Complaint No C05196 [2015] NZREAA 29 (9 February 2015)

Last Updated: 26 September 2015

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

And

In the Matter of Complaint No: C05196

In the Matter of The Licensee

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Dated this 9th February 2015

Complaints Assessment Committee: CAC401

Chairperson: Nigel Dunlop Deputy Chairperson: Alison Wallis Panel Member: Rex Hadley

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 2 May 2014 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee from the Complainant.

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 complaint is that a sign incorrectly stated the time of the auction of the Property with the result that the Complainant missed the auction. He is the sole director of Company A which has been the sole tenant of the Property for about 30 years. The vendor was a family trust, the trustees of which are the Complainant’s father and mother.

1.5. The Complainant advised that:

“The vendor had listed the Property for auction for 1st May 2014 at 1pm. As the most

interested party to purchase, we went to attend the auction at 1pm only to be told that the auction had already been held at 10.30am that morning and sold below reserve value. This has resulted in [a]most grievous financial outcome for us as well as the vendor not realising full market value on the transaction.....Again I must reiterate how outrageous [the Licensee’s]actions are in not informing us of a changed auction time....”

1.6. The Complainant requested that the Licensee be fined, censured and have his license cancelled.

1.7. The Licensee responded to the complaint against him. He commented that:

• He had initially presumed, based on previous auctions within the same portfolio, that the auction would be held at 1pm. He subsequently realised that the auction would take place at 10.30am and altered the documentation in his firm’s systems accordingly. As a result all advertising material, with the sole exception of the one sign at the Property stated the correct time. The correct advertising material included that in the Herald, Information Memorandum, Auction Terms and Conditions and websites.

• He first realised that the time on the sign still showed 1pm when the Complainant rang him during the afternoon of the day the auction was held.

• That very afternoon he emailed the Complainant stating: “I sincerely apologise for the problem with the auction time. It was entirely unintentional and in no way was your parents responsible.” He then went on to explain how the error had occurred.

• There are difficulties in the relationship between the Complainant and his father. A message from the Complainant to his father effectively accused his father of conspiring with the Licensee to cause him to miss the auction.

• “When the vendor called me to advise that he wanted me to proceed to market the Property, he arranged to meet me there prior to listing where we sat down with his son/Complainant and he asked his son/Complainant if he wanted to buy the Property. The son replied that he would like to but was not in a position to do so. It was agreed

that a lease would be entered into by both parties and that the Property would then be sold with the lease in place. A lease was formally prepared and prior to the auction was signed by both parties. The Property was then marketed on that basis. The fact that the lease had been put in place securing the son’s ongoing occupation of the premises for a defined period reinforced to me that the Complainant was not going to buy the Property.”

• “During one of my communications with the vendor, about two weeks into the marketing, he mentioned that his son may be in a position to buy, but that was conveyed to me by the vendor, not [the Complainant]. I undertook several inspections of the Property around this period; at no time did [the Complainant] mention to me that his position may have changed. I was never requested to provide a copy of the LIM report, Auction terms and conditions or any other information relating to the auction. He did not communicate with me that he had changed his mind.”

• The Complainant’s parents do not share his criticisms of the Licensee, and indeed apologised to the Licensee for their son’s conduct. In a message to the Licensee they state that: “We are very pleased with the result of the auction and the excellent personal service you have given us!”

2. What we decided

2.1. On 20 May 2014 Complaints Assessment Committee 303 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 303 was disestablished.

2.3. The complaint was referred to Complaints Assessment Committee 401 (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, the Committee have 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 has been 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

3.1. The Committee concluded that even if the Licensee breached any of the Rules, which is doubtful, such a departure from acceptable professional standards was not significant enough to attract sanction for the purposes of protecting the public.

3.2. The Rules which the Licensee may have technically breached are Rules 5.1 and 6.4. These

Rules respectively state:

Rule 5.1 A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

Rule 6.4 A licensee must not mislead a...customer nor provide false information that should...in fairness be provided.

3.3. It is certainly arguable that the Licensee did in fact exercise requisite skill, care and competence and hence did not breach Rule 5.1 when acting on the sale of the Property, despite the inaccurate sign, because the Committee understands that in all other respects his conduct is not subject to criticism.

3.4. Similarly, it is arguable that the Licensee did not mislead or provide false information and hence did not breach Rule 6.4 because the Committee accepts that the vast proportion of the advertising was correct.

3.5. In other words, it is arguable that Rules 5.1 and 6.4 are not intended to apply to limited or isolated conduct, but to overall conduct. The Committee does not express a view on this.

3.6. Even if however, there was a technical breach of one or both rules, the Committee must apply the two stage test enunciated in McKenzie v MPDT [2004] NZAR 47 (HC) and applied in the real estate context in Hume [2011] NZREADT 37. That test involves first, an objective assessment of whether a licensee departed from acceptable professional standards and second, whether the departure was significant enough to attract sanction for the purposes of protecting the public.

3.7. The question therefore arises as to whether, even if there was a departure from acceptable professional standards by reason of a breach of either or both rules (which is doubtful), the departure was significant enough to attract sanction for the purposes of protecting the public.

3.8. The Committee does not consider that any shortcoming on the part of the Licensee justifies a sanction for at least the following reasons:

• The failure to correct the date on the sign can be readily understood given that the Licensee had successfully altered the time on all other advertising material, and it seems that there was nothing in the systems under which he was operating to specifically alert him to the need to check the sign;

• The failure was isolated to the one sign; all other advertising was correct;

• The reference to the time on the sign was a small part of it, and hence the error was not obvious;

• The error, in the view of the Committee was not deliberate; on the contrary, it was unintentional;

• It is unfair of the Complainant to blame the Licensee for his failure to attend the auction when the Complainant did not alert the Licensee of his interest in the Property; furthermore, the Complainant had access to all the accurate material;

• The Complainant has neither explained nor substantiated how he may have suffered financial loss as a result of the error;

• The vendor has no criticism to make of the Licensee;

• Indeed, apart from the sign, the Complainant has no criticism to make of the

Licensee;

• The vendor, it can be inferred, did not suffer any financial loss as a result of the error;

• The Licensee provided the Complainant with a sincere apology and an explanation at the very first opportunity;
• The Licensee fully cooperated with the investigation, and is contrite and regretful about his error.
  

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 M inistry o f

Justice-Tribunals ( ww w.justice. go v t.nz/ tribunals ) .

5. Publication

5.1. 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.

5.2. 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.

5.3. 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

Nigel Dunlop

Chairperson

Complaints Assessment Committee

Real Estate Agents Authority

Date: 9 February 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.