliance was more to do with good fortune than good agency practice.

3.14. By bidding at auction, for a property Harcourts had listed, the Licensee clearly placed herself in a position to breach section 134 of the Act.

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 Bobbie- Lee Davies has engaged in unsatisfactory conduct.

4.3. By bidding at auction for a property Harcourts had listed and not seeking the prior consent of the client for whom real estate work was being carried out as defined by section 134 of the Act, the licensee placed herself in a position to breach section 134 of the Act.

4.4. The Licensee has failed to demonstrate a sound knowledge of the Act as required under Rule 5.2 and has conducted herself in a manner that is likely to bring the industry into disrepute, in breach of Rule 6.3.

5. Relevant Provisions

5.1. 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).

5.2. 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 incompetent or negligent; or

(d) would reasonably be regarded by agents of good standing as being unacceptable. 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 licensee’s fitness to be a licensee.

134 Contracts for acquisition by licensee or related person may be cancelled

(1) No licensee may, without the consent of the client for whom he or she carries out real estate agency work in respect of a transaction, directly or indirectly, whether by himself or herself or through any partner, subagent, or nominee, acquire the land or business to which the transaction relates or any legal or beneficial interest in that land or business.

(2) No licensee may, without the consent of the client, carry out or continue to carry out any agency work in respect of a transaction if the licensee knows or should know that the transaction will, or is likely to, result in a person related to the licensee acquiring the land or business to which the transaction relates or any legal or beneficial interest in that land or business.

(3) The client’s consent is effective only if— (a) given in the prescribed form; and

(b) the client is provided with a valuation in accordance with section 135. (4) The client may cancel any contract—

(a) made in contravention of subsection (1); or

(b) brought about by agency work carried out in contravention of subsection (2).

(5) No commission is payable in respect of any contract of the kind described in subsection (4), regardless of whether the client cancels the contract.

(6) The client may recover any commission paid in respect of any contract of the kind described in subsection (4) as a debt.

(7) For the purposes of this section, a person who is the client of an agent in respect of a transaction is also the client of any branch manager or salesperson whose work enables the agent to carry out real estate agency work for that client.

(8) This section and section 135 have effect despite any provision to the contrary in any agreement.

5.3. Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 (the Rules).

5.2 A licensee must have a sound knowledge of the Act, regulations made pursuant to the Act, rules issued by the Authority (including these rules) and other legislation relevant to real estate agency work.

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

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, the Licensee and the Complainant.

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

Chris Rogers

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 10 April 2013