Complaint No C09499 [2016] NZREAA 29 (29 February 2016)

Last Updated: 12 November 2016

Before the Complaints Assessment Committee

Complaint No: C09499

In the Matter of Part 4 of the Real Estate Agents Act 2008

The Licensee (XXXXXXXX)

Decision to take no further action

29 February 2016

Members of Complaints Assessment Committee: CAC406

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

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 21 July 2015 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee made by the Complainants.

1.2. The Licensee 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.

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

1.4. The details of the complaint are that the Complainants say they were interested in the Property and after initially viewing the Property with another agent, were referred to the Licensee for further enquiries about the Property.

1.5. The Complainants say that the Property was initially advertised stating that it could be removed or renovated. We note that a copy of the advertisement contained in evidence from the website (www.[thewebsite].co.nz/xxxxxx) shows the Property described as “Demolish or Do-Up”.

1.6. In response to a request from the Complainants, the Licensee emailed the Complainants further information which included information from the local authority. The Complainants further allege that the Council documents showed that the Property was heritage-listed and that a previous request to demolish the house had been declined. When the Licensee was told about this, she changed the advertising.

1.7. The Property was due to sell at auction and the Complainants attended the auction.

Complainant, Mrs. C, says the Property did not reach reserve, so the Complainants did not bid, and the Property did not sell. Mrs. C says that after the auction she contacted the Licensee and told her that she and her husband wanted to make an offer on the Property. She says the Licensee told her there would be a multi-offer situation and the Licensee would contact her about making an offer the following day. She says they did not hear back from the Licensee. She then found out the Licensee had presented two other offers to the vendor and the Property had been sold.

1.8. The Complainants say the Licensee is the sister of the vendor, but the Licensee did not disclose this until just before the auction.

1.9. In particular, the Complainants raise three issues:

a) The Licensee did not give the Complainants a chance to purchase the Property;

b) The Property was wrongly described as able to be demolished; and

c) The Licensee failed to disclose that the vendor was her sister.

1.10. The particulars of each complaint are set out below.

Issue One: The Licensee did not give the Complainants an opportunity to purchase the

Property.

1.11. The Complainants were the customers of Ms. X, an agent at the Branch of the Agency. Ms. X was due to be overseas at the time of the auction and accordingly arrangements were made for the Complainants to be looked after in her absence. The Branch Manager, Ms. Y, was assigned to look after the Complainants and says that she told the Licensee’s Branch Manager (branch Z), Ms. Z, that the Complainants would not be bidding at the auction and that any offer they might make would have to be conditional on the sale of an existing property.

1.12. Contrary to the comments made by Ms. Y (that the Complainants would not be attending the auction), in fact they did so but did not bid as the Property failed to reach the reserve.

1.13. The evidence regarding the multi-offer process, which took place following the auction, suggests that the automated notification to agents of registered buyers was not sent to Ms. Y as it should have been but instead appears to have been sent to the absent Ms. X. Ms. Y confirms that she did not receive a multi-offer notification.

1.14. The Complainants dispute that they were not in a position to bid and state that they had bridging finance arranged. Ms. Y accepts the Complainants’ claim that that she advised them to deal directly with the Licensee.

1.15. The Licensee says that she does not recall seeing the Complainants at the auction, did not speak with them at any time, and states that they did not inform her at any stage that they wished to submit an offer.

1.16. The Committee notes the acknowledgement of the Branch Managers (Ms. Y and Ms. Z) that it is not the role of the Licensee to follow up with buyers who have been registered by other agents, but rather it is the responsibility of the agents representing the particular buyers to do so. The Complainants were represented, initially by Ms. X, and subsequently by Ms. Y. It was not the Licensee’s role to follow up with the Complainants, and she says that she had not been informed that Ms. X was on holiday.

1.17. The evidence suggests that a breakdown in communication may have occurred but it did not involve the Licensee.

1.18. The Licensee’s client was the vendor, who had evidently given clear instructions that only unconditional offers would be considered.

Issue Two: The Property was wrongly described as able to be demolished.

1.19. The Complainant states that the advertising for the Property originally claimed that a purchaser could remove or renovate the house. Complainant, Mrs. C, asked the Licensee for further information about the Property which the Licensee emailed to her, including some Council documents.

1.20. Mrs. C noticed that the Property was referred to in the Council documents as being heritage-

listed and that the previous owners had been denied consent to demolish the house.

1.21. Mrs. C brought the Council information to the Licensee’s attention, and the Licensee promptly changed the advertisement by removing the word “demolish” from the advertising and covering it up on the signboard.

Issue Three: The Licensee failed to disclose that the vendor was her sister.

1.22. The Complainants claim that the Licensee failed to disclose that the vendor was her sister until just before the auction. The Complainants say that they called the Licensee on the day after the auction to ask what was happening and claim they were told that the Property belonged to her sister, and that she had advised the vendor to accept a lower cash offer of the two offers received as it would be difficult to sell given its heritage listing.

1.23. The Complainants claim that this was the first time they had been made aware of the relationship between the Licensee and the vendor; although the evidence shows that the disclosure of a relationship between the Vendor and the Agency was made in the agency agreement and again in the agreement for sale and purchase prepared for the purposes of the auction.

