Cattanach - Complaint No C06852 [2015] NZREAA 200 (20 July 2015)

Last Updated: 26 March 2016

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

And

In the Matter of Complaint No: C06852

In the Matter of David Cattanach

License Number: 10016258

Paul Scarfe

License Number: 10017136

Decision of Complaints Assessment Committee

Dated this 20th day of July 2015

Complaints Assessment Committee: CAC 402

Chairperson: Marjorie Noble Deputy Chairperson: Deborah Clapshaw Panel Member: Jane Ross

Complaints Assessment Committee

Decision on orders

1. Decision on orders

1.1.

1.2.

On 7 May 2015 the Complaints Assessment Committee (the Committee) found David Cattanach (Licensee One) and Paul Scarfe (Licensee Two) guilty of unsatisfactory conduct under section 89(2)(b) of the Real Estate Agents Act 2008 (the Act).

The Complainants and the Licensees were given the opportunity to make submissions to the
Committee on orders.

2. Orders

2.1.

2.2.

Licensee One: Having made a finding of unsatisfactory conduct against the Licensee, the
Committee decided to order that the Licensee:
(a) Be censured;

(b) Pay a fine to the Authority of $2,500.00 within 21 working days of the date of this decision;

(c) Reimburse the Estate of the Property the Agency‘s share of the commission fees taken on sale, being $3,071.18, within 21 working days of the date of this decision;
(d) Reimburse the Complainants for the $345.00 solicitor’s fees relating to the possibility

of disrupting the sale.

Licensee Two: Having made a finding of unsatisfactory conduct against the Licensee, the
Committee decided to order that the Licensee:
(a) Be censured;

(b) Pay a fine to the Authority of $2,500.00 within 21 working days of the date of this decision.

3. Our reasons

3.1.

3.2.

3.3.

The Complainants’ submissions on orders asked for an apology from both Licensees, a full refund of the $18,917.50 paid in commission fees, reimbursement of $345.00 incurred by the Complainants in solicitor’s fees relating to the possibility of disrupting the sale, relief in whole from the consequences of the error being the $55,000.00 difference between the sale price of $530,000.00 and the initial reserve price of $585,000.00, and that the Licensees pay a fine to the Authority.

The Complainants submit they were placed under duress, untruths were told, and the Licensees bullied them and did not act professionally. They believe the Property was worth the reserve price of $585,000.00 if not more.

The Licensees responded jointly for submissions. They submit the third executor had shown by her previous actions she followed the other two executors’ decisions in all matters and state she had no financial interest in the Property. They acknowledge the Committee’s findings that the client was three individuals and a power of attorney should have been

sought, but believe at all times they acted in the best interest of the Complainants and obtained a fair market value in the sale of the Property. The Licensees refute liability for any compensation as instruction to sell at auction was advised by the Complainants’ solicitor, a full marketing plan was completed, the auction was well attended with genuine bidders, and the price achieved was the best on the day. The Licensees state they have been dragged through the complaints process due to one of the Complainant’s inability to purchase the Property for herself, and do not believe they should be fined after acting in good faith in what they believe was a challenging situation.

3.4.

3.5.

3.6.

3.7.

The Committee considers an apology directed to be made subsequent to a length of time, an investigation and ill feelings between parties does not bear genuine intent and therefore an apology is not ordered. The Committee considers the Complainants’ submission for compensation of $55,000.00 has no factual basis. The listing salesperson completed a full marketing plan, feedback regularly supplied to the executors indicated a sale price in the early $500,000’s, the auction process was followed, genuine bidders attended, and a fair market price was produced on the day.

The Committee is aware the listing form for the auction sale was signed by all three executors and is also aware the Complainants have obtained legal advice as to the validity of the sale from their lawyer, who confirmed that as the purchaser had no knowledge of the issue relating to reserve price and the signing of the agreement, the sale is lawful. The Committee, however, considers the Licensees did not have full authority to proceed with the auction as there was not a consensus from the executors on the reserve price prior to the auction commencing and only two of the three executors were represented. With the Licensees’ knowledge of the animosity between the two sister executors, with the third executor not represented, no consensus on the lowered reserve price and only two of the three executors agreeing to the sale price, the Licensees exposed the vendor client to a potentially unenforceable contract. In consideration of the serious nature of this conduct, the Committee orders Licensee One to reimburse the $345.00 paid by the Complainants for advice relating to the disruption of the sale and to refund the Agency’s share of the sale commission (not including the listing salesperson’s share) being $3071.18 to the estate of the Property.

The Committee has serious concerns with the Licensees’ actions prior to and at the auction in regard to lack of consensus and power of attorney between the three executors. The Licensees’ submission confirms the animosity and lack of agreement between the two sister executors yet contends the third executor agreed with both sisters, which clearly was not possible. The Committee considers the fact that the third executor had no financial interest in the Property had no bearing on the importance of her role as an executor, that role being particularly critical in a situation where the two sister executors were clearly not in agreement. Both Licensees were party to decisions made involving only two of the three executors and the Committee considers, regardless of any personal issues or disruption between the executors, the Licensees had a responsibility to comply with basic principles and duty of care to the client by ensuring all three executors were represented at all times during the sale process, which they failed to do. The Committee considers this conduct to be mid- range unsatisfactory conduct which is reflected in the fine ordered for both Licensees.

