Complaint No C09271 [2016] NZREAA 81 (22 April 2016)

Last Updated: 25 December 2016

Before the Complaints Assessment Committee

Complaint No: C09271

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee: The Licensee (XXXXXXXX)

Decision to take no further action

22 April 2016

Members of Complaints Assessment Committee: CAC410

Chairperson: Nigel Dunlop Deputy Chairperson: Paul Elenio Panel Member: Garry Mason

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 9 July 2015 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).

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

1.4. The complaint is integrally related to an earlier complaint received by the Authority on 5

September 2014, in respect of which Complaints Assessment Committee 407 (CAC 407) delivered a decision on 27 August 2015 under case number C06072. The earlier complaint will be referred to as complaint 6072.

1.5. The complainant in complaint 6072 was a Mr. X. He complained against a Mr. A, who was at that time a licensee employed by the current Complainant, and a selling agent for the Property. CAC407 added the current Complainant as a respondent to Mr. X’s complaint.

1.6. The background to complaint 6072 was Mr. X signing a pre-auction offer with the assistance of Mr. A to buy the Property. He then quickly had a change of mind, believing that he had offered too much. The view that he had offered too much was shared by the Licensee with whom he had discussions shortly after having made the offer. Mr. X was advised that he could not extricate himself from his offer. He did not attend the auction. The Property was sold to him at the auction.

1.7. Mr. X on-sold the Property some four months after the auction for $765,000, which was

$125,000 less than the $890,000 he paid for it, and $35,000 less than a registered valuation of $800,000.

1.8. The outcome of complaint 6072 was that of no further action. CAC407 decided that neither Mr. A nor the current Complainant was guilty of unsatisfactory conduct. Complaints Assessment Committee 410 (the Committee) understands that Mr. X appealed CAC407’s decision, but is not aware of the outcome.

1.9. The current complaint is to the effect that the Licensee made unprofessional comments about the Complainant, and did not act in Mr. X’s interests.

1.10. The alleged unprofessional comments were reported to the investigator of complaint 6072 by a Mr. Y, a 2014 prospective purchaser of the Property. Mr. Y told the investigator that the Licensee had told him that Mr. X had been “stitched up” by the Complainant.

1.11. The Complainant further alleges that when engaged by Mr. X to sell the Property, the Licensee told prospective purchasers that Mr. X would be willing to sell for a low price, because he was intending to claim compensation from the Complainant for having (allegedly) bought at an inflated price. The Complainant alleges that these statements by the Licensee resulted in Mr. X selling the Property for a lower price than should have been achieved.

1.12. The Complainant did not specify that it sought any particular outcome. Presumably however,

it sought vindication of its beliefs that it had been defamed by the Licensee, and that the alleged losses suffered by Mr. X were a result of the Licensee’s actions, rather than its own.

1.13. The Licensee responded to the complaint against him.

1.14. He acknowledged telling Mr. Y that in his view Mr. X had been stitched up by the

Complainant, but said that this was objectively true.

1.15. He denied acting otherwise than in the best interests of Mr. X. He said that at no time had he told a prospective purchaser that they could buy the Property at a price which would not be satisfactory to Mr. X, nor were they told that Mr. X was desperate to sell.

2. What we decided

2.1. On 27 July 2015 CAC407 considered the complaint and decided to inquire into it under section 79(2)(e) of the Act. This decision was reaffirmed by the Committee on 27 October

2015, having assumed CAC407’s caseload.

2.2. On 14 April 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.

2.5. The Committee decided that the Licensee was not guilty of either unsatisfactory conduct or misconduct, as those terms are defined in sections 72 and 73 of the Act.

2.6. The decision was also made with reference to the Real Estate Agents Act (Professional

Conduct and Client Care) Rules 2012.

2.7. In relation to the unprofessional comment allegation, the most pertinent rule is Rule 6.3 (licensees must not engage in any conduct likely to bring the industry into disrepute).

2.8. In relation to the allegation of not acting in Mr. X’s interests, the most pertinent rules are Rule

9.1 (licensees must act in the best interests of their clients) and Rule 9.4 (licensees must not mislead customers as to the price expectations of their clients).

3. Our reasons for the decision

U nprofessi onal comm ents

3.1. As already mentioned, the Licensee admitted telling Mr. Y that Mr. X had been “stitched up” by the Complainant. The main issue for the Committee to determine was whether or not in all the circumstances of the case this breached paragraphs (a) or (b) of section 72, or breached Rule 6.3 and thereby paragraph (b) of section 72.

3.2. The Committee also considered whether the Licensee had breached the more serious provisions of section 73 (misconduct). It had no hesitation however in deciding that the comment complained about fell well short of the required threshold of seriousness.

3.3. The Committee considers that the comment complained about does not constitute unsatisfactory conduct either, because:

• It was made on only one occasion to one person.

• It was not made in writing.

• It was made in the context of a private meeting in which the Licensee and Mr. Y

exchanged views on the value of the Property and the position Mr. X had found himself

in.

• The term “stitched up” does not necessarily imply wrongdoing, but could in the context be taken to mean that the Complainant had allowed Mr. X to fall into a situation from which he could not extricate himself.

• The Licensee’s belief that Mr. X was not well served by the Complainant is a sincerely held belief.

A cti ng contrary to Mr. X ’s i nterests

3.4. The investigation report revealed that the Licensee had on more than one occasion mentioned to a prospective purchaser that Mr. X would be seeking compensation from the Complainant.

3.5. The Committee is not satisfied however, that the intent of such comments was to suggest that Mr. X would accept a below-market price because he would also recover compensation from the Complainant, thereby achieving a satisfactory outcome.

3.6. Rather, the Committee considers that the Licensee was doing no more than providing prospective purchasers with an explanation for the Property being on the market, and fueling their interest by suggesting or implying that in the circumstances, Mr. X could not expect to sell for the same price (or higher) than that for which he bought. Without such comments, the Licensee no doubt feared that prospective purchasers would be concerned that in the light of the price Mr. X had bought for, they might not be able to secure a purchase for a price that they considered reasonable.

3.7. The Licensee considered himself a friend and confidante of Mr. X. It is therefore intrinsically unlikely that he would want to undersell Mr. X, especially as the Licensee considered that whatever the Property sold for, there would be a shortfall on what Mr. X had paid.

3.8. Two other considerations are noteworthy. First, the Licensee did not mention the compensation and related issues to the person who bought the Property. Second, Mr. X himself makes no complaint about the Licensee.

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 (no later than Monday, 23 May 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. 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

Nigel Dunlop

Date: 22 April 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:

6 Standards of professional conduct

6.3 A licensee must not engage in any conduct likely to bring the industry into disrepute.

9 Client and customer care

General

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.

9.4 A licensee must not mislead customers as to the price expectations of the client.