Complaint No C00418 [2014] NZREAA 91 (3 April 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: C00418

In the Matter of The Licensee

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 3rd day of April 2014

Complaints Assessment Committee:

CAC20005Chairperson: Stuart Rose Deputy Chairperson: Chris Rogers Panel Member: Denise Bovaird

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1 The Complainant (a real estate agency) has 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), holds a salespersons license and works for the Agency.

1.2 The Complainant alleges that it has been overcharged commission on the sale of its properties in breach of its listing agreement with the Agency.

1.3 The complaint was received by the Real Estate Agents Authority (the Authority) on 22 January 2013 and referred to a Complaints Assessment Committee (the Committee). The Committee considered the complaint on 14 February, decided to inquire into the complaint and now issues its decision in this matter.

2. Relevant Provisions

2.1 The Real Estate Agents Act 2008 establishes a statutory basis for the licensing and hearing of complaints against real estate agents, amongst other things. The Act provides for the setting up of Complaints Assessment Committees to hear the complaints and allegations about Licensees. It also establishes a Disciplinary Tribunal to hear complaints at the next level.

Section 3 of the Act sets out the purpose of the Act.

Purpose of Act

(1) The purpose of this Act is 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.

(2) The Act achieves its purpose by –

a) Regulating agents, branch managers, and salespersons:

b) Raising industry standards:

c) Providing accountability through a disciplinary process is independent transparent and effective.

2.2 When a committee considers a complaint it must decide whether it breaches the standards of conduct that are set out in section 72 and 73 of the Act and also the Rules of Professional Conduct and Client Care as set out in the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012.

2.3 The Real Estate Agents Act 2008

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 wilful 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.

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

The Rules set out the standards of conduct and client care that agents, branch managers or salespersons (Licensees) are required to meet when carrying out real estate agency work and dealing with clients. Whilst these rules are not meant to be exhaustive list, they set minimum standards that Licensees must observe and are a reference point for disciplinary decisions.

Examples of the Rules that may be relevant in this complaint are:

5.1 A Licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

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

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.

9.7 A Licensee must not mislead customers as to the price expectations of the client.

3. Discussion

3.1 In reaching a decision and making a finding the committee has to look carefully at the evidence before it and then come to a decision based on our assessment of what we believe is more likely than not to have occurred or in other words on what we see as the balance of probabilities in this case.

3.2 This threshold has been considered by the Disciplinary Tribunal in its decision: Hodgson v CAC & Arnold [2011] READT03. In that decision the Disciplinary Tribunal said that the onus to establish a complaint rests with the Complainant. The consequence of this is that unless we are able to form a view that what the Complainant alleges is more likely than not what happened, or if we believe that the conduct complained of does not reach the threshold set out in section 72 of the Act, we must dismiss the complaint.

3.3 By way of background, in April 2011 the Complainant completed a listing agreement with the

Licensee’s Agency for the sale of seven sections. The agreement had an estimated selling price of

$680,000 per section and an estimated commission of $23,368.00 inclusive of GST.

3.4 Two of the lots with were withdrawn from the market on 22 November 2011 and relisted on 11

March 2012. The agreement had an estimated selling price of $640,000 and an estimated

commission of $23,690 inclusive of GST.

3.5 The Complainant was presented with four separate offers to purchase the sections at $585,000 each, and sales agreements were signed on 23 March 2012. A dispute arose over the sale price for one of the lots. Subsequently two of the contracts went unconditional and the other two were cancelled.

3.6 Commission was first calculated using the rural commission rate then recalculated at the residential rate. The difference between the Complainant’s calculation of commission due at $28,050 (one bulk rate) and the commission charged at $33,500 is $5,450 exclusive of GST.

3.7 The Licensee responded to the committee by letter dated 15 November 2012. In this letter he states that he had no knowledge of any telephone conversation regarding the commission being calculated as a bulk rate for the four contracts. He says that commission was recalculated after liaising with the listing agent who confirmed the listing should be changed from rural to residential rates. He says the vendor did not mention the commission to be charged as if one sale following the Licensee’s email to the Complainant on 24 May 2012.

3.8 Our investigator has made enquiries with the listing agent who advises that the was no agreement to treat the sales as one bulk sale for the purposes of calculating the commission due.

3.9 After reviewing all of the evidence available to the committee we find no evidence to support the Complainant’s proposition that the commission was to be calculated on the bulk sum of all the sales as opposed to calculated for each individual sale. In the absence of any such evidence we have determined to take no further action with relation to this complaint.

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)(c) of the Act to take no further action with regard to the complaint or any issue involved in 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 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), the Licensee and any third parties in the publication of its decision.

5.4 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).

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

Stuart Rose

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 3 April 2014