Gilligan - Complaint No C04547 [2015] NZREAA 272 (5 October 2015)

Last Updated: 23 July 2016

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

And

In the Matter of Complaint No: C04547

In the Matter of Karen Gilligan

License Number: 10005044

Decision of Complaints Assessment Committee

Decision on Orders

Dated this 5th day of October 2015

Complaints Assessment Committee: CAC 302

Chairperson: Alison Wallis

Deputy Chairperson: Deborah Clapshaw

Panel Member: Sue Matehaere- Patten

Complaints Assessment Committee

Decision on orders

1. Decision on orders

1.1. On 5 May 2015 the Complaints Assessment Committee (the Committee) found Karen Gilligan

(the Licensee) guilty of unsatisfactory conduct under section 89(2)(b) of the Act.

1.2. The Complainant and Licensee were given the opportunity to make submissions to the

Committee on orders.

1.3. The Committee received submissions from Lawyers X for the Complainant and Lawyers Y on behalf of the Licensee.

2. Orders

2.1. Having made a finding of unsatisfactory conduct against the Licensee, the Committee orders that:

• the Licensee pay a fine of $500.00 within 21 days from the date of this decision pursuant to s93(1)(g).
  

3. Our reasons

3.1. The Complainant, in his submissions to the Committee, seeks three penalties:

a. Reduction, cancelation or refund of commission.

b. Payment of increased legal costs arising as a result of “licensee error and misrepresentation”, and “misrepresentation caused by the agent’s misconduct”. These are not specifically itemised, but are stated to be the difference between actual costs of $10,513.10, and usual costs for similar transactions of $2000 - $3000.

c. Payment of legal costs in relation to the inquiry, investigation, or hearing, which were

$2828.43.

3.2. In relation to these points, the Licensee has made submissions. The Committee’s views on each are recorded below as well.

3.3. Refund of commission: The Licensee submits that there is a high threshold which applies to imposition of such a penalty, and that it would not be appropriate in this situation because it would amount to a punitive response. She also states that she worked hard to achieve a good sale result for the Complainant and that much effort and time was applied to resolving the dispute between the Complainant and the purchasers. It is also noted that there was already a commission reduction in place of $2000. The Committee agrees with the Licensee’s submissions on this point. There is no evidence before the Committee to suggest that a refund of commission is appropriate here.

3.4. Payment of transactional legal costs: The Licensee has made extensive submissions on this point.

• Firstly, Counsel for the Licensee notes that the wording used by the Complainant surrounding this submission is incorrect and inappropriate, in that it stresses “misrepresentation” and “misconduct”, neither of which was found by the Committee. The Committee agrees with this submission. The finding against the Licensee was one of unsatisfactory conduct, not misconduct. In addition, there was in the Committee’s view, no aspect of misrepresentation to the Licensee’s behaviour, and this has been clearly stated in our decision.

• Secondly, Counsel submits that the Committee’s only power to award costs is as set out in s93(1)(i) of the Act, in relation to costs or expenses incurred in respect of the inquiry, investigation, or hearing. Counsel states that awarding costs as sought, being additional legal costs in relation to the sale, would be compensatory in nature. The submissions for the Complainant centre around the High Court case of Quin v Real Estate Agents Authority & Baras [2012] NZHC 3557 (Quin). The discussion in the High Court in Quin states that s93(1)(f) empowers the Committee to make orders directed at the taking of actions, to order a Committee to do something to put right or correct an error, but do not extend to payments in the nature of compensatory damages.

• The Licensee states that the Committee is therefore not entitled to make the second award sought by the Complainant. The Committee believes that the interpretation of Quin, which Counsel for the Licensee puts forth, is too strict. The High Court at [63] held that a complainant may be reimbursed under s93(1)(f) if they take action to address the situation. This happened in Wallace v REAA [2014] NZREADT 75. In theory, steps to provide relief could be legal steps. On this view, payment for increased legal fees would not be compensation; rather it would be reimbursing steps taken by the vendor to rectify the situation (even if the vendor was forced to take these steps in response to a claim by the purchasers). Compensation is generally directed at a pure loss in value, which is not the situation here.

• However, in this case, the Committee does not make an award of costs, because (in addition to other factors considered in this decision), there was not sufficient information before the Committee in terms of itemised information on costs to enable it to make a determination.

3.5. Costs in relation to the inquiry, investigation, and hearing: The Licensee submits that although the Committee does have the power (as set out above) to make such an award, it should exercise its discretion not to do so here because although the Licensee was willing to engage in alternative dispute resolution, the Complainant refused. In addition, the Complainant failed to respond to a settlement offer by the Agency of a payment of $5000. The Committee agrees with the Licensee’s comments that the Complainant was not obliged to agree to either of these things, but the Committee also agrees with the Licensee that taken together, they are significant, particularly when the $5000 payment offered would have covered the whole of the amount sought under this head, with funds to spare.

3.6. In summary, the Committee agrees with the submissions of the Licensee on the three penalties sought by the Complainant. In addition to her specific submissions above, the Licensee has also made the Committee aware of significant mitigating factors arising from her personal circumstances at the material times. The Committee does not need to explain these in detail, but has been provided with ample and compelling external evidence on the issue.

3.7. There is no prior disciplinary history, which is also a significant mitigating factor.

3.8. The Licensee has also sought that the Committee not publish the details of this decision.

Publication can be a difficult issue for licensees, but the Licensee will be listed as having

received an unsatisfactory conduct finding against her on the public register, searchable through the Authority’s website. If the details are not published, a member of the public would know that there had been such a finding but would be unable to establish the nature of the conduct. It seems to the Committee that this is not a desirable outcome for the Licensee, considering the circumstances and the relatively low level of her unsatisfactory conduct.

Principles considered

3.9. 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.

3.10. 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. Promoting and protecting the interests of consumers and the public

3.11. 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."

3.12. 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. Maintaining professional standards

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).

3.14. 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 practise 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.
  

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

c. Punishment

3.16. 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).

3.17. 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 appropriate, rehabilitation of the professional must be considered

3.18. 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. 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).

4.2. 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. 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 Licensee and the Agency they work for or worked for at the time of the conduct.

4.4. 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

Alison Wallis

Chairperson

For Complaints Assessment Committee CAC302

Real Estate Agents Authority

Date: 5 October 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.