Complaint No C07586 [2015] NZREAA 258 (21 September 2015)

Last Updated: 24 May 2016

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

And

In the Matter of Complaint No: C07586

In the Matter of Licensee One

License Number: XXXXXXXX

Licensee Two

License Number: XXXXXXXX

The Agency

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Decision to take no further action

Dated this 21st day of September 2015

Complaints Assessment Committee: CAC 402

Chairperson: Marjorie Noble

Panel Member: Jane Ross

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 18 March 2015 the Real Estate Agents Authority (the Authority) received a complaint against Licensee One from the Complainant. When the Complaints Assessment Committee (the Committee) made a decision to inquire, the Committee joined Licensee Two and the Agency to the complaint to ensure a thorough investigation.

1.2. Licensee One is a licensed salesperson, Licensee Two is a licensed agent and the Agency is a licensed Agent Company 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 the Complainant inspected the Property, with a view to purchase as an investment property with her life partner, Licensee X, a licensee at the Agency. On Friday, 6 March 2015, the Complainant made an offer on the Property. The offer was drawn up and facilitated by Licensee Two. Licensee Two assured the Complainant there were no other offers at that time and it was not a multi-offer sale. Licensee Two handed the offer to Licensee One as the listing agent, to present to the vendor. After a period of 48 hours Licensee One had not presented the Complainant’s offer to the vendor, had added an additional clause to the Complainant’s offer, and had also written up a second offer from another buyer, creating a multi-offer situation.

1.5. In particular, the Complainant advised that Licensee X made her aware of the Property, which was a deceased estate listing with the Agency priced at $157,000. On Monday, 2 March 2015, the evening prior to viewing with the Complainant, Licensee X was advised by Licensee One by text that an earlier failed agreement of 7 February 2015 was to be re -submitted. The text referred to the price on the failed offer as $159,000. The Complainant and Licensee X (acting as the selling agent) viewed the Property and decided to submit an offer on the morning of Friday, 6 March 2015. Licensee X was away at that time and arranged for Licensee Two, as the Agency manager, to write up the offer for the Complainant on his behalf. The Complainant states she understood Licensee Two was involved to avoid a conflict of interest with Licensee X being a licensee at the Agency. The Complainant specifically asked Licensee Two if there were any other offers and if it was a multi-offer situation. Licensee Two assured her it was not. The Complainant signed a “Consent by Purchaser” form as well as the agreement for sale and purchase. She believes this was at approximately 10.30am. Licensee Two subsequently contacted Licensee One, who advised she would take the offer to the vendor to present it later that afternoon.

1.6. The Complainant stated her understanding was that usual protocol at the Agency, after an offer is made for a property, was for a notification text to be sent to all agents giving them one hour to state in writing if they had other interested parties. The Complainant stated when her offer was made that Licensee X received no such text.

1.7. The Complainant heard nothing further from the Agency or Licensee One on Friday, 6 March, and on the Saturday afternoon learnt from Licensee X her offer had not yet been presented. Licensee One explained to Licensee X that she had been trying since the Friday afternoon but had been unable to contact the vendor. Licensee X also learnt Licensee One had shown

another client through the Property on the Saturday. Licensee X contacted his principal, Licensee Two, to express his disappointment at the Complainant’s offer being stalled, and Licensee Two indicated he would contact Licensee One and instruct her to present the offer immediately.

1.8. The Complainant contends she heard nothing more from Licensee One in regard to the offer until Sunday morning when Licensee One arrived at her home. The Complainant states Licensee One handed the Complainant the original agreement and a multi-offer form and said, “Here, you have to sign this now as I have a client who is going to make an offer. I have spoken to the vendor and they said they will accept offers around the asking price of

$159,000 so your initial offer of $125,000 will not be considered”. Licensee X did not speak to Licensee One at this time, the Complainant states he was too angry. The Complainant later noticed the amended agreement included a clause 22 disclosing the detached garage for the Property was not on the flat plan and was to be accepted accordingly. The Complainant states she had no idea why clause 22 was inserted without her knowledge and believed it was fraudulent to add it after she had signed the sale and purchase agreement.

1.9. Licensee X advised Licensee Two by telephone that the Complainant did not want to be part of a multi-offer and no longer wished to proceed with her offer. The Complainant states she pulled out as she thought she needed to offer in the $150,000’s but was subsequently made aware the eventual sale price was $137,000, which was within the Complainant’s budget.

