Complaint No C04203 [2014] NZREAA 78 (18 March 2014)

Last Updated: 1 January 2015

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

And

In the Matter of Complaint No: C04203

In the Matter of The Licensee

Licence Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 18th day of March 2014

Complaints Assessment Committee: CAC305

Chairperson: Graham Rossiter

Deputy Chairperson: Miles Maitland

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1 The Complainants have complained to the Real Estate Agents Authority (the Authority) about the conduct of the Licensee. The Licensee is licensed under the Real Estate Agents Act 2008 (the Act). She holds a salesperson’s licence and is working for the Agency.

1.2 This complaint is against the Licensee who conducted the auction of the Complainant’s house (the Property). It is contended that the Licensee failed to accept a bid and, in effect, closed the auction down prematurely. The Complainants say that they suffered loss as a result of this.

2. Material Facts

2.1 The Complainants engaged the Licensee’s firm to sell their property by auction. The auction took place on 18 September 2013. The day before the auction, the selling agents met with the Complainants and explained the auction process, including the various options should the property not reach the reserve price. The reserve was set at $820,000.

2.2 There is included in the investigator’s report a quite comprehensive description of the auction

and its process. There were six potential buyers registered to bid. The bidding started at

$600,000 and stopped at $730,000. There was then a brief pause in the auction as one of the agents present spoke to the party who had held the highest bid.

2.3 The ‘highest’ bidder then increased their bid to $750,000. There was a further pause while the Complainants were consulted. After this, those present were informed that the ‘property was on the market.’ In other words, the reserve had been lowered. It is clear that this, i.e. the lowering of the reserve was with the instructions and authority of the Complainants.

2.4 After this, the Licensee suggested $1,000 bids and indicated who held the ‘final’ bid. She then called: “Is there anyone else?” The Licensee then called ‘first, second and final call’ and brought her hammer down. The property was declared sold to the bidder who, in the Licensee’s view, had and held the final bid.

3. Relevant Provisions

3.1 The relevant law is the definition of ‘unsatisfactory conduct’ in section 72 of the Real Estate

Agents Act 2008.

3.2 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.

3.3 In addition, consideration may be required of rule 5.1 of the Real Estate Agents Act

(Professional Conduct and Client Care) Rules 2012.

Rule 5.1 provides that a licensee must exercise skill, care, competence and diligence at all times when carrying out real estate agency work.”

4. Discussion

4.1 Paragraphs 2.1 to 2.4 above are, from this Complaints Assessment Committee’s (the Committee) point of view, an objective (if quite brief) summary of what this case is about. We have, in the discussion above, avoided any analysis of what happened at the very end of the auction.

4.2 The Complainants refer to what they characterise as the “hurried disposition” of the Licensee (the auctioneer), who (we here paraphrase) did not give them sufficient opportunity to consider their position when bidding stalled in the auction. Further, and more particularly, the Complainants contend that the Licensee failed to notice a ‘bid’ from another agent. In this regard it is, apparently, suggested that the Licensee should have taken that bid before closing the auction and declaring the property sold. The Complainants say: “With the fall of the hammer, the house was deemed sold and we will never know what additional bidding would have eventuated had the auction run its course.”

4.3 Full statements have been obtained by the investigator from the Licensee and other licensees in attendance at the auction, including the agent who purported or attempted to submit the bid (on behalf of her client) that the Complainants refer to in their complaint. The key point made by the Licensee with regard to the issue that is really at the heart of the complaint is that after the third and final call (for any further bids), and as her hammer hit the podium, she heard a colleague call out “bid.” This purported bid was a ‘late’ bid that the Licensee was entitled to not accept.

4.4 The Licensee’s version of what happened in the course of the auction, including crucially, the conclusion of this process, is supported by all other licensees in attendance. The agent who attempted to place what the Licensee says was a late bid states that she did not have written authority from her client to bid on that party’s behalf, she had not identified herself to the Licensee as somebody who was going to bid and she admits that her bid was too late and coincided with the fall of the hammer.

4.5 One point made by the Licensee’s firm is that (if we understand the argument correctly) the Licensee could not have, even if it was not late, accepted a bid from the agent referred to in paragraph 4.4 above. Reference is made here to clause 20 of the relative auction documents which states: “A licensed real estate agent acting for the vendor in respect of the sale may submit

a bid on behalf of any person except the vendor but only if that person is identified to the auctioneer before the commencement of the bidding” (the italics are ours). If the Licensee had, hypothetically, refused to accept a bid from this agent solely on the basis of clause 20, that action may, possibly, have been problematic. We fortunately do not have to consider that question any further.

4.6 Coming back to the relative legal framework within which this matter has to be considered, the basic question is whether the Licensee failed to exercise a duty of reasonable care, skill and diligence (rule 5.1 refers) owed to the Complainants by unreasonably failing to accept a legitimate and proper bid. Our answer to this question is emphatically in the negative.

4.7 Further to paragraph 4.6 above, the Committee’s consideration of the question posed is assisted not only by the totality of the written statements obtained and submitted by the investigator but also the video evidence of the auction. It should be noted that the video basically only shows the Licensee and another who we presume was her assistant. What it does, however, demonstrate beyond question is that her conduct of the auction was measured, unhurried and careful. If anything, we are surprised by the extent to which the foregoing was the case. The Licensee clearly wished to move the auction along but that is what auctioneers do.

4.8 The Licensee says in her response to the complaint that she is “one of the auctioneers in the business who actually speaks quite slowly.” We agree. The manner in which she carried out the auction would seem to us to have been quite patient. The Complainants refer to the Licensee’s “hurried disposition.” On the contrary, our view is exactly the opposite. The Licensee’s demeanour was, we conclude, manifestly unhurried to a point that was almost unusual.

4.9 As regards the fundamental question of whether the Licensee unreasonably refused to accept a legitimate bid, the Committee, from our perusal of the video evidence, heard a sound which we presume was the word ‘bid’ being uttered (although this is not clear), but this was literally at the same point in time as the hammer striking the podium. The Licensee was, in our view, perfectly entitled to regard the auction as, at this point, closed. Further to that, if the Licensee had accepted this purported bid and attempted to continue or re-open the auction, there might well have been a legitimate complaint from the party who had held the final and, ultimately successful, bid.

4.10 Our view is that the complaint has not been proven and we come to that conclusion, it should be made clear, by a substantial margin. The Licensee has done nothing wrong and she is entitled to a finding to this effect. Her conduct of the auction was, in the Committee’s opinion, not only careful and diligent but also, we feel comfortable in saying, exemplary.

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 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.

6.3 The Committee directs publication of its decision, but omitting the names and identifying details of the Complainants (including the address of the property), the Licensee 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 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.

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

Graham Rossiter

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 18 March 2014