Complaint No C14102 [2016] NZREAA 189 (19 September 2016)

Last Updated: 14 April 2017

Before the Complaints Assessment Committee

Complaint No: C14102

In the matter of

Part 4 of the Real Estate Agents Act 2008

The Licensee (XXXXXXXX)

Decision to take no further action

19 September 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 22 April 2016 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee from the Complainant.

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

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

1.4. The details of the complaint are that the Licensee misled the Complainant about the Property and in particular about the location and earthquake damage to the Property.

1.5. In particular, the Complainant advised that:

a) The Property’s location was advertised as Town A and when the Complainant asked the Licensee how to get to the Property, the Licensee told her the Property was actually at Town B, but Town A was on the drop-down and Town B was not, so she (the Licensee) thought it was better to have an incorrect location than no location.

b) The Complainant also asked the Licensee whether the Property had any damage which the Complainant needed to know about. She says the Licensee responded, saying “ it is what it is”. When the Complainant probed further and specifically asked whether there was any damage from the earthquakes in 2014, the Licensee again responded “ it is what it is”.

c) The Complainant says she and her father drove two hours from City X to view the Property, and were disappointed to find it bore no resemblance to the photos on the website and barely looked like the same property.

d) The vendor told the Complainant the Licensee had not visited the Property since it had been listed (two years earlier). He also told the Complainant the Property had been substantially damaged during the earthquake and showed the Complainant the extent of the damage. The vendor said the Licensee was well aware of the scope of damage and was also aware that an EQC claim had been lodged for the Property.

e) The Complainant says she felt she wasted several hours driving to view the Property and would not have done so if the Licensee had disclosed the issues, which she clearly knew. She complained to the Licensee but did not receive a response.

1.6. The Complainant requested a remedy, being:

a) She would like the Licensee censured to ensure she does not mislead other prospective purchasers.

1.7. The Licensee responded to the complaint against them.

1.8. In particular, the Licensee commented that:

a) She took photographs of the Property on two occasions, however the weather was not very suitable, and she also obtained photos from the vendor who has taken photos on a sunny day when the grass was freshly cut. She says she did not photo-shop any of the

photos.

b) The Licensee says she listed the Property on the Website under Town C/Town D area.

When little interest had been shown in the Property she amended the location in an effort to attract more enquiries, as buyers from City X tend to think of the area as being Region Z. In the advertisement she made it clear where the Property was and it’s close proximity to City B.

c) She says it was only after changing the area search criteria on the Website that she had

buyers view the Property and there was never any complaints regarding the address.

d) The Licensee says in April 2016 she had a phone call from the Complainant enquiring about the Property. She says the Complainant wanted to view the Property on 16 April as she was going to City Y and it would be on the way. She says she arranged the viewing with the vendor as she had other appointments that day.

e) The Licensee says the Complainant asked her why the Property had not sold and she replied that her thoughts were that it was a little off the beaten track for people needing to work in Town E.

f) The Licensee says the Complainant asked her about the general condition of the Property and she told her that it was a lovely but very old homestead that required ongoing maintenance. She says she advised her that it had suffered earthquake damage and that work was required to the piles. She says she did not quote a dollar amount to fix the damage as it would be foolish without a written quote and she is not a qualified builder or engineer.

g) The Licensee says the Complainant accused her of not raising the earthquake damage issues and also not providing answers to the Complainant ’s questions about the damage. She refutes this and says she raised the fact that the Property, like most in the area, had suffered damage in the 2014 earthquake.

h) The Licensee says the Complainant asked the “true location” of the Property but by her

tone the Licensee guessed the Complainant already knew this.

i) The Licensee says that the Complainant knew the Property had suffered earthquake damage and the location of the Property before going to view the Property.

2. What we decided

2.1. On 13 July 2016 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. On 1 September 2016 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

2.3. The Committee has decided to take no further action on the complaint.

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) Rule 5.1 (Skill, care and competence), Rule 6.4 (must not mislead or provide false information) and section

72 (unsatisfactory conduct) of the Real Estate Agents Act 2008.

2.5. Our reasons for the decision the Committee concluded:

Having made the effort to view the Property it is apparent the Complainant was disappointed with the condition of the Property. However, the Committee is not satisfied that the Licensee’s conduct was misleading in this regard. In order to be able to do so the Committee

would need to be able to determine that the conduct of the Licensee’s in describing the Property went beyond puffery and the Committee is not satisfied of this for the following reasons.