1.10. The Complainant considers Licensee One’s delay in presenting her offer for over 48 hours was deliberate and designed to benefit Licensee One, by allowing her to find another interested purchaser and claim the full commission. The Complainant is concerned Licensee One disclosed information from the Complainant’s offer to convince the other prospective purchaser to offer a higher amount, significantly disadvantaging the Complainant had she proceeded with her offer.

1.11. The Complainant requested a remedy, being:

• That Licensee One be issued a formal and public warning;

• That Licensee One be required to forgo or refund any commission received from the sale of the Property.
  

Licensee One:

1.12. The Licensee responded to the complaint against her. In particular, she commented that:

(a) Licensee One states she received a phone call on the afternoon of Friday, 6 March

2015, from Licensee Two; to advise her a colleague from the Agency - Licensee X - had a written offer for the Property from his partner, the Complainant, and that the offer

would be left at the Agency’s office for her to collect and present to the vendor. She

advised she collected the offer, quickly looked inside to confirm the address and noted the amount of the offer at $125,000. She telephoned the vendor but there was no reply and no answer machine. The vendor had not provided his mobile number and she continued to ring the landline all Friday evening and into Saturday morning without success.

(b) On Saturday 7 March, she received an enquiry for the Property from Mr. C, who wished to view the Property and made an appointment for that morning. Licensee One told Mr. C she already had an offer for the Property, which was to be presented to the vendor as soon as possible, but Mr. C still wished to continue. Having viewed the Property, Mr. C subsequently contacted Licensee One to advise he wished to make an

offer. She informed him it would be a multi-offer and notes no details of the

Complainant’s offer were disclosed to Mr. C.

(c) Licensee One states she then contacted Licensee Two to advise she had been unable to present the Complainant’s offer and now was expecting a second offer. Licensee Two advised it would now be a multi-offer situation and she should contact Licensee X, so he could inform his client of the situation and advise her accordingly.

(d) Licensee One states at approximately 3.30pm on Saturday 7 March she attended the home of the Complainant and Licensee X, to clarify she had still not managed to contact the vendor and that, due to a further offer being received, there was now a multi-offer situation. She notes Licensee X was not happy, was abusive to her, and accused her of disclosing details of the Complainant’s offer to another party. She left the multi-offer form and amended agreement with the Complainant, departed from the Complainant’s home and immediately contacted Licensee Two to advise him of the accusations, and that the Complainant and Licensee X were very unhappy about the multi-offer situation. Licensee Two advised her to leave things as they were and to wait to hear from Licensee X on his client’s behalf. A further phone call to Licensee Two later on Saturday evening confirmed to Licensee One no word had yet been received from Licensee X and the Complainant. Licensee Two agreed they should wait until the morning.

(e) Licensee Two phoned Licensee One on Sunday morning to advise the Complainant was withdrawing her offer. Licensee One was still unable to contact the vendor at that time but managed to reach him about 8.00pm that evening. She subsequently met with him to present the remaining offer and a contract was eventually formed at $137,000. Licensee One states she did not re-approach the Complainant through Licensee X, as she concluded the offer was withdrawn and further contact was unnecessary.

(f) Licensee One refuted comments made by the Complainant and her agent, and stated she was not the selling agent acting for the Complainant, did not meet with her to show the Property or to write up an offer, and did not inform the Complainant it was not a multi-offer situation. She further stated she did not delay the presentation to benefit herself by finding another buyer, rather the vendor was not contactable at that time and the second buyer approached the Licensee himself. The Licensee strongly denied having made a statement to the Complainant and Licensee X in regard to having spoken to the vendor and that the Complainant’s offer of $125,000 would not be considered.

(g) Licensee One expressed her opinion that, as the Complainant’s agent, Licensee X had the responsibility of acting in his client’s best interest and advising her accordingly in a multi-offer situation. The Licensee states she handed the original document back to Licensee X, to work with his client should she wish to make any changes to her first offer in view of the multi-offer situation.

(h) In respect to the addition of clause 22 to the sale and purchase agreement already signed by the Complainant, Licensee One explained she picked up this omission on the Complainant’s offer and advised Licensee Two to amend the Complainant’s offer before presentation. Licensee One stated the issue with the detached garage not being on the flat plan was known to Licensee Two and Licensee X, at the time of listing the Property, and considered Licensee Two had noted the details on the checklist completed in the office for the Property.

