Complaint No C08873 [2015] NZREAA 324 (13 November 2015)

Last Updated: 20 August 2016

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

And

In the Matter of Complaint No: C08873

In the Matter of The Licensee

License Number: XXXXXXXX

Licensee X [Withdrawn]

License Number: XXXXXXXX

Decision of Complaints Assessment Committee

Decision to take no further action

Dated this 13th day of November 2015

Complaints Assessment Committee: CAC 410

Chairperson: Nigel Dunlop Deputy Chairperson: Paul Elenio Panel Member: Garry Mason

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 9 July 2015 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee and Licensee X from the Complainant.

1.2. The Licensee is a licensed agent under the Real Estate Agents Act 2008 (the Act). So too is

Licensee X.

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

1.4. The Complainant advised the Investigator on 17 August 2015 that his complaint relates only to the Licensee, and that he had referred to Licensee X only because he considered that he was required to do so; as a result of her being a principal of the Agency she runs with her husband. He said that Licensee X was not part of the events complained about. The Committee therefore decided on 27 October 2015 that the Complainant had deemed to withdraw the complaint against Licensee X, and would proceed on that basis. Accordingly, the complaint is to be taken as referring to the Licensee only, who will be referred to as ‘the Licensee’.

1.5. The Complainant was the vendor of the Property. The Licensee was the listing agent. In general terms, the complaint is to the effect that the Licensee represented him in a dilatory and unprofessional manner.

1.6. There were 10 parts to the complaint:

a) Inaccurate advertising - The Property comprised two lots. Lot A had a rateable value of

$84,000 and Lot B had a rateable value of $520,000. The Licensee initially advertised the Property as having a rateable value of $520,000, whereas he should have advertised it as having the combined rateable value of $604,000.

b) Sending correspondence to the incorrect address - The Complainant said that contrary to his instructions, mail had been sent by the Licensee to the Property. The Property was tenanted. The tenants opened the mail and thereby discovered that the Property was about to go on the market, which caused difficulty for the Complainant. It appears that this was an isolated occurrence.

c) No appraisal - The Complainant alleged that the Licensee had failed to provide him with a comparative market appraisal for the Property.

d) Marketing the Property without a current agency agreement - The Complainant alleged that when marketing of the Property commenced on 3 April 2015, there was no agency agreement in place.

e) Whether the Licensee had spoken to the Complainant’s solicitor - The Complainant’s solicitor was Mr. L. The Licensee told the Complainant that Mr. L had told him that the Property was a noose around the Complainant’s neck. The Complainant did not believe that the Licensee had spoken to Mr. L about the Property at all, and so considered that the statement about the noose was a fabrication by the Licensee.

f) Signing the agreement for sale and purchase on behalf of the purchasers - The Complainant alleged that the Licensee had initialed changes to the agreement for sale and purchase on behalf of the purchasers. This would have been irregular given that

parties rather than licensees should sign such agreements, and in any event, the Licensee was not representing the purchasers, and so had no authority to sign on their behalf.

g) Pressurising the Complainant to accept a counter offer - The Complainant alleged that he had been placed under undue pressure by the Licensee as a result of being given only

24 hours to accept or reject an offer of $428,000 from the purchasers. The Complainant accepted the offer.

h) Failing to provide a copy of the agreement for sale and purchase - The Complainant alleged that the Licensee had not provided him with a completed copy of the agreement for sale and purchase.

i) Deducting advertising costs from the sale proceeds of the Property without authorisation - The Complainant alleged that the Licensee had agreed to meet some of the advertising costs in light of the error referred to in (a) above, but contrary to the agreement, deducted the advertising costs from the sale proceeds which the Complainant would otherwise have received.

j) Unilaterally terminating a telephone call - The Complainant alleged that when complaining to the Licensee about the above matters, the Licensee abruptly terminated the call.

1.7. The outcome to the complaint sought by the Complainant was the return of commission and the disciplining of the Licensee.

1.8. The Licensee responded to the complaints against him:

a) Inaccurate advertising - The Licensee admitted that he had arranged incorrect advertising, but said that he rectified the inaccuracy in later advertising.

b) Sending correspondence to the incorrect address - The Licensee admitted that due to an administrative error within his Agency, a letter had been sent to the Property instead of the Complainant’s current address.

c) No appraisal - The Licensee said that a comparative market appraisal was provided to the Complainant. He said, however, that it was a somewhat problematic appraisal to prepare because the Property had a heritage listing, and there were no sales recorded for comparable heritage listed properties. The appraised value was therefore fixed at the rateable value for Lot B ($520,000), which coincided with the Complainant’s asking price for the Property. He said that the Complainant was happy with this figure.

