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New Zealand Real Estate Agents Authority |
Last Updated: 12 March 2017
Before the Complaints Assessment Committee
Complaint No: C10557
In the matter of
Part 4 of the Real Estate Agents Act 2008
Licensee: Ah T’ng (Jenny) Kek (10008060)
Licensee: Rachel Dovey (10012924)
The Agency: Bayleys Real Estate Limited (10017764)
Decision on Orders
26 August 2016
Members of Complaints Assessment Committee: CAC409
Chairperson: Jane Ross
Deputy Chairperson: Peter Brock
Complaints Assessment Committee
Decision on orders
1. Background
1.1. On 23 May 2016 the Complaints Assessment Committee (the Committee) found Ah T’ng (Jenny) Kek (Licensee Kek), Rachel Dovey (Licensee Dovey) and Bayleys Real Estate Limited t/a Bayleys Real Estate Remuera (the Agency) guilty of unsatisfactory conduct under section
89(2)(b) of the Real Estate Agents Act 2008 (the Act).
1.2. The Complainant, the Licensees and the Agency were given the opportunity to make submissions to the Committee on orders.
The Complainant submitted that:
a) Licensee Kek be censured or reprimanded as this is the second time the Licensee has acted in a similar way.
b) The commission be refunded to the vendor.
c) An apology not be made as she does not believe it would be genuine.
d) Licensee Kek, Licensee Dovey and the Agency undertake training or education so that future vendors and purchasers do not have to go through a similar situation.
e) The Licensees and Agency pay a substantial fine.
f) The Agency be ordered to make its business available for inspection or take advice in relation to management from persons specified in the order, with the intent of improving the Agency’s systems and processes so avoiding a recurrence of the Complainant’s experience.
The Respondents:
a) Counsel for the respondents submitted that the respondents each accept that an error may have been made in failing to present to the vendor the Complainant’s offer in writing, but that this does not justify all the orders requested by the Complainant.
b) Counsel submits that it is inappropriate to refund the commission paid by the vendor as it was paid by the vendor not the Complainant. Counsel states, “We are advised that the vendor here, was happy with the service he was provided by Ms Kek and Bayleys, who always intended to act in his best interests (both in relation to price and conditions).”
Licensee Kek submits that:
a) Although she continues to be of the view she was acting in the best interests of her client, she accepts that presenting the Complainant’s offer in writing to the vendor would have been appropriate to ensure she was fair to all parties.
b) Although the Committee has preferred the Complainant’s evidence over hers, she maintains that at all times she was attempting to balance the best interests of her client with being fair to all parties.
c) The purchaser placed her in a difficult position by stating he refused to be involved in a
multi-party offer. She says she sought the advice of her team manager and ensured she advised the vendor of the Complainant’s position. Licensee Kek says she understood from the Complainant that the offer had not changed so she made the mistake of failing to confirm this before presenting a verbal offer to the vendor. Licensee Kek maintains
she did not intend to treat the Complainant unfairly or to misrepresent the
Complainant’s position to the vendor.
d) She accepts that an appropriate order would be a censure and a fine in the range of
$1000-$3000.
1.3. Licensee Dovey submits that:
a) She was not deliberately untruthful.
b) Her unsatisfactory conduct is at the lowest end, she has never had any findings against her in the past and her actions in this case were an unintentional mistake.
c) She has learned from this mistake and will ensure neither she nor any of the salespeople
she manages make the same mistake in the future.
d) She noted the comments made by the Committee regarding supervision and the fact she is not a branch manager and cannot act in a supervisory role. She submits that although this is not necessarily agreed, she has taken steps to continuing her training to become qualified as a branch manager.
e) She considers the unsatisfactory conduct finding on her record is penalty enough and no
further orders should be made.
1.4. The Agency submits that:
a) It accepts it made a mistake by advising that a verbal offer was sufficient in trying to balance the interests of all parties. It also accepts that the Complainant should have been given the opportunity to provide her offer in writing, to give the vendor the option to consider it or not.
b) Despite the Agency’s acceptance of the correct course of action, it says that it intended to act within the scope of its obligations under the Act. It submits that although it was incorrect in its analysis of the best course of action, that an incorrect analysis, without intention, is a minor breach of its professional obligations.
c) It has a robust supervision policy that it considers adequately meets the obligations of Rules 8.3 and 8.4 under the Act and - although it accepts it made a mistake and provided inadequate advice to Licensee Kek - the focus under the provisions of Rules 8.3 and 8.4 is on the supervision and management itself and not on the outcome of the management and supervision system.
d) Even though an error may have been made it does not necessarily constitute a breach of proper supervision or management, that any penalty in relation to supervision should be at the lowest end of unsatisfactory conduct and that an appropriate fine is in the range of $3000-$4000.