(i) With regard to the Complainant’s assertion Licensee One had advised an offer would need to be in the $150,000’s to be considered, the Licensee explained her communication with Licensee X was in respect of a previous offer which had been accepted at $159,000, had failed on finance but was possibly going to be re-presented with financial assistance. This communication occurred prior to the Complainant viewing the Property and Licensee One denies the Complainant was advised by the

Licensee of price at the time of the multi-offer.

Licensee Two:

1.13. The Licensee responded to the complaint against him. In particular, the Licensee commented that:

(a) Licensee Two stated that on 6 March 2015, Licensee X, a licensee at the Agency, advised him his life partner, the Complainant, wished to submit an offer for the Property. As Licensee X was to be out of town he asked if Licensee Two could draw up the necessary documentation. Licensee Two met with the Complainant, advised her there was no other current offer for, or interest in, the Property and drew up an agreement. A section 134 declaration was completed to recognise the Complainant’s relationship with Licensee X, a licensee of the Agency. The Licensee advised when the Complainant’s offer was prepared, an Agency SMS text was sent to all sales staff advising an offer was to be submitted for the Property at 4.30pm that day; with the intention that any other licensees of the Agency who potentially had interested buyers would also have an opportunity to submit offers. Licensee Two states the text was sent out prior to the Complainant signing a consent form in anticipation of the Complainant’s offer so as to give sales staff sufficient time to respond.

(b) Licensee Two advised the Complainant, Licensee One, as listing agent, would present the offer and would inform Licensee X, as introducing agent, of any progress. Licensee Two states he contacted Licensee One who said she would collect the offer and take it to the vendor that afternoon. On Saturday, Licensee Two heard from Licensee X, who was concerned the offer had not yet been presented. Licensee Two says he contacted Licensee One who informed him the vendor was out of town and not due back until Sunday. She further informed Licensee Two of new interest in the Property, with another offer to come, and also advised the Licensee an acknowledgment pertaining to a purchaser’s acceptance of the garage not being on the flat plan needed to be inserted into the Complainant’s offer. Licensee Two subsequently confirmed the sales team had been made aware of this issue at the team’s caravan of the Property and agrees the clause should have been in the first agreement he drafted. The Licensee states he met Licensee One, inserted a clause into the Complainant’s offer, and instructed Licensee One to inform Licensee X of the flat plan clause and that it was now a multi-offer.

(c) Licensee Two considered upon Licensee One informing Licensee X of the multi-offer, her role in that part of the transaction would be at an end, as the Complainant’s signed amended agreement and multi-offer form would be delivered back to Licensee Two to present to the executor vendor as an independent party, as per Agency policy.

(d) Licensee One confirmed to Licensee Two she was in receipt of an offer and multi-offer acknowledgment form from the second purchaser, and Licensee Two states he subsequently contacted Licensee X, to enquire what the Complainant intended to do with her offer. Licensee X informed Licensee Two the Complainant was not going to proceed with her offer, and that Licensee One had indicated the Complainant’s offer would need to be in the $150,000’s and the Complainant was not prepared to go that high. Licensee Two states he was unsure how this price information could be known as the agreement had not been discussed with the vendor, and the Licensee says he advised Licensee X to talk to his client and encourage her to resubmit her offer even if still on the original basis. A text communication ensued over Saturday evening and Sunday morning, and culminated with a phone call from Licensee X to Licensee Two saying the Complainant no longer wished to proceed even at the original price of

$125,000. Licensee Two states he advised Licensee One there was now only her offer to present.

(e) In response to a statement made by the Complainant, Licensee Two notes Licensee One would not have provided the amended agreement and multi-offer form to Licensee X on Sunday as suggested by the Complainant, as the Complainant had already withdrawn her offer by then and Licensee One was aware of that.

The Agency:

1.14. The Agency responded to the complaint against them. In particular, Licensee Two on behalf of the Agency commented that:

(a) Licensee Two is the eligible officer and supervising agent for the Agency and as such was responsible for supervising Licensee One.

