Complaint No C11471 [2016] NZREAA 131 (24 June 2016)

Last Updated: 29 December 2016

Before the Complaints Assessment Committee

Complaint No: C11471

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee One: Licensee One (XXXXXXXX)

Licensee Two: Licensee Two (XXXXXXXX)

The Agency: The Agency (XXXXXXXX)

Decision to take no further action

24 June 2016

Members of Complaints Assessment Committee: CAC412

Chairperson: Bernardine Hannan

Deputy Chairperson: David Bennett

Panel Member: Craig Edwards

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 12 November 2015 the Real Estate Agents Authority (the Authority) received a complaint against Licensee One, Licensee Two and the Agency.

1.2. The complaint was made by Mr. X (together with his wife called the Complainants).

1.3. Licensee One is a licensed salesperson under the Real Estate Agents Act 2008 (the Act) and was employed by the Agency at the time of the alleged conduct.

1.4. Licensee Two is a licensed Agent under the Act and was employed by the Agency at the time of the alleged conduct.

1.5. The complaint relates to the property (the Property). Licensee One was the listing agent for the Property.

1.6. The Property, which was part of a subdivision, was listed with the Agency (with Licensee One as the listing agent) for sale at $630,000.

1.7. Purchasers (the Purchaser) made an initial offer of $590,000 in July 2015. The Complainants made a counter-offer at $615,000, and after some negotiation, a figure of $602,500 was reached.

1.8. The Complainants say that they had told Licensee One that they were not interested in any figure under $610,000, but Licensee One allegedly told them that if they pushed for a higher price, the Purchaser would buy another property. The Complainants allege that Licensee One referred to a “Company” property nearby which was for sale at $608,000.

1.9. The Complainants accepted Licensee One’s advice and entered into an agreement for sale and purchase at the agreed sale price of $602,500.00. The agreement was conditional on the construction of a fence. The evidence shows that delays arose over the completion of the fence involving neighbours, but as the matter has since been resolved through the Disputes Tribunal, the Committee sees no relevance in the issue to the substance of the complaint, and accordingly it has not been considered further.

1.10. The fence issue however, caused some friction between the Complainants and the Purchaser which resulted in various discussions in the course of which the Complainants allege that the Purchaser had not told Licensee One that they would buy another property if the Complainants had made a higher counter-offer. The Complainants evidence is that the Purchaser informed the Complainant, Mr. X, that they had never made reference to another property or used another property as a “bargaining chip” in their attempts to purchase the Property.

1.11. The Complainant, Mr. X, contacted Licensee One and Licensee Two to express his concerns that he had been misled. He felt that Licensee One simply wanted to “close the deal” and provided inaccurate information which influenced the Complainants’ decision.

1.12. At a meeting held on 6 November 2015 between the Complainant, Mr. X, and Licensee Two, the Complainant says that Licensee Two admitted that Licensee One made an error of judgment. Mr. X says he and his wife were offered a discount of $2500 plus GST to be applied against a commission on every house they sold in the future via the Agency, which they say they declined.

1.13. Mr. X is concerned that Licensee One has misled them in providing false information which influenced their decision to sell at a lower price than they were seeking, for which they seek compensation. In addition, they also seek a discount of $2500 plus GST on the commission applying to the sale of the Property.

Issue 1 - whether Licensee One misled the Complainants about the intention of the

Purchaser if the Complainants counter-offered on price

1.14. This issue relates to what the Complainants were allegedly told by Licensee One in order to persuade them to accept an offer lower than they had wanted. If established, it could be construed as misleading in breach of Rule 6.4.

1.15. The Complainants allege that when they counter-offered at $615,000 in response to the offer from the Purchaser of $590,000, Licensee One mentioned a house nearby being built by the Company which was slightly bigger than the Property but “not as high spec”. The Complainant, Mr. X, says that Licensee One told him that if they pushed for more, the Purchasers would cease negotiations and purchase the Company property.

1.16. In the course of the investigation, Mr. X accepted that he could not recall the actual words used by Licensee One but said he knew they were sufficient to convince him that the Purchaser was also looking at another property, which they would buy if they were unable to buy the Property at the price they had offered. Licensee One readily concedes that he did mention that the Purchaser was looking at another property in the immediate area but denied that it was said in the form of an ultimatum or trick to force the Complainants to sell at a lower price.

