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New Zealand Real Estate Agents Authority |
Last Updated: 24 July 2016
In the Matter of Part 4 of the Real Estate Agents Act 2008
And
In the Matter of Complaint No: C07836
In the Matter of Licensee One
Licence Number: XXXXXXXX
Stephen Walsh
Licence Number: 10005852
Barfoot & Thompson Limited
Licence Number: 100018521
Decision of Complaints Assessment Committee
Finding of unsatisfactory conduct asking for submissions on orders and Decision to take no further action
Dated this 9th day of October 2015
Complaints Assessment Committee: CAC 407
Chairperson: Nigel Dunlop Deputy Chairperson: Marjorie Noble Panel Member: Rex Hadley
Complaints Assessment Committee
Decision finding unsatisfactory conduct asking for submissions on orders and
Decision to take no further action
1. The Complaint and other matters investigated
1.1. On 10 April 2015 the Real Estate Agents Authority (the Authority) received a complaint against Licensee One from the Complainant. The Complainant is the sales manager/licensee agent of agency X.
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. The Agency is a licensed company agent under the Act.
1.3. The complaint from the Complainant related to Licensee One only. On 23 March 2015, the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it. An investigation was undertaken on its behalf.
1.4. On 22 July 2015, having received information from the investigator, the Committee decided to investigate Stephen Walsh (Licensee Walsh). The Committee is empowered to do so by section 78(b) of the Act. Licensee Walsh is a licensed salesperson under the Act.
1.5. On 23 July 2015, on receipt of further information, the Committee decided to investigate
Barfoot & Thompson Limited (the Agency).
1.6. The complaint relates to a property (the Property).
1.7. The matters investigated were as follows:
b) That Licensee One sold the Property without an agency agreement with the vendor;
d) That Licensee Walsh acted as branch manager of a branch of the Agency (the Branch)
when not licensed to do so.
f) That the Agency appointed and maintained Licensee Walsh as the manager of the
Branch when he did not possess a branch managers’ licence.
2. The background to the complaint
2.1. The Property was the subject of general agency agreements with the Agency and agency X, dated 27 August 2014 and 27 September 2014 respectively.
2.2. On 17 December 2014, the Property became the subject of a sole listing agreement with agency X, with an expiry date of 31 January 2015.
2.3. On 6 January 2015, agency X served a cancellation notice on the Agency, thus alerting the
Agency to the cancellation of its general agency.
2.4. An agency X salesperson, Ms. B, conducted open homes at the Property on 31 January and 1
February 2015. She says that on 1 February, when she returned to the Property to pick up a file, she encountered Licensee One, who told her that the Property had been sold and that he was the selling agent. Given that 1 February was the day following the expiry of the sole agency agreement, and a Sunday, she presumed that the Property must have been sold through the Agency in breach of the sole agency agreement.
2.5. Ms. B’s presumption was borne out in her mind as a result of a conversation she had with the purchaser (the Purchaser) of the Property on 3 February. He appeared to tell her that he had purchased the Property two weeks earlier, well within the period of the sole agency. She used her phone to video record the conversation.
2.6. On behalf of agency X, the Complainant says that by selling the Property during the agency X sole agency, Licensee One has exposed the vendor to liability to pay commission to both agency X and the Agency. Agency X has charged the vendor commission but he has not paid.
2.7. In his complaint to the Authority, the Complainant says that Licensee One should be dealt with by the Authority to the full extent permitted under the Act. He also says that the Agency should be required to pay the full commission on the sale to agency X.
3. Responses
3.1. The three respondents have provided evidence and views to the Committee through the investigator. They did so primarily through their solicitors. These responses are referred to below by reference to the seven issues identified in paragraph 1.7 above. The first two will however be referred to together.
Selling in breach of sole agency and selling without an agency agreement
3.2. Licensee One says that in late January 2015, the vendor of the Property contacted him and informed him of his intention to re-establish general agency agreements with the Agency and agency X, following the imminent expiry of the sole agency. The vendor told him that he intended reducing the asking price. He asked Licensee One whether the Purchaser might still be interested in the Property at the reduced price. The Purchaser had shown interest in the Property through Licensee One during the time of the general agency agreements, but had considered the Property to be over-priced. Licensee One said that he would ask the Purchaser whether he was still interested in the Property.
3.3. Licensee One needed to speak with the Purchaser in any event. That was because the Purchaser had placed a backup offer on a property (property X). This property was also owned by the vendor, and was built to the same design. One reason the vendor had rung Licensee One was to inform him that property X had sold, and hence the Purchaser ’s backup offer would not be proceeding. Licensee One would have to let the Purchaser know that.