(b) In his role as Agency manager, Licensee Two facilitated in writing the offer from the

Complainant on behalf of Licensee X who was out of town, consents, and the section

134 declaration form. Licensee Two continued to oversee the transaction as a manager on behalf of the Agency, and instructed and advised both Licensee One and Licensee X, as listing and introducing agents respectively, on behalf of the Agency. Licensee Two provided written evidence of comprehensive instructions provided in the Agency’s Induction and Policy manual in regard to multiple offers and the Licensee’s evidence indicates the required process was followed in the sale of the Property. Had the Complainant not withdrawn her offer, Licensee Two would have been the agreed independent person who would have presented all interest to the Agency’s client, the vendor. Although Licensee Two drew up the Complainant’s original offer and was therefore party to the price and conditions, Licensee X, as the introducing agent, had been handed back the Complainant’s offer to make any changes on behalf of the Complainant, without Licensee Two having knowledge of those changes and therefore remaining independent of both parties’ offers.

2. What we decided:

2.1. On 13 April 2015 the Complaints Assessment Committee (the Committee) 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 24 August 2015 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

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

2.4. 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 2012.

3. Our reasons for the decision

Licensee One:

3.1. The Committee concluded:

(a) The role of Licensee X in the transaction caused confusion.

(b) The delay in presentation of the offer was due to the vendor being uncontactable.

(c) The multi-offer situation resulted from another client contacting Licensee One.

(d) The addition of clause 22 to the Complainant’s offer was due to an oversight by

Licensee Two.

(e) Details of the Complainant’s offer were not disclosed to the second buyer.

(f) The discussion regarding price for the Property occurred prior to the Complainant viewing and offering on the Property.

Reason One: [Role of Licensee X]

3.2. The Complainant states she understood Licensee Two facilitated her written offer for the Property to avoid a conflict of interest with her partner, Licensee X. Licensee X was not the listing agent but the introducing /selling agent, was out of town on the day the offer was drawn up, and had asked Licensee Two as manager to act on his behalf. The Complainant’s written evidence refers to Licensee X as “acting as my agent for the purchase of the Property” and “the selling agent for the transaction”, and Licensee Two refers to Licensee X as “the Complainant’s sales person” and encourages “Licensee X to talk to his customer”; clearly indicating both the Complainant and Licensee Two were treating Licensee X as the selling agent for the transaction. The Committee considered it was not the role of Licensee One to act directly as advisor to the Complainant. Licensee X was the agent responsible for advising the Complainant, particularly when the multi-offer arose, and had he not been able to separate his roles as agent and life partner at that stage in order to give his client impartial and professional advice, he should have relinquished his role as selling agent to another licensee at the Agency. He did not do this, and the Committee considered the Complainant did not receive impartial advice in regard to her offer.

Reason Two: [Delay in presentation of offer]

3.3. The Complainant considered Licensee One deliberately delayed presenting her offer to the vendor thereby creating an opportunity for the Licensee to find another buyer, and claim the list and sell portion of the commission. The Committee is satisfied from the evidence provided by Licensee One, and the written statement from the vendor (which was confirmed verbally by the interviewer), that she used her best endeavours to contact the vendor but he was not available or contactable for the weekend in question. The Committee did consider that, using best practice principles, Licensee One should have advised Licensee X sooner that she was not able to contact the vendor and therefore had not presented his client’s offer; but did not consider this conduct was incompetent or negligent, nor that it would reasonably be regarded by agents of good standing as being unacceptable, and did not reach the threshold for unsatisfactory conduct.

Reason Three: [Multi-offer]

3.4. The Complainant specifically asked Licensee Two at the time of making her offer if there were any other offers or current interest in the Property. She was advised there was not. Licensee One’s evidence to the Committee is reinforced by a statement from the other prospective purchaser, Mr. C, that he approached Licensee One after the Complainant had made her offer in regard to viewing the Property - she did not approach him. When Mr. C expressed a desire to make an offer for the Property it was Licensee One’s duty to take that offer in writing to the vendors. Both prospective purchasers were subsequently advised of a multi-offer situation. Licensee One was not acting as selling agent or advisor to the Complainant at this or any other time, and the Committee considered the Licensee correctly dispatched her duty by advising both Licensee Two, as manager, and Licensee X, as selling agent, of the situation.