1.24. The evidence of the Licensee is that the auctioneer also drew this provision to the attention of the attendees at the auction as it forms part of the Particulars and Conditions of the Agreement.

2. What we decided

2.1. On 22 September 2015 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 17 December 2015 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 in respect of all issues under section 89 (2)(c) and section 136 of the Act, and in particular, having regard to Rules 5.1 and 9.1.

3. Our reasons for the decision

The Committee concluded:

Issue One: The Licensee did not give the Complainants an opportunity to purchase the

Property.

3.1. The Licensee confirms that the Complainants attended an open-home on 28 June 2015, and a few days later phoned the Licensee asking about price-feedback. When told by the Licensee that it would be above $2 million, the Complainants stated that they thought it would lay below $2 million but that they would need to sell their house first before being in a position to buy, and for this reason they would not be attending the auction.

3.2. The Complainants, however, did attend the auction but did not bid as the bidding failed to reach the reserve. They say that they were in a position to do so even though it would appear they had not sold their property, as they had interim bank funding arranged.

3.3. The Property failed to sell. The Complainants further say that after the auction, they contacted the Licensee and advised that they wished to make an offer on the Property and were evidently told that there would be a multi-offer situation arising the following day and

that she would contact them to make an offer. The Complainants state that the Licensee failed to do so and instead took two other offers to the vendor, one of which was accepted.

3.4. They claim that the listing agent only wanted to present offers from her own clients as being the reason why they were not given the opportunity to make an offer themselves. They say that not only did they not have the option to offer to purchase the Property, but the agent caused a loss to the vendor by not presenting all offers (including theirs).

3.5. The evidence confirms that in the absence of Ms. X, who the Complainant’s first consulted; the Complainants were advised by Ms. Y to deal directly with the Licensee. Ms. Y confirms in her evidence that she gave this advice. The Licensee on the other hand states that she cannot recall seeing either of the Complainants at the auction and denies that she spoke with either of them after the auction, nor she says, did they inform her at any time that they wished to make an offer on the Property. The Licensee further says that she was unaware that Ms. X was on leave. It is also accepted by the Committee on the evidence of Ms. Y and Ms. Z that it is not ordinarily the responsibility of the Licensee to follow up with buyers who have been registered with other agents, but the agents themselves.

3.6. The Committee further accepts that on the evidence, it is possible that a breakdown in communication may have occurred which does not reflect on the Licensee at all, namely that the information given by Ms. Y to Ms. Z that the Complainant’s original contact, Ms. X, was away on leave was not passed on to the Licensee. Ms. Z says in her evidence that she cannot recall being given this information by Ms. Y and therefore would not have informed the Licensee accordingly.

3.7. The Committee considers that issues of credibility are always difficult to assess when considering complaints, but is of the view that it is more likely than not that the Licensee was not informed of the absence of Ms. X and it was therefore quite fair for her to assume that Ms. X would be dealing with them as she had registered them as her buyers.

3.8. On Issue One, we consider that no further action is justified.

Issue Two: The Property was wrongly described as able to be demolished.

3.9. There is no evidence as to why the Property was described in the first place as “Demolish or Do Up in [the Property]”, although we have noted from the original advertising that the word “Demolish” is used only once and the narrative refers to a “home .... ready for renovation to suit your family needs and tastes”, and makes no further reference to demolition.

3.10. The Committee is satisfied though, that as soon as the error was brought to the Licensee’s attention she took immediate steps to correct the sign and other advertising material. The evidence confirms the actions taken by the Licensee on the day after she was informed of the mistake by the Complainants.

3.11. On Issue Two, we consider that no further action is justified.

Issue Three: The Licensee failed to disclose that the vendor was her sister.

3.12. The Complainants have raised as an issue the fact that the Licensee did not disclose that the vendor was her sister until just before the auction.

3.13. The evidence shows that the Licensee has recorded in the agency agreement that the vendor

is associated with the Agency and included a similar clause in the sale and purchase agreement recording the terms on which the Property was offered for sale by auction. Further, in the internal listing document, it was noted that the “Vendor associated with the Agency”. The Licensee also says that the association between the vendor and the Agency was drawn to the attention of all attendees at the auction.

3.14. The Committee considered that the conduct of the Licensee is not a breach of section 136 of the Act.

3.15. On Issue Three, we consider that 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 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

David Bennett

Date: 29 February 2016

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

Section 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.

Section 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.

Section 136 Disclosure of other benefits that licensee stands to gain from transaction

(1) A licensee who carries out real estate agency work in respect of a transaction must disclose in writing to every prospective party to the transaction whether or not the licensee, or any person related to the licensee, may benefit financially from the transaction.

(2) Subsection (1) does not apply to any matter disclosed under section 128 or 134.

(3) The licensee must make the disclosure required by subsection (1) before or at the time that the licensee provides the prospective party with any contractual documents that relate to the transaction.

(4) For the purposes of this section, an agent does not benefit financially from a transaction merely because of any commission payable to the agent under an agency agreement in respect of the transaction.

(5) A contract entered into in contravention of this section may not be cancelled merely because of that contravention.

The relevant provisions 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 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.