2. Orders
2.1. Licensee Kek:
Having made a finding of unsatisfactory conduct against the Licensee, the Committee decided to make the following orders pursuant to s93 of the Act:
a) Make an order censuring the Licensee;
b) Order that the Licensee undergo training or education by completing unit standard
23136 Demonstrate knowledge of misleading and deceiving conduct and misrepresentation within 3 months from the date of this decision;
2.2. Licensee Dovey:
Having made a finding of unsatisfactory conduct against the Licensee, the Committee decided to make the following orders pursuant to s93 of the Act:
a) Make an order censuring the Licensee;
2.3. The Agency:
Having made a finding of unsatisfactory conduct against the Agency, the Committee decided to make the following orders pursuant to s93 of the Act:
a) Make an order censuring the Agency;
3. Our reasons
Licensee Kek:
3.1. The Complainant submitted that Licensee Kek be censured as this was the second time the Licensee has behaved in a similar way, and that she be substantially fined and undergo further training.
3.2. Licensee Kek submits that an appropriate order would be a censure and a low fine in the range of $1,000-$3,000.
3.3. The Committee notes the previous unsatisfactory conduct decision against Licensee Kek by CAC20010 in complaint C03012, which found Licensee Kek’s conduct to be self- serving when she circumvented her agency’s auction policy regarding pre-auction offers in favour of her purchaser. In that decision, the penalty was mitigated by the fact Licensee Kek accepted her actions were unsatisfactory, and that she had her contract with that agency terminated as a result of her conduct. A low end fine of $900 was ordered as CAC20010 agreed with Licensee Kek that the effect of losing her employment was serious and severe and at that time Licensee Kek had no previous findings against her.
3.4. The Committee finds similarities between Licensee Kek’s conduct in complaint C03012 and this complaint and considers the previous loss of her employment contract and the fine do not seem to have acted as a deterrent to Licensee Kek. The Committee found Licensee Kek presented a written offer to the vendor from her own purchaser and a verbal offer only from the Complainant and her husband, who were working with another licensee as selling agent. As in decision C03012, Licensee Kek’s conduct is viewed as self-serving as Licensee Kek enjoyed the benefit of the full selling share of the commission, which would not have been the case had the Complainant’s offer been successful.
3.5. Licensee Kek does accept that she “may have made an error” and that presenting the Complainant’s offer in writing to the vendor would have been appropriate to ensure she was fair to all parties, but continues to be of the view she was acting in the best interests of her client. The Committee accepts that although the primary purpose of a penalty in a discipline case is to maintain standards and to protect the public, there is also an element of punishment and deterrence. Licensee Kek’s previous penalty does not appear to have deterred the Licensee from acting again in a like manner and she appears to fail to recognise the serious nature of her conduct. Accordingly, the Committee orders a fine of $6000.00 and a censure to reflect the overall higher end level of Licensee Kek’s unsatisfactory conduct.
3.6. Licensee Kek submits she was placed in a difficult position by the purchaser when he stated he would not be party to a multi-offer and that she was at all times “attempting to balance the best interests of her client”. Licensee Kek stated during the investigation that the vendor was advised of the situation and did not want to lose the purchaser as a buyer. The Committee determined that the vendor had the right to choose not to deal with a multi-offer but that the vendor was misled and not in a position to make an informed choice, as Licensee Kek misrepresented the offer from the Complainant.
3.7. The Committee found Licensee Kek showed a biased and dismissive attitude towards the Complainant’s offer, when the statement was made that even if the Complainant had submitted a revised offer it “was not going to compete” with the purchaser’s offer and “would still have been rejected” by the vendor. The Committee considers Licensee Kek had no knowledge of what a “revised” offer from the Complainant may have been and based her actions on assumption only. The Committee also found Licensee Kek used the assumed offer from the Complainant to increase the offer from her own buyer, the purchaser, so creating the exact “Dutch auction” he wished to avoid. The Committee’s order for Licensee Kek to complete the unit standard “Demonstrate knowledge of misleading and deceiving conduct and misrepresentation” is in direct relation to this conduct.
