Belcher - Complaint No C05432 [2015] NZREAA 84 (22 April 2015)

Last Updated: 1 January 2016

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

And

In the Matter of Complaint No: C05432

In the Matter of Timothy Belcher

License Number: 10004350

Decision of Complaints Assessment Committee

Dated this 22nd day of April 2015

Complaints Assessment Committee: CAC 406

Chairperson: Paul Biddington

Deputy Chairperson: Bernardine Hannan

Panel Member: David Bennett

Complaints Assessment Committee

Decision finding unsatisfactory conduct asking for submissions on orders

1. The Complaint

1.1. On 17 June 2014 the Real Estate Agents Authority (the Authority) received a complaint against Timothy Belcher (the Licensee) from the Complainant.

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

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

1.4. The Complainant alleges:

(i) Issue One - a non-disclosure of issues relating to noise levels at the apartment and a question as to whether the Licensee took steps to hide the level of noise during a viewing.

(ii) Issue Two - misleading information provided about the ownership of a grassed area

outside the apartment.

(iii) Issue Three - In addition the Complainant raises some additional matters which the

Committee also considered.

1.5. The Complainant advises that she specifically asked the Licensee about the noise levels in the apartment as she had particular concerns in this regard. She alleges that during a visit to the apartment on 13 August 2013 (after signing the Sale and Purchase Agreement), she asked the Licensee to go to the apartment immediately above hers to ask the tenants to make as much noise as possible. She says she heard nothing and decided to proceed with the purchase, but that after moving into the apartment she could hear every noise emanating from the upstairs apartment, such as mobile phones ringing and on vibrate, hinges squeaking, and the occupants’ conversation. She says that this is affecting her sleep and her life to the extent that she cannot live there any longer.

1.6. The Complainant further states that she also asked the Licensee about ownership of the grassed area immediately outside the apartment and was told that it was her Property. It is unclear exactly when this took place, but she says that she did not get a copy of the title to the apartment until the day on which she signed the Agreement for Sale and Purchase.

1.7. The Complainant also raised issues relating to:

(i) the Licensee pressuring her into increasing her offer;

(ii) the Licensee failing to put the negotiations in writing; and

(iii) the Licensee on-selling the LIM which the Complainant had obtained at her cost.

1.8. The Complainant requested a remedy, being:

• The Complainant says that the apartment needs to be soundproofed and says that as she is unable to afford to do this, she wishes to know what the Licensee is prepared to do; presumably by way of contribution towards the cost. It is noted that the Complainant has been successful in obtaining an order of the Disputes Tribunal requiring the landlord of the upstairs apartment to pay half the amount of soundproofing.

• The Complainant does not seek a remedy in respect of the issue relating to the incorrect comments made by the Licensee concerning the grassed area outside the apartment. Nor does the Complainant seek any remedy in respect of the additional matters referred to in

paragraph 1.7 above, although they have been considered by the Committee along with the Licensee’s behavior relating to the grassed area.

Issue One

1.9. On the issue of noise affecting the apartment, the Licensee responded to the complaint against him.

1.10. The Licensee says he informed the Complainant that the vendor had found the noise coming from the upstairs apartment to be “nothing out of the ordinary,” and that he (the Licensee) had visited the apartment on at least 20 occasions in the evenings and the weekends and had not encountered excessive noise. In particular, the Licensee commented that he had suggested to the Complainant that she should discuss with her builder the installation of an insulation layer, although he also says that on several occasions when he visited the apartment with her, she had raised no concern about noise at all.

1.11. The Licensee says that he has shared comments from the vendor with the Complainant to the effect that a downstairs apartment is generally noisier than upstairs, but that his experience and the vendor’s “had not provided any reason for concern .... I felt I could assure [the Complainant] of as much.”

1.12. The Licensee confirmed that he met the Complainant at the apartment on 13 August 2013 and that he recalls that he offered to go upstairs to make noise – this comment contrasts with the Complainant’s statement in which she said that she had asked the Licensee to do so. He says that he cannot recall whether anyone was upstairs at the time but if in fact no-one was at home that evening, the question is why did he not expressly say so to the Complainant and arrange another time, knowing that noise was an issue for her. The Complainant directly challenges this statement by saying that of all her visits to the Property, the visit on 13 August was the only occasion on which the upstairs tenants were at home.

1.13. The Complainant alleges that the Licensee asked the tenants to be quiet and not make any noise.

1.14. The Licensee drew her attention to the noise from the stairs which she says were very noisy, but she heard nothing from the upstairs apartment. Since moving in to the apartment however, she has experienced nothing but excessive noise and that appears to be supported by the comments of other occupants of downstairs units in relation to the noise factor from upstairs.