d) Marketing the Property without a current agency agreement - The Licensee said that the marketing of the Property had been delayed due to tenancy issues, but that the date of the original agency agreement was amended to take account of the delay. He said that the amended agency agreement, as signed by the Complainant, was for the period 25

March to 31 July, which covered the marketing commencement date of 3 April and the sale date of 4 July.

e) Whether the Licensee had spoken to the Complainant’s solicitor - The Licensee said that he had in fact spoken to the Complainant’s solicitor, who had said that the Property was a noose around the Complainant’s neck.

f) Signing the agreement for sale and purchase on behalf of the purchasers - The Licensee said that the purchasers of the Property, not he, initialed the amount of their counter offer. He said that having been informed in advance by the selling agent of the amount that the purchasers would be counter offering, he entered the figures into the agreement for sale and purchase for the Complainant to initial before the purchasers, because he was due to meet with the Complainant before the purchasers were due to meet with their agent. The timing of meetings with the Complainant was of practical significance because he lived some two hours’ drive from the area. By contrast, the

purchasers lived locally. It therefore made sense for the Complainant to initial the anticipated counter offer ahead of the purchasers, while he was available. In the event, the Complainant initialed the counter offer figure amended by the Licensee, and the purchasers later initialed the amendment.

g) Pressurising the Complainant to accept a counter offer - The Licensee said that he did

not place the Complainant under pressure, but that the purchasers did so, by imposing a

24 hour deadline on him to accept or reject their counter offer.

h) Failing to provide a copy of the agreement for sale and purchase - The Licensee said that he provided the Complainant with a copy of the final form of the agreement for sale and purchase through the Complainant’s solicitor.

i) Deducting advertising costs from the sale proceeds of the Property without authorisation - The Licensee said that there had been an agreement to compensate the Complainant for inaccurate advertising, but that this agreement had been superseded by a more significant agreement to reduce the commission payable by the Complainant. As a result of the latter agreement, the former agreement no longer applied, and so the Licensee was permitted to deduct advertising costs from the sale proceeds as normally occurs.

j) Unilaterally terminating a telephone call - The Licensee said that he could not recall ever having abruptly terminated a call with the Complainant, but said that he does recall an occasion when for unknown technical reasons he and the Complainant were cut off from one another during a call. He presumes this must be the call to which the Complainant is referring.

2. What we decided

2.1. On 10 August 2015 Complaints Assessment Committee 407 considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. On 27 October 2015 Complaints Assessment Committee 410 (the Committee) held a hearing on the papers and considered all the information gathered during the inquiry.

2.3. The Committee has decided under section 89(2)(c) of the Act to take no further action on the complaint.

3. Our reasons for the decision

3.1. The Committee has not found the Licensee to be guilty of either misconduct or unsatisfactory conduct in relation to the matters complained about. Therefore it is required under section

89(2) to take no further action.

3.2. Unsatisfactory conduct and misconduct are defined in sections 72 and 73 of the Act respectively. It is unnecessary in this Decision to refer to those definitions and the provisions of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules) in respect of most of the 10 allegations referred to above. That is because the Committee has found, in respect of eight of those allegations that the alleged events did not in fact occur. Had they occurred, then the Act and Rules applicable to them would have needed to have been considered. It is necessary to refer to the Act and Rules only in relation to the first two of the allegations, because only those two have, in the view of the Committee, been factually proven. The Committee’s view in respect of each of the 10 allegations will now be explained.

3.3. Inaccurate advertising -

i. The Licensee accepts responsibility for inaccurate advertising as alleged by the Complainant. The issue therefore is whether or not this amounts to misconduct or unsatisfactory conduct.

ii. There is no doubt that an advertising error, such as occurred in this case, could never amount to misconduct as defined in section 73, because in broad terms, misconduct relates to serious shortcomings. But does the inaccurate advertising denote unsatisfactory conduct?

iii. In the Committee’s view it does not. There is no doubt that the Licensee allowed an advertising error to occur. Section 72 refers to issues of competency and acceptability and breaches of the Rules. The relevant rule is rule 5.1, which requires licensees to exercise skill, care, competence, and diligence. The Committee does not consider the Licensee’s error in relation to the advertising suggests a failure to meet the standards prescribed by section 72 and rule 5.1, regrettable as the error was.

iv. The error was understandable, although not excusable. The Complainant’s asking price of $520,000 and the rateable value of Lot B were confused, especially as the rateable value of Lot A was effectively being disregarded in fixing the asking price.

v. In summary, the Licensee made an error, but the error does indicate that the Licensee was not acting competently. Competence does not imply perfection.

vi. Given the finding that there was neither misconduct nor unsatisfactory conduct, it follows that in respect of this aspect of the complaint there should be no further action.