3.8. The Complainant submits that Licensee Kek be ordered to refund the commission to the vendor. The Committee agrees with Counsel for Licensee Kek that this is not an appropriate remedy as the commission was paid by the vendor not the Complainant, and Counsel is advised the vendor was happy with the service provided by Licensee Kek and Agency.
Licensee Dovey:
3.9. The Complainant makes no specific submissions in relation to Licensee Dovey.
3.10. Licensee Dovey submits that the finding against her is at the lowest end of unsatisfactory conduct and as such, no further penalty be ordered.
3.11. Counsel for Licensee Dovey notes that the Licensee was not deliberately untruthful and “despite looking into other aspects of Ms Dovey’s conduct, the Committee has taken no further action and has not made any further findings”. The Committee notes no further action was taken in respect of Licensee Dovey’s supervisory failure as at the time of the conduct she did not hold a branch manager or agent’s licence and therefore could not be bound by section 50 of the Act, which directs that agency work is carried out under such direction and control of either a branch manager or an agent, as is sufficient to ensure that the work is performed competently and that the work complies with the requirements of this Act.
3.12. The Committee notes that at all relevant times Licensee Dovey had an obligation to provide
accurate information to the Complainant and correct advice to Licensee Kek. The Committee considers Licensee Dovey’s failure to do so can be viewed at the least as negligent and potentially as incompetent. Accordingly, the Committee considers Licensee Dovey’s conduct in dealing with the Complainant and Licensee Kek cannot be considered at the lowest end of unsatisfactory conduct and the orders of a censure and a fine of $3000.00 are in direct relation to that conduct.
3.13. The Committee was unable to make a finding of unsatisfactory conduct against Licensee Dovey for inadequate supervision because she is not a branch manager or agent as defined by the Act. However, Licensee Dovey acted in the position of branch manager for the Agency and held herself out to be in that role. Indeed, Licensee Dovey’s penalty submissions state that it “is not necessarily agreed” that she is not a branch manager and cannot act in a supervisory role and further, she refers to ensuring that neither she “nor any of the salespeople she manages” make the same mistake again.
3.14. Licensee Dovey submits she has taken steps to continue her training to become qualified as a branch manager, which the Committee commends. The Committee, however, is concerned that Licensee Dovey continues to act in a branch manager role and, as such, there is an expectation from salespeople that she is qualified to be in that role and that her advice is therefore to be relied on. Members of the public will also have an expectation that a manager is qualified to exercise supervision over salespersons. The Act requires salespersons to be supervised by an agent or branch manager. It appears to the Committee inconsistent with the scheme of the Act for a salesperson to be identified as a manager and to be expected by an agency to carry out supervision, when not an agent or branch manager as defined by the Act.
The Agency:
3.15. The Complainant submits that the Agency should be ordered to make its business available for inspection or take advice in relation to management from persons specified in this order.
3.16. The Agency submits that any penalty in relation to supervision be at the lowest end of unsatisfactory conduct and that it be fined in the range of $3,000-$4,000.00.
3.17. The Complainant’s concern is for the Agency to improve its systems and processes to prevent the conduct reoccurring. The Agency does admit it made a mistake in advising a verbal offer from the Complainant was sufficient in trying to balance the interests of all parties, but states it intended to act within the scope of its obligations under the Act and that its incorrect analysis is a minor breach of its professional obligations.
3.18. The Committee found that the Agency’s advice to present a verbal offer on behalf of the Complainant with the intention of avoiding a multi-offer situation was not adequate and not fair to all parties, in breach of the Act’s requirements under Rule 5.1 for skill, care and competence and in breach of the Agency’s fiduciary obligations to their client vendor as required by Rule 6.4. The Committee considers these two Rules contain some of the core professional obligations of an agency’s duty to its clients and the Agency’s breach of these Rules is not minor. Accordingly, the Committee’s order of a censure and a fine of $5,000.00 is in direct relation to the Agency’s conduct in this respect.
3.19. The Agency submits that the error made in advising a verbal offer does not necessarily constitute evidence of a breach of proper supervision or management. The Agency also contends that the focus under the provisions of Rules 8.3 and 8.4 and section 50 of the Act is on the supervision and management itself, and not on the outcome of the supervision and
management.
