Complaint No C05172 [2014] NZREAA 245 (22 August 2014)

Last Updated: 7 March 2015

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

And

In the Matter of Complaint No: C05172

In the Matter of Licensee One

License Number: XXXXXXXX

Licensee Two

License Number: XXXXXXXX

The Agency

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 22nd day of August 2014

Complaints Assessment Committee: CAC303

Chairperson: Marina Neylon Deputy Chairperson: Susan D’Ath Panel Member: Amanda Elliott

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1 This is a complaint made by the Complainant against Licensee One and Licensee Two. After receiving the initial referral report the Complaints Assessment Committee (the Committee) decided to include a third licensee in our in investigation into the complaint. The third licensee is the Agency.

1.2 Licensee One is a licensed salesperson and Licensee Two is a licensed agent under the Real

Estate Agents Act 2008 (the Act) and both are engaged by the Agency.

1.3 The Complainant is the co-owner of a property listed by Licensee One and the Agency (the

Property).

1.4 The complaint alleges Licensee One failed to act in the best interests of the Complainant in that he colluded with the other co-owner (ex-husband) to force the Complainant to sell the Property at a price below the agreed level. Further, Licensee One was unfair to the Complainant in that he withheld an offer on the Property until after it had been accepted by her ex-husband.

1.5 In regard to Licensee Two, the complaint alleges the Licensee Two failed to handle the initial complaint to the Agency in a professional manner. Specifically, Licensee Two did not personally respond to the complaint.

1.6 The complaint also alleges the Agency has failed to abide by the listing agreement in that the marketing contribution made by the Complainant has not been deducted from the commission as verbally agreed with Licensee One.

1.7 The Complainant is seeking disciplinary action against Licensee One “to minimise the risk of his acting in a similar manner to the detriment of other clients” and disciplinary action against Licensee Two to ensure he puts in place better procedures for handling complaints.

2. Material Facts

2.1 The Property was jointly owned by the Complainant and her ex-husband (Mr. A). After 3 years of negotiation between those parties, a divorce settlement (the Settlement Agreement) was agreed whereby the Property could be sold for a sum no less than $975,000.

2.2 The Complainant and Mr. A listed the Property for sale through Licensee One and the Agency on

18 December 2013. The parties agree Licensee One was aware of the minimum figure required to achieve a sale in line with the Settlement Agreement.

2.3 The listing authority agreement contained an estimate of commission payable of $31,500 plus GST and a marketing contribution from the Complainant and Mr. A was marked “TBC”. The parties agree there was a verbal commitment that the Complainant and Mr. A would each pay

50% of the marketing and those sums would be deducted from commission at the time of sale.

2.4 The Property was marketed as “expressions of interest” with no price indication for the next two

months. On 20 January 2014 Licensee One presented multiple offers for the Property. The three offers were $812,000, $864,000 and $905,000. All were refused by the clients. The Complainant suggested to Licensee One that $950,000 may be acceptable.

2.5 On 25 February 2014 Licensee One had a discussion with Mr. A and an agreement was reached that Mr. A would consider an offer lower than $950,000 but would agree to ensure the Complainant received a share equivalent to 50% of $950,000. Licensee One sent an email to the Complainant informing her of the discussion with Mr. A on the same day. Several emails were exchanged between Licensee One and the Complainant’s husband Mr. B.

2.6 Mr. B is legally trained and assisted the Complainant in regard to the sale of the Property. Mr. B

reminded Licensee One in an email that (i) the Complainant had never agreed to sell at

$950,000. (ii) the Settlement Agreement would need to be amended to sell at a lower price than

$975,000 and (iii) unless that amendment was in place no offer would be considered below the original price in the Settlement Agreement. The exact wording from one email stated “Until such an agreement has been executed by both parties on agreed terms, the C omplainant does not grant any consent to accept offers or to market the property for a lower sale price” - underlined for emphasis.

2.7 On 28 February 2014 Licensee One presented an offer to Mr. A for $911,000 which he counter signed at $920,000. Mr. A took legal advice and his solicitor sent an email to Mr. A and the Complainant at 12.02pm providing an amendment to the Settlement Agreement which would guarantee the Complainant a 50% share of $950,000 if she also accepted $920,000.

2.8 Mr. A’s solicitor emailed the Complainant again on 3 March 2014 with a “final offer” which stated Mr. A would seek an order to sell the Property for $920,000 if the Complainant did not agree forthwith. The Settlement Agreement was amended and the offer of $920,000 completed on 3 March 2014.

2.9 The Complainant sought and received from the Agency an agreement to reduce the commission from $29,500 plus GST to $23,000 plus GST.

2.10 The sale and purchase agreement became unconditional on 6 March 2014. The Agency sent out a tax invoice dated 26 March which showed the commission being deducted from the deposit as per the new agreement at $23,000 plus GST. It also showed a deduction for unpaid marketing expenses of $1042.26.

2.11 The Complainant submits marketing expenses should not have been deducted from the deposit as those particular marketing expenses were payable by Mr. A (not the Complainant) and therefore she should not be responsible for her ex-husbands debts. She further submits all marketing was to be deducted from the commission at the time of sale and therefore this amount should have been deducted from the commission not from the deposit.

2.12 Mr. B contacted Licensee Two to query this matter and was directed to the Agency’s Chief

Financial Officer who is the person in charge of the Agency accounts.

2.13 The Agency submitted the unpaid marketing could not be deducted from the commission if it was never paid. Further, the Complainant has been compensated for the marketing by Mr. A and finally, the renegotiation in the commission revoked the previous agreement to refund marketing money that was paid by the Complainant.

