Complaint No C14664 [2016] NZREAA 203 (5 October 2016)

Last Updated: 16 April 2017

Before the Complaints Assessment Committee

Complaint No: C14664

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee: The Licensee (XXXXXXXX)

Decision to take no further action

5 October 2016

Members of Complaints Assessment Committee: CAC403

Chairperson: Susan D'Ath Deputy Chairperson: Amelia Bardsley Panel Member: Sandra Wilson

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 27 June 2016 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee from the Complainant.

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

engaged by the Agency.

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

1.4. The details of the complaint are that the Complainant alleges that the Licensee mislead him by not telling him the downstairs of the Property was not permitted/consented as a dwelling and as a consequence he was misled into thinking the Property contained a separate legal residential rental unit.

1.5. The Licensee has responded to the complaint against her denying that the Complainant was misled.

2. What we decided

2.1. On 5 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 31 August 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) 2012, Rule 6.4 (not to mislead).

3. Our reasons for the decision

3.1. The Committee concluded that no further action should be taken with respect to this complaint:

Background

3.2. This complaint arises in the context of the Complainant, having seen the Property advertised, viewed and purchased it at auction on the same day.

3.3. On 23 March 2016 the Complainant saw the Property listing on the website. He met the

Licensee at the Property to view it, requested the Property files and was emailed them by the

Licensee and forwarded them on to his lawyer. He then attended the auction later that day and purchased the Property unconditionally.

3.4. On the next day, 24 March 2016, the Complainant, his wife and children visited the Property and met the vendors. The Licensee was not present at that visit/meeting.

3.5. That same day the Complainant contacted the Licensee and asked her to ascertain whether the under-bidders would take over the contract. The reason given to the Licensee was that the children did not like the Property and in particular, their bedrooms.

3.6. On 29 March 2016 the Complainant contacted his lawyer and then telephoned the Licensee.

He recorded part or all of his telephone conversation without the Licensee’s knowledge. He then proceeded to withdraw from the purchase contract, which was resisted by the vendors and which eventually led to a financial settlement between them.

3.7. On 15 April 2016, the Complainant spoke with the CEO of the Agency and made a complaint.

The Agency and Licensee have subsequently denied the allegations.

The alleged representation

3.8. The Property contained downstairs a one to two bedroom suite with an additional lounge, bathroom and kitchenette. This was accessible through the main house or through a separate outside entrance. It had in the past been rented to tenants by the vendors of the Property.

3.9. The Complainant says that he was misled by the Licensee that the downstairs unit was a legal separate dwelling. He says that specifically the Licensee told him only that an oven could not be installed in the unit and that it had in the past been rented out by the vendors. The Complainant says that he would not have purchased the Property had he known that it was not legally permitted as a second dwelling and that he was misled into doing so by the Licensee failing in her duty to disclose.

3.10. In his complaint he refers to a comment he says was made to him by the vendor at the conclusion of the auction to the effect that he had “done some things he should not have”. The Complainant then says that when he viewed the Property with his family the day following the auction, he saw a “rigged up electricity meter device” in a cupboard which he said did not look professionally installed and gave him concern as to a fire risk. This he says alerted him to the possibility the downstairs was not a legal separate dwelling.

3.11. Both parties agree that the Complainant gave as his reason for wanting out of the contract the fact that his children did not like the Property and in particular, the bedrooms. The Complainant agrees that between the 24th and 29th March he changed this reason to being that the downstairs was not legally a separate unit and his having been misled as to that fact. The timing of that change of reasoning coming immediately after his consulting his lawyer was challenged by the Licensee and the Agency and by the vendor’s lawyer in a letter dated 5

April 2016, addressed to the Complainant’s lawyer.

3.12. The Complainant has offered as an explanation for his change of reason his embarrassment with the situation. We are not necessarily convinced by this explanation but in determining this complaint we do not have to reach a conclusive finding on that point.

3.13. The Complainant was released from the purchase contract at the cost of $124,302.68 and seeks this from the Licensee.

The Licensee’s response

3.14. In contrast, the Licensee says she did not mislead the Complainant as to the nature of the downstairs area. She notes that the Property was not marketed as a home and income. That documentation including a LIM showing the use of the downstairs portion of the Property was available and supplied to the Complainant, and states her belief that he had other reasons (including the one he initially gave at the time) for wanting to withdraw from the purchase of the Property and is now seeking to blame her for his change of mind regarding the purchase.

Our findings

3.15. There are a number of pieces of evidence which support the Licensee: (a) the Property was not marketed as a home and income;

(b) the advertising material describes the Property as “Perfect for extended families, elderly relatives, teenagers or an ideal area to work from home”. All these uses would be allowed and legal;

(c) the Licensee made disclosures to the Complainant about other relevant matters concerning the Property, the pot belly stove and a crack;

(d) a rental appraisal of the Property was available as part of the marketing material. This appraisal was for the Property as a whole and not for the downstairs separately;

(e) the electrical meter referred to by the Complainant appears to be a standard installation with a sticker identifying the electrical installer clearly visible.

3.16. The Committee has been provided by the Complainant with a transcript of the recording he made of a telephone conversation with the Licensee. The Complainant says that this proves his allegation that she failed to disclose about the downstairs. With respect we do not agree.

3.17. The comments as presented to us are equivocal at best and do not amount to any admission by the Licensee that what the Complainant says is true. Indeed the Licensee is shown challenging the Complainant’s view of events and referring to the reason he originally gave for withdrawing from the contract, that his daughters disliked the house. We have no way of knowing whether the transcript is of the whole of the conversation or only part of it or whether the recording has been edited. Accordingly, we place little evidential weight on it.

3.18. There are a number of problems with the Complainant’s timeline of events as outlined in his complaint. He has omitted to mention contacts he had with another licensee about the Property. He refers to an electrical meter which from the photographs we have seen appears normal and professionally installed. He originally gave as his reason for wanting out of the contract his children's dislike of the house. He did not mention being misled as to the status of the downstairs of the Property as the reason until after he had consulted his lawyer about withdrawing from the contract.

3.19. The burden is on the complainant to prove their complaint to the requisite standard which is that of the balance of probabilities. That is, is it more likely than not that the events complained of occurred as alleged. Further to that, the events alleged must amount to a breach of the Professional Conduct and Client Care Rules 2012, Rule 6.4 of which provides that a licensee must not mislead a customer.

3.20. Both the Complainant and the Licensee agree that she told him an oven could not be installed in the downstairs area. That was correct. There is no evidence before us to support the Complainant’s allegation that he was misled and what evidence we have tends to support the Licensee's version of event.

3.21. The marketing did not hold the Property out as being a home and income and the Complainant had the benefit of access to the LIM and other material from which the status of the downstairs area was clear.

3.22. Accordingly, we have formed the view that on the balance of probabilities the Complainant has not proved that the Licensee misled him about the Property.

Compensation

3.23. As determined by the High Court in Quin v Real Estate Agents Authority [2012] NZHC 3557 a Complaints Assessment Committee does not have the ability to award compensation to a Complainant on a finding of unsatisfactory conduct and this was made clear by the Authority to the Complainant at an early stage of the complaint process. Even had we found the Licensee engaged in unsatisfactory conduct we would not have been able to order compensation payable to the Complainant.

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 Ministry of

Justice-Tribunals (www.justice.govt.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

Susan D'Ath

Chairperson

Date: 5 October 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.