3.20. Compliance Guidance RR8.3.1 makes it clear that Rule 8.3 places a positive obligation on agencies to supervise and manage and RR8.3.2 states the Authority wants to ensure that salespeople are being properly supervised and managed as per s50 of the Act. In view of the fact Licensee Dovey did not hold a branch manager’s or agent’s licence at the time of the conduct, the Agency had a clear responsibility to properly supervise and advise Licensee Kek, Licensee Dovey and Licensee X at that time. The Committee considers the supervision provided by the Agency at that time was not effective and was compromised by the understanding Licensee Dovey was the authorised branch manager (and expected to supervise other salespersons) when in fact she was not qualified to act in this capacity. The Committee does not consider an order that the Agency make its business available for inspection is required, as requested by the Complainant, but it does order a censure and fine to reflect the serious nature of the Agency’s conduct in this respect.
3.21. The Committee also notes the issue of an effective multi-offer process was not addressed by the Agency and has serious concerns that Licensee Kek was not advised to step aside from negotiations with the vendor, as she could not be impartial in a presentation where the purchaser was her client and the Complainant and her husband were clients of Licensee X. The Committee considers it would be prudent for the Agency to review its multi-offer process to ensure it is clear that an independent party would handle any such offer in the future.
Principles considered
3.22. When determining whether or not to make an order under Section 93(1), the Committee has also had regard to the functions which the imposition of a penalty usually must serve in professional disciplinary proceedings.
a. promoting and protecting the interests of consumers and the public generally (section
3(1));
b. maintaining professional standards;
c. punishing offences;
d. rehabilitating the professional.
3.23. The Committee acknowledges that, when making an order under Section 93, the order/s made must be proportionate to the offending and to the range of available orders.
Promoting and protecting the interests of consumers and the public
3.24. Section 3(1) of the Act sets out the purpose of the legislation. The principal purpose of the Act is "to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work."
3.25. One of the ways in which the Act states it achieves this purpose is by providing accountability through an independent, transparent and effective disciplinary process (Section 3(2)).
Maintaining professional standards
3.26. This function has been recognised in professional disciplinary proceedings involving other professions (for example, in medical disciplinary proceedings: Taylor v The General Medical Council (1990) 2 A11 ER 263; and in disciplinary proceedings involving valuers: Dentice v The
Valuers Registration Board (1992) 1 NZLR 720.
3.27. Although different professions use different descriptions of the nature of the unprofessional or incompetent conduct that will attract disciplinary charges, there is a common thread of scope and purpose. The aim is to enforce a high standard of propriety and professional conduct. Professions seek to:
• Protect both the public and the profession itself against persons unfit to practice.
3.28. In the Committee's view, maintaining professional standards is also a function of the disciplinary processes under the Act.
Punishment
3.29. The Committee accepts that a penalty in a professional discipline case is primarily about maintaining standards and protecting the public. However, in the Committee's view there is also an element of punishment – indicated by the power the Committee has to impose a fine (Section 93(1)(g)); or make an order of censure (Section 93(1)(a)). The element of punishment has been discussed in the context of other professional disciplinary proceedings (see Patel v Dentists Disciplinary Tribunal (High Court, Auckland, CIV 2007-404-1818 Lang J 13
August 2007)).
3.30. At paragraph [27]-[28], the judge said:
“Such penalties may be appropriate because disciplinary proceedings inevitably involve issues of deterrence. They are designed in part to deter both the offender and others in the profession from offending in a like manner in the future. I therefore propose to proceed on the basis that, although the protection of the public is a very important consideration, nevertheless the issues of punishment and deterrence must also be taken into account in selecting the appropriate penalty to be imposed...”
Where appropriate, rehabilitation of the professional must be considered
3.31. The Committee regards its power to make an order requiring a Licensee to undergo training or education (Section 93(1)(d)) as indicating that rehabilitation is a function of professional disciplinary processes under the Act.
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 Friday, 23 September 2016 (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. The Committee directs publication of its decision. The decision will be published without the names or identifying details of the Complainant (including the address of the Property), and any third parties. The decision will state the name of the Licensees and the Agency for which they work or worked for at the time of the conduct.
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 standards and that is in the public interest.
Signed
Jane Ross
Date: 26 August 2016
Appendix: 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.
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.
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.
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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