1.15. The Complainant says that the noise issue has had a negative impact on her attempts to rent the apartment. The issues have also been acknowledged by the previous owner of the apartment.

Issue Two

1.16. The Complainant was concerned that she had been advised by the Licensee that she owned the grassed area immediately outside her ground level apartment, when that proved not to be the case. She had expressly stated in an email to the Licensee that she had plans for that area; and subsequent to the advice she received, discovered from the LIM that in fact the interest in the land attaching to the apartment was only a one-half share in the grassed area.

Issue Three

1.17. The Complainant has also raised some further ancillary matters.

1.18. The Complainant alleges that she was coerced into bidding higher for her apartment after repeatedly making clear the price she was willing to pay. Email trails are produced in evidence, from which it is clear that the Licensee has attempted to procure a higher price for the vendor. Secondly, the Complainant alleges a breach of Rule 10.10 by the Licensee failing to submit offers to the vendor in writing, although it is arguable that the email trail may be considered a negotiation rather than submission of an offer. And thirdly, the Complainant expresses concern that the Licensee arranged the on-sale of her LIM for a reduced price to effect the sale of another unit in the complex.

2. What we decided

2.1. On 7 July 2014 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it.

2.2. On 5 March 2015 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

2.3. The Committee has found the Licensee engaged in unsatisfactory conduct.

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

3.1. The Committee found, pursuant to section 72 of the Act, that the Licensee’s actions:

(i) fall short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; and

(ii) would reasonably be regarded by agents of good standing as being unacceptable.

3.2. The Committee concluded that:

(i) the Licensee’s evidence relating to the absence of noise in the apartment was not convincing;

(ii) the Licensee did not take sufficient care to comply with the request of the Complainant thereby misleading her as to the level of noise from the upstairs apartment;

(iii) the Licensee misled the Complainant in relation to ownership of the grassed area.

Reason One

3.3. The Committee accepts the Complainant ’s concerns relating to the noise level in the apartment, and that such concerns were made clear to the Licensee during the course of the Complainant’s deliberations. The Complainant is consistent in her statements which lead the Committee to conclude that the Licensee cannot have misunderstood the importance of the issue.

3.4. The vendor has made comments during the inquiry to the effect that while the previous tenants in the upstairs apartment were very noisy, the current tenants were much quieter with the noise being nothing out of the ordinary. That is not consistent with the Complainant’s experience, which is that every tenant in the complex complained to her about noise issues well before she had raised it herself.

3.5. Evidence has been put before the Committee from the Licensee, the vendor, and another agent who claims to have sold a number of units in the complex, which suggests that they have all experienced noise which is not excessive. That evidence, we suggest, is directly contradicted by comments from a number of occupants of other downstairs units (submitted in email form as part of the investigation), all of whom complain about the issues they have experienced with noise from upstairs units – such evidence in the view of the Committee tends to support the allegations made the Complainant.

3.6. We do not consider the Licensee’s arguments relating to the absence of noise to be convincing and consider that he has acted in a way as to mislead the Complainant, and the Committee finds a breach of Rules 6.3 and 6.4.

Reason Two

3.7. The Complainant specifically asked to visit the apartment at a time when the upstairs tenants were at home so that she could assure herself of whether the noise would be a problem for her or not. The Licensee arranged for the visit on the evening of 13 August 2013. The Complainant claims that she asked the Licensee to go upstairs and ask the tenants to make as much noise as possible. The Licensee used the stairs which themselves created noise noticed by the Complainant but otherwise she says she heard nothing. The Licensee states that he does not recall whether anyone was at home which suggests that he did not comply with the Complainant’s request.

3.8. The Committee is unclear as to whether the Licensee actually took any steps to carry out the Complainant’s request – for example, his comment that he was unsure whether anyone was in the upstairs apartment that evening strongly suggests that did not bother to even check by knocking on the door. The Committee is of the view that he should have taken that step in order to allow the Complainant to satisfy herself of the potential level of noise.

3.9. The comments received from third party tenants of the downstairs units, in the view of the Committee, strongly support the Complainant’s concerns. The Committee is accordingly of the view that the Licensee, knowing of the importance of the issue to the Complainant, fell short of the standard of behavior expected of him in these circumstances. The Committee finds a breach of Rules 6.3, 6.4 and 9.2.

