Complaint No C05586 [2015] NZREAA 249 (22 June 2015)

Last Updated: 17 May 2016

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

And

In the Matter of Complaint No: C05586

In the Matter of Licensee One

License Number: XXXXXXXX

Licensee Two

License Number: XXXXXXXX

Clinton Hardy

License Number: 10013706

The Agency

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 22nd day of June 2015

Complaints Assessment Committee: CAC 302

Chairperson: Alison Wallis

Deputy Chairperson: Deborah Clapshaw

Panel Member: Sue Matehaere-Patten

Complaints Assessment Committee

Decision finding unsatisfactory conduct asking for submissions on orders and

Decision to take no further action

1. The Complaint

1.1. On 8 July 2014 the Real Estate Agents Authority (the Authority) received a complaint against

Licensee One and Licensee Two from the Complainants.

1.2. Licensee One is a licensed salesperson under the Real Estate Agents Act 2008 (the Act) and at the time of the conduct was engaged by the Agency.

1.3. Licensee Two is a licensed salesperson under the Act and at the time of the conduct was engaged by the Agency as Sales Manager.

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

1.5. The details of the complaint in relation to Licensee One are that the Complainants wished to make an offer to purchase the Property, but they were denied that opportunity because Licensee One ignored the fact that there was a multi offer situation and presented another offer to the vendor, which was accepted. In relation to Licensee Two, the complaint is that Licensee Two said as there were two offers there would be a multi offer situation and both offers would be presented together, but this did not occur; additionally, Licensee Two said he would discuss the matter with his manager, but never followed through.

1.6. The Property was listed for sale in May 2011, so at the material times it had been on the market for just over three years. The eventual purchaser of the Property (the Purchasers) was a neighbouring landowner who first made an offer to purchase the Property in March 2014, for $1.1M. This offer contained a clause saying that it was only open for acceptance for a very short period of time. The offer was not accepted.

1.7. The Complainants were working with another Agency salesperson, Licensee X. On 4 May

2014, Licensee X advised Licensee One that there was likely to be an offer on the Property coming from the Complainants. The Complainants then contacted Licensee X on 25 May and advised him that they hoped to have an offer to him by mid-week.

1.8. Early the following day, 26 May 2014, the Purchasers contacted Licensee One and made an appointment to submit another offer on the Property. Their offer was submitted at $1.4M, which was the asking price, and had a tight acceptance deadline of 24 hours to 4pm the following day.

1.9. At 1.49pm, 26 May 2014, Licensee One phoned Licensee X to let him know that another offer had been received, which needed to be presented immediately. Licensee X made contact with the Complainants at 2.15pm to advise them and followed up with an email at 3pm containing the multi offer form.

1.10. At 2.44pm, Licensee One was advised the vendors were home and wished to meet him. At

3pm, Licensee One met with the vendors. They asked him about the other offer and he told them it had not yet been received in writing. The vendors accepted the Purchasers’ offer.

1.11. Just before 3pm, Licensee X had emailed Licensee One to say that the Complainants’ offer would be presented. Licensee One was already visiting the vendors, and his assistant was out at a funeral at the material time. The email was not accessed until well after 3pm.

1.12. Close to 4pm, Licensee One phoned Licensee X to advise him that an offer had been presented and accepted. Licensee Two became involved at that point, as he was asked to call the Complainants. He talked to them and advised that he would phone the vendors and check whether the offer had in fact been finalised. As noted above, it had been finalised; after confirming this with the vendors, he advised the Complainants that he would check the agreement when he saw it the following day. The Complainants say that he said he would check with his manager as to whether there was anything else which could be done, but it appears this may not have happened.

1.13. That evening the Complainants phoned the vendors to express that they were unhappy that they had not had a chance to present their offer.

1.14. The Complainants requested a remedy, being that Licensee One be held accountable and have his license suspended for six months. In addition, the Complainants seek that neither Licensee One nor Licensee Two receive any financial benefit from the transaction, and that they both apologise to the Complainants.

2. What we decided

2.1. On 28 July 2014 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it.

2.2. On 9 March 2015 the Committee had a hearing on the papers and considered all the information that had been gathered during the inquiry.

2.3. As a result of the Committee’s investigation, the Committee determined to join Clinton Hardy, who is the Regional Branch Manager responsible for Barfoot & Thompson Limited (the Agency) Mangawhai Branch (the Branch), and the Agency to the complaint in relation to the issue of supervision of Licensee One and Licensee Two.

Licensee Clinton Hardy

2.4. The Committee found that Licensee Clinton Hardy, has engaged in unsatisfactory conduct under section 89(2)(b) of the Act. The decision was also made with reference to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules).

