Complaint No C05800 [2015] NZREAA 245 (10 September 2015)

Last Updated: 15 May 2016

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

And

In the Matter of Complaint No: C05800

In the Matter of The Licensee

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 10th day of September 2015

Complaints Assessment Committee: CAC 405

Chairperson: Graham Rossiter Deputy Chairperson: Jane Parker Panel Member: Geoff Warren

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 31 July 2014 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee from the Complainants.

1.2. The Licensee is a licensed salesperson under the Real Estate Agents Act 2008 (the Act).

1.3. The complaint relates to a property (the Property).

1.4. The details of the complaint are that in October 2008 the Complainants purchased the Property subject to a builder’s report that was commissioned by the Licensee. The report came back noting an issue with dampness in and around a window, and no other issues.

1.5. In particular, the Complainant advised that in 2010 they noticed a leak in the Property, which was investigated and showed the Property was suffering weather tightness issues.

1.6. The Complainants say after they discovered the leak they looked through a file the Licensee gave them after the sale went through and found a second builder’s report the Licensee did not tell them about, and did not show them before settlement date.

1.7. The report said the builder had concerns about the damp window so he had visited the Property again to investigate further. The report said: A moisture reading of nearly 40% as I found (sic) in the exterior cladding under the window is seriously excessive and cause for worry.

1.8. The Complainants say the Licensee should have known about possible weather tightness issues and told them, and should also have told them about the second builder’s report prior to settlement. The Complainant requested a remedy, being costs/compensation for:

• Assessing and doing repairs;

• Legal costs;

• Stress and anxiety;

• Arranging accommodation, transportation and storage during the building work.

1.9. The Licensee responded to the complaint against her.

1.10. In particular, the Licensee commented that she had been working with the Complainants, showing them various properties around the city for some time. They had driven past the subject Property, which was being marketed by another agency. They indicated interest in it and the Licensee arranged a viewing and conjunctional arrangement with the other agency’s listing licensee.

1.11. The Complainants viewed the Property for a second time at an open home and subsequently rang the Licensee to indicate their interest, instructing her to draw up an offer subject only to a satisfactory builder’s report. There was discussion around a LIM report; however, the Complainant indicated he would make his own enquiries with the District Council as he had experience in, and knowledge of, the building industry (it is understood the Complainant was a plasterer by trade).

1.12. The offer was accepted by the vendors; however, due to the short conditional period and difficulty in obtaining the services of a builder within that time, the offer lapsed. At the request of the Complainants a second offer was drawn up, presented, and accepted with the Licensee obtaining the services of a local builder (Mr. B) to undertake a building inspection.

1.13. The building inspection was carried out by Mr. B in the presence of the vendor and Licensee.

During the course of his inspection, Mr. B discovered a high moisture reading in an area beside a window in the master bedroom; otherwise his comments were that the house was in very good condition and presented well.

1.14. The Licensee stated she received the builder ’s report and took it to the Complainants, who after some discussion requested a price reduction, to reflect anticipated repairs to the affected area. They indicated that the Complainant would undertake the repairs himself. This was passed to the vendor via the listing licensee.

1.15. The Licensee claimed she heard nothing subsequent to this, and it was she who contacted the listing agency to be informed they were of the impression the agreement was at an end, due to the vendors not making a price adjustment following the builder’s report. However, shortly thereafter she was contacted by the vendors expressing concern over the moisture reading in the master bedroom, and saying that they had contacted the Complainants asking them to consider carrying out a further inspection of the affected area. She understood the vendors agreed with the Complainants that, in conjunction with the builder, a hole no bigger than a light switch could be cut in the affected area and that the Complainant would re- plaster the area following the inspection.

1.16. The Licensee was of the understanding that during the above period the Complainants and vendors were in regular contact.

1.17. The Licensee organised for the builder and Complainant to meet at the Property the next day in the presence of the vendors. The Licensee was not present.

1.18. Following completion of the investigation, the Licensee stated she was telephoned by the vendors, who informed her there was a problem. Present were the builder, his assistant and the Complainant. A hole was cut in the wall. Both the builder and Complainant put their hands into the wall cavity and (in the words of a written statement by Mr. B) “we both came out with wet hands”.

1.19. The Licensee understood a moisture reading of 40% was shown by the builder to the

Complainant and discussion ensued on where the leak was coming from.

1.20. The Licensee further stated she was informed the Complainant claimed this was not a worry as he would re-clad the bay window with weatherboard at a later date.

1.21. Soon after the second inspection, the builder delivered to the Licensee a second building report detailing specific issues surrounding the master bedroom window. The Licensee claimed she delivered this to the Complainants personally, with the Complainant repeating to her the assertion in 1.20 above.