3.4. On the same day as the call from the vendor, Licensee One duly rang the Purchaser to inform him that his backup offer on property X had fallen through. He also mentioned that the Property was about to be generally listed again with the Agency and agency X at a reduced asking amount.
3.5. Licensee One says that he proceeded to draft a general agency agreement with the intention that the vendor would sign it on Monday 2 February. Hence he dated it 2 February in anticipation.
3.6. Licensee One says that on Sunday 1 February, he received a call from the Purchaser saying that he wanted to make an unconditional offer for the Property that day. He therefore arranged two meetings with the vendor and Purchaser. The agency agreement was signed that day, although Licensee One omitted to change all the dates contained in it from 2
February to 1 February. The Purchaser ’s offer was presented. A counter offer was made and accepted that day.
3.7. Hence Licensee One says that the Property was sold on 1 February, after the termination of the agency X sole agency, and that an agency agreement with the Agency was in place when this occurred.
Selling without a comparative marketing analysis
3.8. This issue closely relates to the previous two. It appeared to the Complainant that there could not have been time for a CMA to be provided, in respect of a Property sold the day following the termination of the sole agency.
3.9. Licensee One says that a CMA was provided on 27 August 2014, the date on which the vendor signed the first general agency agreement with the Agency. A copy was provided to the Committee.
3.10. Licensee One says that it was not necessary to provide a further CMA on 1 February because one had been provided five months earlier. Furthermore, he says that the vendor did not want one because he had an accurate understanding of the market as a result of having just sold the near identical property X.
Acting as a branch manager when not licensed to do so
3.11. Little needs to be said, because Licensee Walsh and the Agency admit that Licensee Walsh was purporting to act as the manager of the Branch when not licensed to do so.
Failing to have systems to prevent the sale of the Property without an agency agreement being in place
3.12. The Agency says that there was in fact an agency agreement in place when the Property was sold on 1 February as discussed above.
Appointing and maintaining the appointment of Licensee Walsh as a Branch Manager when he was not licensed to be one
3.13. The Agency admitted the breach.
Failing to ensure that Licensee One was properly managed and supervised
3.14. The Agency said that Licensee Walsh is an experienced salesperson, who provided good supervision of Licensee One who is himself an experienced salesperson. Furthermore, Licensee Walsh was overseen by the Regional Manager of the Agency, Mr. C.
4. What we decided
4.1. On 30 September 2015 the Committee had a hearing on the papers and considered all the information that had been gathered during the inquiry.
4.2. It determined pursuant to section 89(2)(b) of the Act that:
a) Licensee Walsh has engaged in unsatisfactory conduct in terms of section 72 (b) and (d) of the Act by carrying out real estate work that contravened sections 6(1)(a) and 142 of the Act. He did so by carrying out real estate work as a branch manager when that was not within the scope of his salespersons’ licence, and by holding himself out as a branch manager when not licensed to be one or exempted from the requirement for such a licence.
b) The Agency has engaged in unsatisfactory conduct in terms of section 72(b) and (d) of the Act by carrying out real estate work that contravened section 143 of the Act. It did so by employing and continuing to employ Licensee Walsh as a branch manager when not licensed to be one or exempted from the requirement for such a licence.
c) The Agency has engaged in unsatisfactory conduct in terms of section 72(b) and (c) of
the Act by contravening section 50 of the Act. It did so by failing to ensure that
Licensee One was properly supervised and managed by an agent or a branch manager.
4.3. It also determined pursuant to section 89(2)(c) to take no further action in relation to the complaints that:
a) Licensee One sold the Property when it was subject to the agency X sole agency agreement.
b) Licensee One sold the Property without an agency agreement having been entered into with the vendor.
c) Licensee One sold the Property without first providing the Purchaser with a CMA.
d) The Agency failed to have systems in place to prevent Licensee One selling the Property without an agency agreement with the vendor being in place.
5. Our reasons for the decisions in relation to unsatisfactory conduct
5.1. Given that Licensee Walsh and the Agency admitted the first two transgressions summarised in paragraph 4.2 above, and having regard to the sections of the Act referred to, it follows that there was unsatisfactory conduct in relation to those two matters.
5.2. The Agency did not admit to failing to ensure that Licensee One was properly supervised and managed. It contended that in a defacto sense he was. See paragraph 3.14 above. The Committee however is concerned with legal obligations. Section 50 is clear that salespeople must be supervised and managed by either a branch manager or agent. Manifestly Licensee One was not. It follows that the Agency breached section 50.