1.17. The evidence subsequently showed some confusion over the reference to the “Company” property which was in fact another property owned by a Mr. Z. The Purchaser has stated in his evidence that at no time did he refer to any other house “and dangle it in front of ” Licensee One, but he did concede that he told Licensee One that he had looked at another property behind the Property but it did not have quite the right aspect. He says that he also made it very clear to Licensee One that he and his wife had a limited budget of $600,000.

1.18. The Purchaser gave evidence to confirm that he had told Licensee One that at the time he viewed the Complainants’ Property he was considering another property, and would continue to do so if he was unable to purchase the Complainants’ Property for the price he had offered.

1.19. Further, Licensee Two made the observation that regardless of what exactly Licensee One may or may not have said to the Complainants, Mr. X was a “seasoned property developer” and would not have been unduly influenced by anything a real estate agent said to him - he was apparently experienced enough to make up his own mind as to whether to sell at the price he did.

1.20. The evidence, in the view of the Committee, does not support Mr. X’s claim that he was

“misled” by Licensee One. It is clear that the Purchaser did comment to Licensee One that he

was considering another property and that he would negotiate on that property if he was unable to purchase the Property for the final price he was offering.

1.21. The Purchaser’s evidence in particular tends to support the evidence of Licensee One - he says that he did tell Licensee One that if he (the Purchaser) could not buy the Property at the final offer he made, then he was intending to negotiate on another property.

Issue 2 - whether Licensee One acted in the best interests of the Complainants

1.22. Licensee One was successful in facilitating the sale of the Property for $602,500.00 and it appears from the evidence that the Complainants were satisfied with the outcome. The evidence of the Complainants however, is that while at the time they were happy with the service provided by Licensee One, it was only later the Complainants say that they learned from the Purchaser that he had not told Licensee One that he was intending to break-off negotiations, causing them to believe that they had been misled by Licensee One in order to achieve a sale.

1.23. Licensee One believed he acted in the best interests of the Complainants at all times. He says that he was told by the Complainant, Mr. X, at the time the Property was listed that he did not want to lose the sale - it seems that he may have been under some pressure from a bank at the time. Licensee One’s view was that this sale would release some capital allowing the Complainants to proceed with their next project.

1.24. He says that he gave the Complainants the choice of signing the agreement or “roll the dice and see who else they could attract”. That, in our view, cannot be interpreted as not acting in the best interests of his client.

1.25. The Property took some time to sell - it was listed on 16 April 2015, the agreement was signed on 22 July 2015, a full three months later, with settlement scheduled for 4 September

2015 - almost five months from listing to settlement. Licensee One says that in that time prices had increased, which he believes is the main source of the Complainants’ dissatisfaction.

1.26. Licensee One’s views are supported in full by Licensee Two who also refutes much of the complaint. He also confirmed that the offer to the Complainants to discount future commissions as a way of appeasing the Complainants was a goodwill gesture and not intended to “buy the Complainant off ”, but expressed concern at the attitude of the Complainants, particularly what he saw as threats by the Complainants to pay compensation or a complaint would be made to the Authority.

2. What we decided

2.1. On 17 February 2016 the Complaints Assessment Committee 406 considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. On 7 March 2016 Complaints Assessment Committee 406 was disestablished.

2.3. The complaint was referred to Complaints Assessment Committee 412 (the Committee).

2.4. The Committee have considered the original complaint afresh and made a decision to inquire

into the complaint.

2.5. On 18 May 2016 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

2.6. The Committee has decided to take no further action in respect of both Issues 1 and 2 under section 89(2)(c) of the Act, having regard in particular to Rules 6.4 and 9.1, and the provisions of section 72 of the Act.

3. Our reasons for the decision

The Committee concluded:

Issue 1 - whether Licensee One misled the Complainants about the intention of the

Purchaser if the Complainants counter-offered on price

3.1. The Committee concluded that there is insufficient evidence produced by the Complainants to establish to the required level that Licensee One misled the Complainants, and that there has therefore been no breach of Rule 6.4.