Licensees One, Two, and the Agency

2.5. The Committee decided to take no further action on this complaint against Licensees One, Two and the Agency.

2.6. This decision was made under section 89(2)(c) of the Act. The decision was also made with reference to Rules 6.1, 6.2, 8.3 and Section 50 of the Act.

3. Our reasons for the decision

Licensee One

3.1. Licensee One’s response to the complaint is that although he had been liaising with Licensee X regularly and knew about the Complainants’ interest, events transpired in such a way that he could not have dealt with the situation in any other way.

3.2. The Agency does have a policy for handling multi offer situations, which evidently is triggered once a second customer has made a written offer. However, there was always an overarching obligation on Licensee One to act in his vendor clients’ best interests and in accordance with their instructions, and Licensee One’s response to the complaint is that he did so.

3.3. Although he was made aware of the possibility of another offer coming; the email from Licensee X saying that the Complainants would likely be in a position to make an offer the following day, came in at 2.53pm on 26 May 2014. At that time Licensee One was already on his way to see the vendors with the Purchasers’ offer.

3.4. It is important to note that the Purchasers’ offer had come in rather unexpectedly and had significant urgency attached to it because of the short acceptance clause. It was also for the asking price and had few conditions attached to it. In other words, it fulfilled the vendors’ requirements and was likely to be very welcome to them after a long marketing period. It is also relevant that at that point, according to the Agency policy, a multi offer situation had not arisen because there was no offer from the Complainants at that point.

3.5. The Committee believes even if the email had been accessed earlier, it would have made no difference to the outcome, because of the factors mentioned above. The Committee has received evidence from the vendors that they were aware another party was considering making an offer. They had apparently been kept appraised of the Complainants’ interest over a period of weeks by Licensee One.

3.6. However, when they received the Purchasers’ offer they knew they needed to make a swift decision. The Property had then been on the market just over three years, and as the Purchasers’ previous offer had also contained a short acceptance clause they had reason to believe they would only have one opportunity to accept it.

3.7. The vendors have explained that they felt the Complainants had had several weeks in which to present an offer, they were very happy with the Purchasers’ offer, and had no desire to wait and see if another offer came in. They have confirmed that Licensee One did discuss the issue with them, but that their instructions to him were quite clear.

3.8. The Committee believes that considering the evidence of Licensee One, which is backed up by that of the vendors, he acted in good faith towards all parties and has not breached any Rules.

Licensee Two

3.9. Licensee Two is a salesperson; he has been described as the Sales Manager of the Agency in his response to this complaint, but he was effectively acting in the role of Branch Manager. This point is considered further below, but the complaint in relation to Licensee Two is that

he did not ensure the Agency procedure in relation to multi offers was correctly followed and that he did not respond appropriately when the complaint was made.

3.10. Licensee Two’s response to the complaint is that he did deal with the Complainants appropriately, as he did speak to the salespeople and the vendors, and reviewed the documents to confirm the position. It was very clear to him (as noted above) that Licensee One had acted correctly and in line with the instructions and best interests of his vendor.

3.11. Once Licensee Two had looked into the matter it was plain the multi offer situation had not arisen at that point, the agreement had been fully and correctly concluded, and the vendors were very happy with it. Accordingly, he believes there were no more steps he could have taken.

3.12. The Committee agrees with Licensee Two, and takes the view that he acted appropriately and has not breached any of his obligations pursuant to the Rules.

Licensee Clinton Hardy and the Agency

3.13. As mentioned in 3.9 above, although Licensee Two was described as a Sales Manager to the Committee, he is advertised on the Agency website as Branch Manager. He is a salesperson and his supervising agent is Licensee Clinton Hardy; who is the Regional and Business Development Manager for the Agency in the North Shore, Northland, West Auckland, and in some central Auckland branches.

3.14. Licensee Hardy had no involvement in the events described in the complaint whatsoever. It appears that Licensee Two may have considered contacting him at one point following the discussion with the Complainants, but it seems that he did not do so. If he had, it would not have made any difference to the outcome for the reasons discussed above, in relation to Licensee Two. Licensee Hardy is not actively involved in a day to day sense at the Agency’s branch.