5.3. In considering the three complaints, the Committee had regard to the issue of whether or not Licensee Walsh and the Agency were undertaking real estate agency work at, or in relation to, the Agency’s Branch. This is a prerequisite to a finding of unsatisfactory conduct (although not of misconduct). The Committee considers that they were undertaking such work. Licensee Walsh was appointed branch manager as long ago as 1 September 2012. On his behalf it is said that upon his appointment he was provided with extensive training and mentoring in all aspects of his role. It is further said that he was given additional duties within his role as branch manager, which include the supervision of other salespeople. Clearly he was at all material times the senior person in the branch office, and was very much involved in real estate agency work. By extension so too was the Agency, because it had overall charge of the branch. This is reinforced by the Agency placing weight in its response on the regional manager also being involved in the supervision of salespersons in the branch.
6. Our reasons for the decisions in relation to no further action
Selling during sole agency and selling without an agency agreement
6.1. The Committee considers that on the balance of probabilities, the evidence available to it establishes that the Property was sold on 1 February 2015, and not before, and therefore outside the period of the sole agency. It is prepared to accept the fact scenario as outlined in paragraphs 3.2-3.6 above. Amongst other things, it carefully examined the video supplied by agency X, but concluded that due to obvious and serious language difficulties, it was of little probative value.
6.2. The Committee considered whether or not by telling the Purchaser in late January that a general listing was impending, and that the asking price would be lowered, Licensee One was engaging in a selling process. Agency X raised this concern. The Committee’s view is that he was not. He did not initiate the call from the vendor at that time. He was bound to contact the Purchaser to inform him that his backup offer on property X would not proceed. Arguably, he would have been open to legitimate criticism from the Purchaser if he had not also mentioned the impending general agencies and reduced price. There was no evidence that he actively marketed the Property in late January. He arranged to see the vendor to sign the agency agreement on Monday 2 February, after the sole agency agreement had expired. It appears that he did not know that the Purchaser would make an early offer; otherwise he would have arranged to see the vendor on Sunday 1 February, not the following day.
6.3. It follows from the above that the Property was not sold without an agency agreement in place. It is therefore unnecessary in the circumstances to discuss what provisions of the Act or Rules might have been breached had a timely agency agreement not been signed.
6.4. Finally, the Committee should record that the fact that the Agency decided to refund the vendor his commission has been noted. It would seem however, that with the benefit of fuller information and legal advice, the Agency might now have a different view of that matter. In any event, the Committee reaches its own conclusions about the matters which it is required to decide, and to some extent the issue of commission is secondary to the Committee’s required focus.
Comparative marketing appraisal
6.5. As noted in paragraph 3.9 above, a CMA was provided on 27 August 2014. Rules 10.1 and
10.2 are silent as to the duration of such appraisals. The Committee has considered whether or not the Purchaser should have been provided with an up to date appraisal in February
2015, given the rising city market. It is not prepared to conclude that in the circumstances an updated one should have been provided. It notes that the appraisal was for the range of
$1,100,000-$1,150,000, and that the Property eventually sold at the exact top end of that
range. It also notes that appraisals are for the benefit of vendors, not licensees, and that the vendor in this case had an accurate appreciation of the market in early 2015, having just sold property X, built to the same design as the Property and in the same part of the city.
Systems to prevent sales without agency agreements in place
6.6. The issue of the Agency possibly not having systems to prevent sales without agency agreements, arose in tandem with the issue of no agency agreement being in place when the Property was sold. No agency agreement would have suggested a systems failure. As indicated above, the Committee has concluded that there was in fact a timely agency agreement in place. It follows that there is no evidence indicating any systems failure or shortcoming on the part of the Agency in this respect.
7. Request for submissions on orders: Licensee Walsh and the Agency
7.1. 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.
7.2. The Licensee and the Complainant may file submissions on what orders, if any, should be made. The Complainant may file submissions within 10 working days from the date of the decision. These submissions, if any, will then be provided to the Licensee Walsh and the Agency, with a timeframe for filing final submissions.
7.3. The Committee requires the CAC Administrator to obtain a record of any previous disciplinary decision in respect of Licensee Walsh and the Agency, if any such decision exists, provide them to the Committee.
8. What happens next
8.1. The Committee will consider all submissions and issue a decision on orders.
Your right to appeal
8.2. In the matter of Licensee Walsh and the Agency, the Committee has yet to finally determine this complaint because the Committee is yet to determine what orders should be made, if any.
8.3. The Committee considers that the 20 working day appeal period does not commence until it has finally determined the complaint against Licensee Walsh and the Agency by deciding what orders should be made, if any.
8.4. In the matter of Licensee One, 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.
8.5. 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
8.6. The Committee has deferred making any decision on publication until its hearing to decide what orders, if any, should be made.
Signed
Nigel Dunlop
Chairperson
For Complaints Assessment Committee 407
Real Estate Agents Authority
Date: 9 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.
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URL: http://www.nzlii.org/nz/cases/NZREAA/2015/282.html