Location of the Property

2.6. Evidence has been presented to indicate that there are some restrictions on the Website as to what location descriptions are available on the search criteria. The Committee accepts that the Licensee sought to promote the Property in a category that was more likely to attract enquiry from suitable buyers, notwithstanding that other options may have been more geographically accurate. The Committee has taken other factors into account in determining that this did not, in itself, amount to unsatisfactory conduct.

2.7. There was no attempt by the Licensee to disguise the actual location of the Property and its relative position to well-known locations was accurately described in the body of the advertisement.

2.8. The Committee is satisfied that it was promoted as Town A because it might appeal to buyers seeking property using Town A as a search criteria and that this was not intended to mislead buyers about where the Property actually is.

2.9. The Committee is satisfied that the selection of the location criteria was not in itself misleading in respect of the desirability of the location. There was no suggestion that the location could have been confused with other areas that held more intrinsically desirable or prestigious appeal than the Property’s actual position would generally be attributed. In other words, there was no attempt to pass the Property off as something it was not.

2.10. It is clear that the Complainant had clearly ascertained the location of the Property before going to view and could have chosen not to do so having determined the Property’s location.

Earthquake Damage

2.11. There is disagreement between the parties as to what the Licensee said to the Complainant about the Property on the phone before the Complainant went to view the Property. It is clear that the Complainant feels the Licensee withheld information about earthquake damage and a disputed Earthquake Commission (EQC) claim and such information would have been material to the Complainant’s decision to view the Property.

2.12. In such a situation the Committee is required to determine what is most likely to have occurred on the balance of probabilities. In this regard the Committee has had to consider a number of factors.

2.13. The Committee considers that at the core of this issue is the question of how fully the Licensee explained issues about earthquake damage and the pending EQC claim. The Licensee’s position is that she said the vendor would be best to explain the issues rather than her. It is understandable for a Licensee to be very cautious about commenting on structural matters when the Licensee is not qualified to do so. The Committee accepts that the Complainant might well have interpreted such reluctance as evasiveness.

2.14. The Committee does however accept the Licensee’s position that a conversation did occur where earthquake damage was disclosed. This is based on both the Licensee’s evidence and

that of the Complainant where she says she probed the Licensee specifically about damage from the 2014 earthquake.

2.15. The Committee accepts that the Complainant felt unsatisfied with the response to her questions about the earthquake damage but nonetheless decided to proceed with viewing the Property.

2.16. The Committee also accepts there is an argument that the existence of a disputed claim with EQC is a relevant fact that might best have been clearly disclosed to potential buyers at the outset. There was however also no suggestion that the Licensee represented that the earthquake damage was covered by a claim and would be repaired by EQC. Therefore the Committee accepts that the impression left by the Licensee was not misleading , that there was some earthquake damage and that this presented potential risks and costs and for the buyer.

2.17. The Committee also accepts that the Licensee’s duty does not extend to being able to understand and explain complex technical, legal and engineering issues relating to earthquake damage and insurance/EQC claims. However, like issues of water tightness, the Licensee is required to identify where there is a heightened risk that such issues may exist. In this case the Committee is satisfied that the Licensee has fulfilled this obligation by disclosing that the Property had suffered earthquake damage.

Misleading Photos

2.18. No evidence has been provided by the Complainant to support their view that the photos were misleading. There is no evidence to suggest the photos are of a property other than the Property, that the photos have been altered (photo shopped), or that the photos show any features which are materially different to the actual Property.

2.19. Licensees are entitled, and generally expected, to use photos that show the Property in a favourable light. Other than questioning when some of the photos were taken, no evidence has been supplied to enable the Committee to determine that the photos show features that have, for example, been removed, modified or deteriorated significantly since the photos were taken.

2.20. Based on the evidence presented the Committee cannot determine that the photos were misleading.

3. Your right to appeal

3.1. 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).

3.2. For further information on filing an appeal, read Guide to Filing an Appeal at Ministry of

Justice-Tribunals (www.justice.govt.nz/tribunals).

4. Publication

4.1. 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.

4.2. 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.

4.3. 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

Craig Edwards

Panel Member

For Complaints Assessment Committee 412

Real Estate Agents Authority

Date: 19 September 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:

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 or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client.