Reason Three

3.10. Whilst the Complainant has not pursued the issue of incorrect and misleading advice regarding the grassed area outside the apartment, the Committee nevertheless feels that it is important to record its concerns that the Licensee has made such a representation without checking the title, or if he did so, failing to understand the legal status of the land in question; which is clearly shown on XX XXXXX/XXX as comprising a one-half share in Accessory Unit 2 on Deposited Plan XXXXX. Likewise, the plan itself shows AU 2 (Accessory Unit 2) as comprising a half share for each of units C and D.

3.11. There is evidence to suggest that the Complainant was in possession of a copy of the title prior to the date of the agreement, and we also note that the Complainant’s offer was conditional, among other things, on her solicitor’s approval of the title to the unit. However, our concern is that the Licensee has, in this case, given advice which should have been checked before being given.

3.12. We also note though that while the Licensee has acknowledged his mistake, the “advice” has no bearing on the outcome of the agreement, and the Complainant is not seeking a remedy in this instance. The Licensee is nevertheless at fault in the view of the Committee, by misleading the Complainant over a fundamental issue of the purchase of a property. Although the Complainant has formally raised this issue as a complaint, she has not indicated that she seeks any particular remedy. The Committee nevertheless felt it prudent to consider the issue and expresses its concern that such conduct amounts to a breach of Rules 5.1 and

5.2

Reason Four

3.13. The Committee has also considered the three additional issues on which we now comment.

3.14. The Complainant alleges that she was coerced into bidding higher for the unit after repeatedly making it clear what she was prepared to pay. The evidence includes an email trail confirming the discussions which took place between the Complainant and the Licensee. The Committee, having reviewed the email trail however, does not consider that the Licensee’s conduct breaches the Professional Code of Conduct. Such discussions on price often take place between an agent and a prospective buyer as a means to negotiate a satisfactory price, taking into account the agent’s duty to the vendor. As the Complainant was free to withdraw from the negotiation at any time, we do not consider this issue to be anything more than a negotiation as to price.

3.15. Secondly, the Complainant raises an issue on the absence of “paperwork or signatures” while the discussions on price took place. This claim is supported by the email trail. The original offer of $140,000 was signed by the Complainant but the vendor did not sign until the negotiations had been completed and the price agreed at $148,000. Again, the Committee found that it is not unusual that negotiations over price between the parties may take place without amendment to the Agreement, until such time as a final consensus has been reached.

3.16. Thirdly, the Complainant has expressed concern at the suggestion of the Licensee to facilitate the on-sale of the LIM (obtained by the Complainant at her expense) in order to effect the sale of another unit in the complex. It is not uncommon that a purchaser may sometimes be given the opportunity to recoup some of the cost of obtaining a LIM, normally where the purchaser withdraws from a contract after failing to satisfy conditions. In such a case, another prospective purchaser might be offered the LIM at a reduced rate to reflect the fact that the information is at that stage “second-hand.” However, as the Complainant in this case was not a vendor (nor purchaser) client of the Licensee, the Committee is satisfied that in facilitating the on-sale of the LIM (from which it is noted the Complainant benefitted) there has been no breach of Rule 9.16.

4. Request for submissions on orders

4.1. 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 the Appendix of this decision.

4.2. The Complainant is to file submissions (if any) on what orders should be made by 7 May 2015 and provide a copy of their submission to the Licensee.

4.3. The Licensee is to file their submissions on what orders (if any) should be made within 10 working days from receiving the Complainant’s submission.

4.4. The Committee requires the CAC Administrator to obtain a record of any previous disciplinary decision in respect of the Licensee and, if any such decision exists, provide it to the Committee.

5. What happens next

5.1. The Committee will consider all submissions and issue a decision on orders.

Your right to appeal

5.2. The Committee considers that the 20 working day appeal period does not commence until it has finally determined this complaint by deciding what orders should be made, if any.

Publication

5.3. The Committee has deferred making any decision on publication until its hearing to decide what orders, if any, should be made.

Signed

David Bennett

Panel Member

For Complaints Assessment Committee 406

Real Estate Agents Authority

Date: 22 April 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.

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.

Rule 5.2 A licensee must have a sound knowledge of the Act, regulations made pursuant to the Act, rules issued by the Authority (including these rules) and other legislation relevant to real estate agency work.

Rule 6.3 A licensee must not engage in any conduct likely to bring the industry into disrepute.

Rule 6.4 A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or fairness be provided to a customer or client.

Rule 9.2 A licensee must not engage in any conduct that would put a client, prospective client or customer under undue or unfair pressure.

Rule 9.6 A licensee must not advertise any land or business on terms that are different from those authorised by the client.