Principles considered

When determining whether or not to make an order under Section 93(1), the Committee has also had regard to the functions which the imposition of a penalty usually must serve in professional disciplinary proceedings.

a) Promoting and protecting the interests of consumers and the public generally

(section 3(1));

b) Maintaining professional standards;

c) Punishing offences;

d) Rehabilitating the professional.

3.8.

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.

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

3.9.

3.10.

Section 3(1) of the REAA 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 aintaining pro fessio nal standards

3.11.

3.12.

3.13.

This function has been recognised in professional disciplinary proceedings involving other professions (for example, in medical disciplinary proceedings: Taylor v The General Medical Council (1990) 2 A11 ER 263; and in disciplinary proceedings involving valuers: Dentice v The Valuers Registration Board [1992] 1 NZLR 720).

Although different professions, use different descriptions of the nature of the unprofessional or incompetent conduct that will attract disciplinary charges, there is a common thread of scope and purpose. The aim is to enforce a high standard of propriety and professional conduct. Professions seek to:

• Make sure that no person unfitted because of his or her conduct is allowed to practice the profession in question.

• Protect both the public and the profession itself against persons unfit to practice.

• Enable the profession or calling, as a body, to ensure that the conduct of members conforms to the standards generally expected of them.
  

In the Committee's view, maintaining professional standards is also a function of the disciplinary processes under the Real Estate Agents Act 2008.

c. P unishm ent

3.14.

3.15.

The Committee accepts that a penalty in a professional discipline case is primarily about maintaining standards and protecting 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(1)(g); or make an order of censure (Section 93(1)(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).

At paragraph [27]-[28], the judge said:
“Such penalties may be appropriate because disciplinary proceedings inevitably involve issues

of deterrence. They are designed in part to deter both the offender and others in the profession from offending in a like manner in the future. I therefore propose to proceed on the basis that, although the protection of the public is a very important consideration, nevertheless the issues of punishment and deterrence must also be taken into account in selecting the appropriate penalty to be imposed...”

d. Where appro priate, rehabilitatio n o f the pro fessio nal m ust be co nsidered

3.16.

The Committee regards its power to make an order requiring a Licensee to undergo training or education (Section 93(1)(d)) as indicating that rehabilitation is a function of professional disciplinary processes under the Act.

4. What happens next

Your right to appeal

4.1.

4.2.

If you are affected by this decision of the Committee, you may appeal in writing to the Real Estate Agents Disciplinary Tribunal (the Tribunal) within 20 working days after the date of this decision. Your appeal must include a copy of this decision and any other information you wish the Tribunal to consider in relation to the appeal (Section 111).

For further information on filing an appeal, read Guide to Filing an Appeal at M inistry o f
Justice-Tribunals ( ww w.justice. go v t.nz/ tribunals ).

Publication

4.3.

4.4.

The Committee directs publication of its decision. The decision will be published without the names or identifying details of the Complainant (including the address of the Property), and any third parties. The decision will state the name of the Licensees and the Agency they work for or worked for at the time of the conduct.

Publishing the Committee’s decision supports the purpose of the Act by ensuring that the disciplinary process remains transparent, independent and effective. The Committee also considers that publishing this decision helps to set standards and that is in the public interest.

Signed

Jane Ross

Panel Member

For Complaints Assessment Committee 402

Date: 20 July 2015

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

Section 89 Power of Committee to determine complaint or allegation

(1) A Committee may make one or more of the determinations described in subsection (2) after both inquiring into a complaint or allegation and conducting a hearing with regard to that complaint or allegation.

(2) The determinations that the Committee may make are as follows:

(a) a determination that the complaint or allegation be considered by the

Disciplinary Tribunal:

(b) a determination that it has been proved, on the balance of probabilities, that the licensee has engaged in unsatisfactory conduct:

(c) a determination that the Committee take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

(3) Nothing in this section limits the power of the Committee to make, at any time, a decision under section 80 with regard to a complaint.

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.

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 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.

Section 111 Appeal to Tribunal against determination by Committee

(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 the notice given under section 81 or 94.

(2) The appeal is by way of written notice to the Tribunal of the appellant's intention to appeal, accompanied by—

(a) a copy of the notice given to the person under section 81 or 94; and

(b) any other information that the appellant wishes the Tribunal to consider in relation to the appeal.

(3) The appeal is by way of rehearing.

(4) After considering the appeal, the Tribunal may confirm, reverse, or modify the determination of the Committee.

(5) If the Tribunal reverses or modifies a determination of the Committee, it may exercise any of the powers that the Committee could have exercised.