Thomas - Complaint No C08510 [2016] NZREAA 214 (10 October 2016)

Last Updated: 16 April 2017

I n the Matter of	Part 4 of the Real Estate Agents Act 2008
And
I n the Matter of	Complaint No: C08510
	Sijo Edayathara Thomas (10035352)

Decision of Complaints Assessment Committee

Decision on Orders

10 October 2016

Members of Complaints Assessment Committee: CAC406

Chairperson: Paul Biddington Deputy Chairperson: Bernardine Hannan Panel Member: David Bennett

Complaints Assessment Committee

Decision on orders

1. Decision on orders

1.1. On 21 July 2016 the Complaints Assessment Committee (the Committee) found Licensee Sijo Edayathara Thomas (the Licensee) guilty of unsatisfactory conduct under section 89(2)(b) of the Act.

1.2. In its decision, the Committee concluded that in failing to comply with an instruction to enable the provision of information about the defects in a residential property about which the Licensee had knowledge to other potential buyers, the Licensee’s conduct had fallen short of the standard of conduct that a member of the public is entitled to expect from a reasonably competent licensee and would reasonably be regarded by agents of good standing as being unacceptable.

1.3. The Committee found that the Licensee failed in his duty to act in good faith (Rule 6.2), exercise skill, care, competence and diligence (Rule 5.1), failed in his duty to not engage in conduct likely to being the industry into disrepute (Rule 6.3) , failed in his duty to not mislead a customer nor provide false information (Rule 6.4) and failed in his duty to not engage in conduct which would put a prospective client or customer under undue or unfair pressure.

1.4. The Complainants and Licensee were given the opportunity to make submissions to the

Committee on orders.

1.5. Despite correspondence between the Authority and the Licensee, and extensions of time granted to him, the Licensee did not make any submissions on orders.

1.6. The Complainants advised that they would not be making any submissions.

2. Orders

2.1. Having made a finding of unsatisfactory conduct against the Licensee, the Committee decided to make the following orders against the Licensee pursuant to s93 of the Act:

(a) censure; and

(b) a fine of $3000.

3. Our reasons

3.1. The Committee in its hearing on 21 July 2016 determined that of the three issues comprising the complaint, no further action should be taken against the Licensee in respect of two of the issues, but that pursuant to the provisions of section 72 of the Act, it made a finding of unsatisfactory conduct in relation to Issue 3 (whether the Licensee provided information about building reports supplied by the Complainants to other salespeople and prospective buyers for the purposes of relisting the Property in question) on the basis that the evidence established that the Licensee’s conduct would reasonably be regarded by agents of good standing as being unacceptable.

3.2. The New Zealand Real Estate Agents Disciplinary Tribunal has stated that “breach of the rules simpliciter is unsatisfactory conduct .... which creates strict liability in this regard” and that “if, having held a hearing on the papers under s90, a Committee is satisfied on the balance of probabilities that an agent has breached the Rules, then a findin g of unsatisfactory conduct must follow pursuant to s72(b).” (Evans v REAA & Orr [2012 NZREADT 67).

3.3. The evidence considered by the Committee showed that two building reports concerning the condition of a residential property (the Property) had been obtained by the Complainants in this case following the contract becoming unconditional , and as a result of the significant defects highlighted by the reports, the Complainants were able to successfully negotiate the cancellation of the agreement for sale and purchase by consent between the parties.

3.4. The evidence further showed that although the Licensee did not appear to have knowledge of the defects when the Property was listed, he subsequently became aware of the reports or at least one of them after they had been commissioned by the Complainants. Although he says in his brief response to the Authority during the investigation that he “really have had nothing to do with this case”, the Committee’s view was that he had knowledge of the reports, and that he failed to comply with instructions given by the Agency to ensure that the reports were available to other potential interested parties.

3.5. Following cancellation of the agreement for sale and purchase by the Complainants, the Property was again listed with Barfoot & Thompson Papatoetoe (the Agency) for whom the Licensee worked, with the Licensee and another licensee named as the listing agents.

3.6. The evidence showed that the Licensee had been instructed to include notes of the building reports in the Agency’s internal listing system, the purpose of which was to ensure that information relevant to properties being listed was available to all agents and salespeople. The evidence of the Agency provided to the Committee has satisfied us that the Licensee did not do as instructed.

3.7. The consequence of the Licensee’s failure to comply with an instruction f rom the Agency was that a new buyer, introduced by another agent from the Agency (different branch) , purchased the Property before becoming aware off its defects, resulting in the cancellation of his contract.

3.8. The Committee is satisfied that the evidence showed on the balance of probabilities that the Licensee has failed to comply with an instruction given by the Agency, which in turn has had serious consequences. We also noted that the Licensee denied having any involvement with the Property nor any knowledge of the defects in the Property, but this evidence has been directly contradicted by the agent involved in the resale who claimed having spoken to the Licensee when introducing his client to the Property. Further, the evidence of the Licensee in providing responses to questions posed in the investigation phase was, in our view, unhelpfully brief and of little assistance in determining the validity of his evid ence. We were therefore unable to place any weight on the Licensee’s evidence.

3.9. The Committee considers the failure of the Licensee to be of a serious nature and is of the view that the penalty must recognize the seriousness of the offending. The evidence shows that both the Agency and the Licensee had knowledge of the building reports. We consider that the Agency has been clear in the instructions it has given the Licensee, but the Licensee has failed to comply with those instructions and has accordingly engaged in unsatisfactory conduct, contravening Rules 6.2, 6.3, 6.4 and 9.2.

3.10. For the reasons set out, we accordingly make the orders against the Licensee as set out in clause 2 above.

Principles considered

3.11. 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.

3.12. The Committee acknowledges that, when making an order under Section 93, the orders made must be proportionate to the offending and to the range of available orders.

Promoting and protecting the interests of consumers and the public

3.13. Section 3(1) of the REAA sets out the purpose of the legislation. The principal purpose of the Act is "to promote and prote ct 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."

3.14. 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

3.15. 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).

3.16. 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:

• Make sure that no person unfitted because of his or her conduct is allowed to practise the profession in question

• Protect both the public and the profession itself against persons unfit to practice

• Enable the profession or calling, as a body, to ensure that the conduct of members conforms to the standards generally expected of them.
  

3.17. In the Committee's view, maintaining professional standards is also a function of the disciplinary processes under the Real Estate Agents Act 2008.

Punishment

3.18. 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).

3.19. 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 als o be taken into account in selecting the appropriate penalty to be imposed...”

Where appropriate, rehabilitation of the professional must be considered

3.20. 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. What happens next

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. Your appeal must include a copy of this decision and any other information you wish the Tribunal to consi der in relation to the appeal (section 111).

4.2. For further information on filing an appeal, read Guide to Filing an Appeal at Mi n is try o f

J u s ti ce -Tri b un als ( w w w.j u stice . gov t. nz / trib u nal s).

Publication

4.3. The Committee directs publication of its decision. The decision will be published with 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 Licensee and the Agency they work for or worked for at the time of the conduct.

4.4. 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

David Bennett

Date: 10 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.

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.

The relevant provisions from the 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 6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

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 in fairness be provided to a customer or client.

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