Sharma - Complaint No C05231 [2015] NZREAA 117 (11 May 2015)

Last Updated: 8 February 2016

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

And

In the Matter of Complaint No: C05231

In the Matter of Kamal Sharma

License Number: 10003654

Decision of Complaints Assessment Committee

Dated this 11th day of May 2015

Complaints Assessment Committee: CAC301

Chairperson: Deirdre McNabb Deputy Chairperson: Patrick Waite Panel Member: Rex Hadley

Complaints Assessment Committee

Decision on Orders

1. Background

1.1 By its decision dated 3rd February 2015 the Complaints Assessment Committee (the Committee) made a determination under section 89(2)(b) of the Real Estate Agents Act 2008 (the Act) that Mr. Kamal Sharma (the Licensee) has engaged in unsatisfactory conduct as that term is defined. At the time the conduct occurred the Licensee was licensed under the Act. The Licensee held a salespersons license and worked for Clyth MacLaod Limited, Auckland (the Agency). The Licensee now resides in Uganda; his license is currently suspended voluntarily.

1.2 Having made a determination under section 89(2) (b) the Committee may make one or more of the orders set out in section 93 of the Act.

1.3 The Committee invited the Complainant to make any comments or submissions on orders she wished to have made within ten working days from the date of the Committee's determination.

1.4 The Complainant in a submission dated 10th February 2015 requests an order for the Licensee to pay her $50,000 representing the capital that she believes that she lost as a result of the failed business investment.

1.5 The Licensee, in his submission dated 3rd February 2015 has chosen to challenge the Committee’s determination rather than make a submission on orders. In this regard he has provided the following comments:

(a) He had placed reliance on the vendor that the information was ‘true and correct in

all respects;”

(b) The Agreement for Sale and Purchase of a Business was on a standard form but contained numerous conditions to protect the purchaser including: a due diligence clause, advance by the vendor of a loan to the purchaser, solicitor’s approval required for both vendor and purchaser, provision for the purchaser to attend and observe the Business to verify the sales figures quoted by the vendor;

(c) The Agreement was perused and approved by Ms. C, a director of the Agency; (d) The purchaser had verified in writing the sales at $8,000 after only five days;

(e) The vendor is believed to have regularly visited the Business and could have provided advice;

(f) The claim by the purchaser of a ‘buy back’ offer by the vendor is purely ‘hearsay’ and

is denied by the vendor and the Licensee;

(g) While the Complainant has stated that she suffered a loss of $50,000 he has not seen any documentation to proof that claim.

1.6 Having satisfied itself that it had completed its inquiry into the complaint, the matter was considered by the Committee on 4th March 2015.

1.7 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 Having made a finding of unsatisfactory conduct against the Licensee the Committee must now decide what orders, if any, should be made under section 93 of the Act.

Section 93 provides:

Section 93 Power of Committee to make orders

(1) If a Committee makes a determination under section 89(2)(b), the

Committee may do one 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 apologizes 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.

3. Discussion

3.1 The Committee in its determination of 3rd February 2015 determined under section 89(2)(b) of the Act that it had been proved, on the balance of probabilities, that Mr Kamal Sharma had engaged in unsatisfactory conduct.

3.2 The Committee found in its determination that the Licensee fell short of the standard required under Rule 5.1 and 6.4 in respect of real estate agency work. The Committee

determination identified the following issues:

(a) The Licensee failed to independently verify sales and expense information provided by the vendor before conveying it to the Complainant;

(b) The Licensee failed to provide support to the Complainant when he was aware of her lack of business experience, and;

(c) The Licensee misled the Complainant as to the intentions of the vendor by leaving

with her an expectation as to the vendor’s commitment to repurchase the Business.

3.3 The Committee, in reaching its’ decision in relation to appropriate orders, took into account the following:

(a) Section 3 of the Act defines the purpose of the Act i.e. to promote and protect the interests of consumers in respect of real estate transactions and to promote public confidence in the performance of real estate agency work.