1.22. The Licensee was of the opinion this Property was the Complainants’ “dream home”, with a five car garage for material storage and hobbies area. A reduction of $3,000 was negotiated and the agreement confirmed.

2. What we decided

2.1. On 19 September 2014 Complaints Assessment Committee 307 considered the complaint and decided to inquire into it under section 78(a) of the Real Estate Agents Act 2008 (the Act).

2.2. On 3 December 2014 Complaints Assessment Committee 307 was disestablished.

2.3. The complaint was referred to Complaints Assessment Committee 405 (the Committee).

2.4. The Committee have considered the original complaint afresh and made a decision to inquire

into the complaint.

2.5. Subsequent to that decision to inquire, on 17 July 2015 the Committee held a hearing on the papers and considered all the information that had been gathered during the inquiry.

2.6. The Committee has decided to take no further action on the complaint.

2.7. This decision was made under section 89(2)(c) of the Act. The decision was also made with reference to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009.

3. Our reasons for the decision

3.1. The Committee concluded:

Notwithstanding the amount of evidence submitted by both parties, the pertinent issue is whether the Licensee failed to disclosed a second building report and potential weather tightness issues, and thereby breached rules 13.11 and 13.12 of the Real Estate Institute of New Zealand Incorporated Part 1 (Rule 13 Code of Ethics).

3.2. The Licensee testified she arranged for the vendors, Complainants and builder to meet at the Property for the purpose of another inspection. She stated she was not present. Soon after this inspection the builder delivered a second report to her, which she took to the Complainants to confirm the concern expressed in the first report. She testified the Complainant discussed with her his plans for remedying the moisture issue.

3.3. The Complainants neither confirmed nor denied they were present at this second inspection, and indeed had made no mention of this in their evidence. However, they have denied the Licensee ever delivered the second report to them and only found it in a pile of documents some two years later, given to them by the Licensee following settlement.

3.4. The Licensee denied this, stating all documents relating to the Property were in the possession of the listing agency and she never had access to these.

3.5. The Committee, in its deliberation, concluded this came down to a “he said, she said” scenario and looked for other pertinent evidence. The vendors are sadly deceased and so the Committee referred to the written testimony of the builder, Mr. B, and his associate, Mr. L, who were both present at the second inspection.

3.6. Mr. B’s testimony stated in regard to the second inspection, “I was told I could cut a hole the size of a power point [...] on the condition that the Complainant repaired the hole. When I arrived at the Property the Complainant confirmed this, as he was a GIB stopper, he said this was not a problem. A hole was cut in the presence of both the vendor and Complainant. Both

the Complainant and I put our hands in this hole, and we both came out with wet hands. The

moisture meter showed a reading of 40% on the exterior lining and stud where it was in contact with the cladding [...] A discussion was had between myself and the Complainant about the fact further investigation was needed and that a lot more lining needed to be removed to see where the leak was coming from. The Complainant agreed and stated this was not a worry as he would re-clad the bay window with weatherboard at a later date”.

3.7. Mr. L's testimony stated, “As an employee of Mr. B I was present when he undertook a second and slightly more invasive inspection of the Property [...] the prospective purchaser was present when we cut a small hole under the bay window in the master bedroom. The alarm on the moisture meter indicated a problem and a physical inspection by the three of us present confirmed there was [moisture] [...] the prospective purchaser, as he is a plasterer, finished the repair of the hole himself”.

3.8. In its deliberation the Committee has weighed all the substantive evidence available to it and

is satisfied that the Complainant/s were present at the second inspection. The moisture issue around the window was fully discussed by those present and accepted by the Complainant, and the second report was merely written confirmation of the findings of that inspection.

4. What happens next

Your right to appeal

4.1. 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. Refer to Appendix section 111.

4.2. For further information on filing an appeal, read Guide to Filing an Appeal at Mi ni stry of

J usti ce -Tri bunal s ( ww w. justi ce. g ov t. nz/ tr i bunal s ) .

Publication

4.3. At the Committee’s discretion, the decision will be published without the names or identifying details of the Complainant (including the address of the Property), the Licensee and any third parties.

4.4. The Authority will publish the Committee’s decision after the period for filing an appeal has ended, unless the Tribunal receives an application for an order preventing publication. The Authority will not publish the Committee’s decision until the Tribunal has made a decision on the application.

4.5. 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 industry standards and that is in the public interest.

Signed

Geoff Warren

Panel Member

For Complaints Assessment Committee 405

Real Estate Agents Authority

Date: 10 September 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 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.

The Real Estate Institute of New Zealand Incorporated provides: Part 1

Rule 13 Code of Ethics

Rule 13.11 Acceptance by a member, either directly or through a licensee, by whom the member is engaged or employed as a salesperson, of any agency appointment imposes the obligation to render skilled and professional service.

Rule 13.12 A member shall render services with absolute fidelity, honour and courtesy.