3.2. The Committee is satisfied that Licensee One quite rightly drew the attention of the Complainants during the negotiation phase to the stipulation of the Purchaser that he was limited as to price. We also consider that Licensee One did not endeavor to trick or mislead the Complainants as to the motive of the Purchaser by being quite open and explaining to the Complainant that if they continued to push the price, they might lose the Purchaser’s offer as he was also interested in another property.

3.3. That much is apparent from the evidence of the Purchaser, which in our view has not been convincingly contested by the Complainants.

3.4. The Committee notes that the evidence of the Complainants suggests a misunderstanding on their part as to the motive of the Purchaser and the price he was prepared to pay. We believe that Licensee One clearly and accurately conveyed to the Complainants the Purchaser’s real intention, which was to purchase the Property at the price he had offered but if the Complainants were intent on pushing the price higher than that which he could afford, he would withdraw and negotiate on another property.

3.5. We also find the evidence of the Purchaser in relation to his dealings with Licensee One and Licensee Two to be persuasive. The Purchaser found the Licensees to be very professional and that with his experience of having moved house in the 12 years they have lived in New Zealand, he and his wife have found the Agency to be the best real estate team they had worked with.

3.6. The Committee found that conversely, the evidence of the Complainants on this issue was lacking in conviction and suggested that they simply did not understand the terms of the Purchaser’s offer.

3.7. Our view is that Licensee One correctly and accurately conveyed to the Complainants the basis on which the Purchaser was prepared to make an offer, that he was not prepared to negotiate a higher price as he could not afford to do so and that if his offer was not

acceptable, he would negotiate in respect of another nearby property.

3.8. We are therefore not persuaded by the Complainants’ argument that Licensee One is in breach of professional standards by misleading the Complainants about the intention of the Purchaser if they counter-offered on the price.

3.9. On Issue 1, we consider that no further action is justified.

Issue 2 - whether Licensee One acted in the best interests of the Complainants

3.10. The evidence of the Complainants is that Licensee One allegedly misled them by persuading them that if they did not accept the Purchaser ’s offer, they would lose the offer. The Complainants do not express dissatisfaction with Licensee One’s performance or with Licensee Two or the Agency in any other respect.

3.11. The Purchaser’s evidence is canvassed above and our view is that the Purchaser has made his position quite clear. We believe that Licensee One has, in his own evidence, shown that he had a clear understanding of the terms on which the Purchaser’s offer was made, and has conveyed those clearly to his client, the Complainants. In doing so, Licensee One has fully appraised his client of the information he required in order to consider the Purchaser ’s offer.

3.12. The Purchaser was adamant that he and his wife had a limited budget of $600,000. Licensee One has nevertheless managed to negotiate a slight increase on the price in order to obtain the best outcome for his client that was achievable in the circumstances. Indeed, Licensee One’s evidence is that the Complainants were, at the time, under pressure from their bank and “didn’t want to lose the buyer”.

3.13. We have also considered the comments made by the Complainants during the course of the investigation, particularly to the Authority in an email communication on 7 December 2015, in which the Complainants allege that Licensee Two admitted that Licensee One made an error of judgement in making a statement that the Purchaser would buy the Company property if the Complainants pressed for more money. Licensee Two has adamantly denied making any such comment about Licensee One.

3.14. We accept that the evidence points to Licensee One having made a remark to the Complainants about the possibility that the Purchaser might negotiate another purchase but we consider that such a remark must be seen in context. In our view, the evidence supports Licensee One’s position, which is that in order to ensure that his client was fully informed about the terms of the offer made by the Purchaser, he made it clear that the Purchaser would not pay more than $602,500 for the Property and that if the Complainants pushed for more, they would most likely lose the sale.

3.15. Licensee Two had strongly denied making the claim alleged by the Complainants.

3.16. In the circumstances, we favour the evidence of Licensee One and Licensee Two, and find that Licensee One has acted entirely in the interests of the Complainant.

3.17. Accordingly, we find that in relation to Issue 2, no further action is justified.

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 (section 111).

4.2. 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 ).

5. Publication

5.1. At the Committee’s discretion, the decision will be published without the names or identifying details of the Complainants (including the address of the Property), the Licensees 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

David Bennett

Date: 24 June 2016

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

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.

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 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 9.1 A licensee must act in the best interests of a client and act in accordance with the client’s instructions unless to do so would be contrary to law.