(b) At the heart of the complaint was the question as to whether information provided to the Complainant by the Licensee was accurate. Rule 6.4 places an onus on licensees to ensure that information provided is correct. This was emphasized in Vadke v REAA & Pannu (2014 NZREADT 50: “Any material information should be able to be verified.”

(c) The apparent lack of recognition by the Licensee, as evidenced in his response, of his responsibility to ensure that the Complainant, who clearly lacked experience in business affairs, received not only the appropriate support and advice but that she received information that had been independently verified as accurate and capable of being relied on. In the opinion of the Committee it is not a sufficient defense for a licensee to point to conditions inserted into a sale and purchase agreement as protecting parties to the agreement. The Act expects more than this of licensees.

3.4 Whilst the Complainant has sought in her submission an order for the Licensee to compensate the Complainant with the loss of $50,000 which she perceived she had incurred, such an order is not within the jurisdiction of a Complaint Assessment Committee - Quin v Real Estate Agents Authority (2012) NZHC 3557.

3.5 In considering the issue of what orders to make the Committee recognizes that its’ responsibility is to ensure that salespersons licensed by the Real Estate Agents Authority adhere to the rules and regulations that are imposed on licensees.

4. Decision

Principles considered

4.1 The Committee, when determining whether or not to make an order under section 93(1), has also had regard to the functions, which the imposition of a penalty usually must serve in professional disciplinary proceedings. They include:

(a) P rom oting and protecting the interests o f co nsum ers and t he public generally

Section 3(1) of the Act sets out the purpose of the legislation. The principal purpose

of the 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." One of the ways in which the Act states it achieves this purpose is by providing accountability through an independent, transparent and effective disciplinary process (section 3 (2)).

(b) M aintenance o f pro fessio nal standards

This function has been recognized in professional disciplinary proceedings involving other professions (for example, in medical disciplinary proceedings; Taylor v The General Medical Council [1990] 2 All ER 263; and in disciplinary proceedings involving valuers; Dentice v The Valuers Registration Board [1992] 1 NZLR 720). In the Committee's view this function is also applicable in the disciplinary processes under the REAA.

(c) P unishm ent

The Committee accepts that a penalty in a professional disciplinary case is primarily about the maintenance of standards and the protection of the public. However in the Committee's view there is also an element of punishment - indicated by the power the Committee has to impose a fine (section 93(l) (g); or make an order of censure (section 93(l) (a)). The element of punishment has been discussed in the context of other professional disciplinary proceedings (see Patel v Dentists Disciplinary Tribunal (High Court, Auckland, CIV 2007-404-1818 Lang J 13 August 2007, where the Court said that disciplinary proceedings inevitably involve issues of deterrence, and penalties are designed in part to deter both the offender and others in the profession from offending in a like manner in the future.)

(d) Where appro priate, rehabilitatio n o f t he pro fessio nal m ust be co nsidered

The Committee regards its power to make an order requiring a licensee to undergo training or education as indicative of this function applying in the context of professional disciplinary processes under the Act.

4.2 The Committee acknowledges that when making an order under section 93, the order/s made must be proportionate to the offending and to the range of available orders.

4.3 Having regard to the facts of this case as recorded in the Committee’s determination dated 3

February 2015, and the established unsatisfactory conduct and functions which the imposing of a penalty is designed to serve, the Committee has determined to make the following orders under section 93(1):

(a) The Committee is imposing on Mr. Sharma a fine of $5,000 payable to the Authority within 21 working days of this order.

(b) The Committee orders that Mr. Sharma be censured.

(c) The Committee orders that Mr. Sharma, should he chose to revive his salesperson’s

license, complete the National Certificate in Real Estate (Salesperson) Unit Standard

23136 – “Demonstrate knowledge of misleading and deceiving conduct and misrepresentation”, before the license is revived.

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 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.

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.ju st ice. go vt .n z / tribu n als .

Signed

Patrick Waite

Deputy Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 11th May 2015