2.14 The Complainant was not satisfied with this response and has since taken the matter of the advertising refund to the Disputes Tribunal. The matter has not been decided at this time.

2.15 The Authority received a complaint from the Complainant in relation to the conduct of the

Licensees on 5 May 2014.

3. Relevant Provisions

3.1 Real Estate Agents Act 2008

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 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.

3.2 Professional Conduct and Client Care Rules 2012

Rule 6.1 A licensee must comply with fiduciary obligations to the licensees client.

Rule 6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

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.

Rule 9.1 A licensee must act in the best interests of a client and act in accordance with

the client’s instructions unless to do so would be contrary to the law.

Rule 9.2 A licensee must not engage in any conduct that would put a prospective client, client, or customer under undue or unfair pressure.

4. Discussion

4.1 The Committee has carefully considered all the matters raised by the Complainant. In order to make a finding of unsatisfactory conduct against any licensee, the Committee must be satisfied the evidence before us has proven, on the balance of probabilities, a licensee has breached the Act or the Rules to a level that reaches the threshold for unsatisfactory conduct as described above.

4.2 The Complainant and her former husband had come to an agreement in regards to the sale of their Property. It appears to the Committee after months on the market and several lower offers; the price that had been agreed by them was not attainable at that time. The Complainant took the view this meant the Property should be retained and rented out with the

income being split as per the Settlement Agreement. Her former husband clearly had a preference to sell at whatever was the best price the current market would pay.

4.3 The Complainant submits Licensee One colluded with her former husband against her by suggesting the variation to the Settlement Agreement. The Committee finds Licensee One and the Agency had a duty to their “client” and in this case their client was both the Complainant and Mr. A. As these parties had differing priorities this was a very difficult situation. The Committee does not find suggesting an option that would work for Mr. A and still give the Complainant the same end result was working against the Complainant’s best interests.

4.4 The Licensees and the Agency had been engaged to sell the Property and the suggestion made by Licensee One does not seem unreasonable or unfair to the Complainant in the Committee’s opinion.

4.5 The Committee considered the allegation Licensee One was unfair and withheld information when he failed to present the offer from the eventual purchaser at the same time as he presented it to Mr. A.

4.6 After lengthy discussion, the Committee came to the view Mr. B had given Licensee One strict and clear instructions on behalf of the Complainant that no offer would to be considered by the Complainant until and unless both parties had amended the Settlement Agreement. The Committee considers Licensee One was correct to follow his client’s lawful instruction not to bring any offer forward until the required alteration to the Settlement agreement had also been completed. The Committee also notes when Licensee One realised he may have upset the Complainant he immediately apologised and explained his reasoning.

4.7 The Complainant alleges she was effectively forced to agree to the sale when she did not wish to do so. The Committee considered where this pressure originated. The Complainant submits Licensee One was the cause but the Committee is not of the same view. It appears the long and stressful years of negotiation between the Complainant and Mr. A had taken a financial and emotional toll on both of them. The prospect of further legal wrangling must have caused genuine upset to the Complainant who was in the late stages of pregnancy at the time. The Committee finds the Complainant was pressured to sell the Property but this pressure was a cumulative effect of the separation and divorce rather than the actions of the Licensees.

4.8 The Committee also consider the allegation that the Complainant’s costs of conveyancing were increased due to the amendment of the Settlement Agreement was outside the control of Licensee One or the Agency and was inherently caused by the inability of the parties to come to an agreement without the assistance of their respective solicitors.

4.9 On the matter of the handling of the original complaint by Licensee Two, the Committee finds there is no evidence to support the allegation Licensee Two handled the matter inappropriately. It appears the complaint was originally in regard to the issue of deducting marketing funds from the deposit that had not been paid by Mr. A.

4.10 Licensee Two submits he was never made aware of the other concerns until the complaint was made to the Authority. The Committee has no evidence before it to show this was not the case.

4.11 The Complainant has allowed Mr. B to engage with the Agency on her behalf on this matter and the email correspondence is extensive. From the Agency’s perspective, all those involved state Mr. B was not a reasonable person to deal with either by telephone or by email. The Agency’s Chief Financial Officer described her interactions with Mr. B as difficult and going nowhere.

4.12 The Committee has no evidence before it to indicate that Licensee Two, the Agency or its staff have acted unprofessionally when dealing with the Complainant or with Mr. B. Whilst the Committee accepts there is an ongoing disagreement over the deduction of marketing expenses, we consider this part of the dispute will be appropriately handled by the Disputes Tribunal.

4.13 In summary, the Committee has determined the allegations in the complaint are not proven. We will therefore take no further action on any part of this 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)(c) of the Act to take no further action with regard to the complaint or any issue involved in the complaint.

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 Publication gives effect 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.

6.3 The Committee directs publication of its decision, but omitting the names and identifying details of the Complainant (including the address of the Property), the Licensees and any third parties in the publication of its decision.

6.4 The Authority will publish the Committee’s decision after the period for filing an appeal has ended. Any application for an order preventing publication must be made to the Real Estate Agents Disciplinary Tribunal (the Tribunal).

7. Right of Appeal

7.1 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.

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

7.3 Further information on filing an appeal is available by referring to the Guide to Filing an Appeal

at www.justice.govt.nz/tribunals.

Signed

Marina Neylon

Chairperson

Complaints Assessment Committee

Date: 22 August 2014