Reason Four: [Addition of clause 22]

3.5. The Complainant stated Licensee One had not made her aware of the issue of the detached garage not being on the flat plan, before she signed her offer. The Committee notes Licensee One did not show the Property to the Complainant and did not write up the offer for her, so was not in a position to know what the Complainant had or had not been advised. Evidence from both Licensees Two and One, indicates all the Agency’s licensees, including Licensee X, were advised of the garage issue at the time of an office “caravan” to the Property after listing. Licensee One noticed the offer from the Complainant did not include a clause in relation to the garage and flat plan and alerted Licensee Forsyth, who subsequently added this clause to the original copy of the offer, which Licensee One had retained to present to the vendor. The “second offer” referred to by the Complainant appears to be a copy of the original offer made by the Complainant and supplied to her as required by the Act at the time of signing. The Committee is satisfied Licensee One acted appropriately in respect of clause

22.

Reason Five: [Details of offer disclosed]

3.6. At the time Licensee One collected the Complainant’s offer from the Agency’s office, there were no other offers for the Property and it was appropriate for her to note the details of the offer she was about to present. When it became apparent there would be a multi-offer situation, she was required to step aside and not present the offers, and only deal with the other interested purchaser. The Licensee states in writing she did not disclose any details to the other interested purchaser. This was confirmed by the other interested purchaser. Regardless, the Complainant was given the opportunity to alter her offer at that time, in consultation with Licensee X, to make it her best offer; and any change in details the Complainant made would not have been known to Licensee One. The Committee is satisfied Licensee One acted appropriately with regard to client privacy.

Reason Six: [Price]

3.7. The Complainant and Licensee X state Licensee One advised them the Complainant’s offer needed to be in the $150,000’s to be considered. Evidence shows a text communication occurred between Licensees One and X prior to the Complainant viewing the Property; in regard to a previous failed offer which had been accepted at $159,000 and may possibly be re-presented with some financial assistance. This offer had not been re-presented at the time of the multi-offer. The Complainant’s statement asserts Licensee One said, “I have spoken to the vendor and they said they will accept offers around the asking price of $159,000 so your initial offer of $125,000 will not be considered”. Clearly the Licensee had not spoken to the vendor at that time as he was not contactable so she could not have known what would or would not be acceptable. The offer Licensee One had written up herself from the other interested purchaser was also substantially under the $150,000 range, which would indicate the Licensee was prepared to present lower offers to the vendor. The Committee does not find evidence in support of the Complainant’s assertions in regard to price advice from Licensee One.

Licensee Two:

3.8. The Committee concluded:

(a) The omission of the clause from the Complainant’s original offer was remedied prior to presentation.

Reason One: [omission of clause]

3.9. Licensee Two admitted he neglected to advise the Complainant of the requirement for a clause in her offer in respect of a detached garage, which was not on the flat plan and was to

be accepted accordingly. Licensee X had not advised the Complainant as his client of this issue either, although Licensees One and Two both state the licensees from the Agency were all made aware of the issue at the initial Agency team viewing. Licensee One noticed the omission and pointed it out to Licensee Two, who subsequently amended the Complainant’s original agreement, and asked Licensee One to point it out to Licensee X for his client to sign prior to presentation. The Committee did consider whether or not Licensee Two’s omission breached the Act but considered, although it could have had more serious consequences, the error was picked up and rectified prior to presentation of the offer. The Committee does not consider Licensee Two’s conduct reached the threshold for Unsatisfactory Conduct.

The Agency:

3.10. The Committee concluded:

(a) The Agency’s supervision and systems were adequate.

Reason One: [Agency’s supervision and systems]

3.11. The Committee considered Licensee Two, on behalf of the Agency, did supervise the Agency’s licensees appropriately. The evidence provided on the papers of the Agency’s multi-offer process shows it to be sound, and the Committee considered Licensee Two utilised the process effectively. The Committee had some concerns that no record of the information in respect of the garage/flat plan issue for the Property, held by the Agency, was provided in evidence, and neither Licensee Two nor Licensee X advised the Complainant of the issue when she first made her offer. The Committee recommends the Agency use best practice principles to ensure all property files are complete and all information is recorded in writing, but do not find the conduct has reached the threshold for being considered unsatisfactory.

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/ tri 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

Jane Ross

Panel Member

For Complaints Assessment Committee 402

Real Estate Agents Authority

Date: 21 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.