3.15. Licensee Hardy states that “The offices [of Office X and the Branch] are part of my regional territory and Licensee Two is the licensee responsible for the management of these branches.” The Committee considered whether Licensee Hardy had incorrectly delegated his Branch Manager role to Licensee Two and therefore he did not comply with section 50 of the Act, and Rule 8.3, in terms of his supervision of Licensee Two. Licensee Hardy was tasked by the Agency’s structure with supervision of a large territory of the Agency’s branches, in relation to which he was nominally the Branch Manager. He has stated that he visited the Branch once or twice per month to hold a meeting of several hours duration, and that Licensee Two has received quite significant training. He also states he is available 24 hours, 7 days a week to those whom he supervises. The Agency response to the Committee confirms that the Branch is overseen and monitored by Licensee Hardy, and that there are regular visits made and ongoing communication.

3.16. The question is whether such supervision is sufficient for Licensee Hardy to be said to have met his obligations under the Act and the Rules.

3.17. There has been recent guidance from the Real Estate Agents Disciplinary Tribunal in relation to what constitutes effective supervision, in REAA v Li, Wang, and Swann [2014] READT 67 (the Swann Decision). The relevant portion of that decision relates to Licensee Swann, who was Branch Manager of a branch where, although he was present on a day to day basis, he was found by the Tribunal to have breached his obligations of supervision. This was because

the team he was supervising were all Mandarin speakers who were managed by a Mandarin speaking salesperson. The Tribunal found that he had allowed the salesperson to take too much control over the team of salespeople, which he should have retained. The Tribunal found that his conduct amounted not to misconduct but to high level unsatisfactory conduct.

3.18. This decision is directly relevant to the question of Licensee Hardy’s delegation of his supervisory role. In the Swann Decision, Licensee Swann was physically present at the branch and available, even though he lacked active involvement in listings and transactions mainly for language reasons. In the present case, Licensee Hardy was not really involved in supervision at all. His only involvement appears to have been by way of training and availability by phone. This is arguably considerably more of a breach than arose in the Swann Decision because there could be said to have been almost complete delegation of his supervisory role.

3.19. Accordingly, the Committee follows the Swann Decision and finds that Licensee Clinton

Hardy’s actions amounted to unsatisfactory conduct.

3.20. The Committee also considered whether the Agency’s structure as it relates to supervision of salespeople complies with the Act and the Rules. The Agency in its response argues that each branch manager is required to have a structure and process in place to ensure that their obligations are met, and that Licensee Hardy met those obligations. Taking into account the law as clarified by the Tribunal in the Swann Decision, the Agency process is not directly at issue here – it is a question of how it was worked in the specific circumstances as they relate to Licensee Hardy and the Branch. Accordingly, the Committee finds that there has not been a breach of the Act or the Rules on the part of the Agency.

4. Request for submissions on orders: Licensee Clinton Hardy

4.1. The Committee will conduct a separate hearing on the papers to decide what orders, if any, should be made under section 93 of the Act. Refer to Appendix 1.

4.2. The Complainant is to file submissions (if any) on what orders should be made within 10 working days from the date of issue of this decision. These submissions, if any, will then be provided to Licensee Hardy, with a timeframe for filing final submissions.

4.3. The Committee requires the CAC Administrator to obtain a record of any previous disciplinary decision in respect of the Licensee and, if any such decision exists, provide it to the Committee.

5. What happens next

5.1. The Committee will consider all submissions and issue a decision on orders.

Your right to appeal

5.2. In the matter of Licensee Clinton Hardy, the Committee has yet to finally determine this complaint because the Committee is yet to determine what orders should be made, if any.

5.3. The Committee considers that the 20 working day appeal period does not commence until it has finally determined the complaint against Licensee Clinton Hardy by deciding what orders should be made, if any.

5.4. In the matter of Licensees One, Two, and the Agency; if you are affected by this decision 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 to the Tribunal to consider in relation to the appeal. Refer to Appendix section 111.

5.5. 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

5.6. The Committee has deferred making any decision on publication until its hearing to decide what orders, if any, should be made.

Signed

Alison Wallis

Chairperson

For Complaints Assessment Committee 302

Real Estate Agents Authority

Date: 22 June 2015

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

Section 50 Salespersons must be supervised

(1) A salesperson must, in carrying out any agency work, be properly supervised and managed by an agent or a branch manager.

(2) In this section properly supervised and managed means that the agency work is carried out under such direction and control of either a branch manager or an agent as is sufficient to ensure—

(a) that the work is performed competently; and

(b) that the work complies with the requirements of this Act.

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.

The relevant provisions from the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012 are:

Rule 6 Standards of professional conduct

Rule 6.1 A licensee must comply with fiduciary obligations to the licensee’s client.

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

Rule 8 Duties and obligations of agents

Supervision and management of salespersons

Rule 8.3 An agent who is operating as a business must ensure that all salespersons employed

or engaged by the agent are properly supervised and managed.