3.4. Sending correspondence to the incorrect address -

i. The error was admitted to. Although unfortunate, it was more in the nature of an administrative error, than an error pointing to incompetence or lack of required diligence. Were it not for the tenants opening a letter not addressed to them, no prejudice would have resulted from the error.

ii. The Committee applies the same reasoning as referred to in paragraph 3.3 to conclude that the error did not amount to misconduct or unsatisfactory conduct. Likewise, given the finding that there was neither misconduct nor unsatisfactory conduct, it follows that in respect of this aspect of the complaint there should be no further action.

3.5. No appraisal -

i. The investigation established that a comparative marketing appraisal was in fact provided to the Complainant. The Committee sighted a copy of it.

ii. It follows that this allegation is not proven, and accordingly, there being neither

misconduct nor unsatisfactory conduct, there must be a finding of no further action in respect of this aspect of the complaint.

3.6. Marketing the Property without a current agency agreement -

i. The investigation established that there was in fact a current agency agreement in place during the marketing of the Property. The Committee sighted a copy of it.

ii. It follows that this allegation is not proven, and accordingly, there being neither

misconduct nor unsatisfactory conduct, there must be a finding of no further action in respect of this aspect of the complaint.

3.7. Whether the Licensee had spoken to the Complainant’s solicitor -

i. The Investigator spoke with the Complainant’s solicitor, who told him that he did speak with the Licensee and made reference to the Property being a noose around the Complainant’s neck, or words to that effect. That is very convincing evidence, and directly contradicts that of the Complainant.

ii. It follows that this allegation is not proven, and accordingly, there being neither misconduct nor unsatisfactory conduct, there must be a finding of no further action in respect of this aspect of the complaint.

3.8. Signing the agreement for sale and purchase on behalf of the purchasers -

i. The Licensee’s explanation as set out above makes good sense, and is accepted by the

Committee. The allegation is intrinsically unlikely to have been correct.

ii. It follows that this allegation is not proven, and accordingly, there being neither misconduct nor unsatisfactory conduct, there must be a finding of no further action in respect of this aspect of the complaint.

3.9. Pressurising the Complainant to accept a counter offer -

i. There is no reason not to accept the Licensee’s explanation as set out above. Apart from the allegation of the 24 hour deadline, there was no other allegation or evidence suggestive of unfair pressure.

ii. It follows that this allegation is not proven, and accordingly, there being neither misconduct nor unsatisfactory conduct, there must be a finding of no further action in respect of this aspect of the complaint.

3.10. Failing to provide a copy of the agreement for sale and purchase -

i. The Complainant’s solicitor told the Investigator that he provided the Complainant with a copy of the agreement for sale and purchase in final form. That is very convincing evidence, and directly contradicts that of the Complainant.

ii. It follows that this allegation is not proven, and accordingly, there being neither

misconduct nor unsatisfactory conduct, there must be a finding of no further action in respect of this aspect of the complaint.

3.11. Deducting advertising costs from the sale proceeds of the Property without authorisation -

i. The Investigator was unable to identify any written documents verifying the Licensee’s explanation, as referred to above. The explanation is however plausible. The Committee’s assessment of the Licensee is that his evidence is reliable and credible. In contrast, the Committee finds much of the evidence of the Complainant to be unreliable. It therefore prefers the evidence of the Licensee to that of the Complainant, and is prepared to accept the Licensee’s explanation.

ii. It follows that this allegation is not proven, and accordingly, there being neither misconduct nor unsatisfactory conduct, there must be a finding of no further action in respect of this aspect of the complaint.

3.12. Unilaterally terminating a telephone call -

i. There is no independent corroborative evidence indicating whether the call was or was not deliberately unilaterally terminated by the Licensee. As indicated above however, the Committee prefers the evidence of the Licensee to that of the Complainant. It considers therefore, is that the best evidence does not support the allegation.

ii. It follows that this allegation is not proven, and accordingly, there being neither

misconduct nor unsatisfactory conduct, there must be a finding of no further action in respect of this aspect of the complaint.

4. 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 (no later than Friday, 11 December 2015) (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

For Complaints Assessment Committee 410

Real Estate Agents Authority

Date: 13 November 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.

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 73 Misconduct

For the purposes of this Act, a licensee is guilty of misconduct if the licensee’s conduct—

(a) would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful; or

(b) constitutes seriously incompetent or seriously negligent real estate agency work; or

(c) consists of a wilful or reckless contravention of— (i) this Act; or

(ii) other Acts that apply to the conduct of licensees; or

(iii) regulations or rules made under this Act; or

(d) constitutes an offence for which the licensee has been convicted, being an offence that reflects adversely on the licensee’s fitness to be a licensee.

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

2012 are:

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