Complaint No C09207 [2016] NZREAA 89 (3 May 2016)

Last Updated: 26 December 2016

Before the Complaints Assessment Committee

Complaint No: C09207

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee: The Licensee (Licence Number: XXXXXXXX)

Agency: The Agency (Licence Number: XXXXXXXX)

Decision to take no further action

3 May 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 6 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 Committee considered that the complaint also raised issues about the Agency and on 27

October 2015 decided to inquire into it.

1.4. The Licensee was at all material times employed by the Agency.

1.5. The complaint relates to a property (the Property) of which the Complainant was the purchaser.

1.6. The details of the complaint are that the Licensee:

a) Failed to tell the Complainant that Code Compliance Certificates (CCC) for a double carport, an attic addition, and a pot belly stove installation had not been applied for and as a result potential buyers were deterred from purchasing because of the lack of CCCs when the Complainant subsequently tried to sell the Property.

b) The vendor and the Licensee had a personal relationship that should have been disclosed.

1.7. In particular, the Complainant advised that:

a) The Licensee and she were long standing friends.

b) She and her husband inspected the Property on 24 October 2013 after being told about it by the Licensee.

c) The Property was advertised as “Council recognised as two Dwellings” and described as

a good investment.

d) She admitted that they were looking for an investment property and the Property appealed to them because it included two houses on a single title and was expected to sell for less than two homes on separate titles.

e) She asked the Licensee whether the Property was legally compliant and the Licensee confirmed that it was.

f) She denies being given a copy of the Land Information Memorandum (the LIM) which included references to the CCC’s not being granted.

g) On 6 November 2013 she and her husband purchased the Property at auction.

h) Following settlement on 8 January 2014, they engaged the Agency to manage the

Property as a rental.

i) On 11 May 2015 they decided to sell the Property through another agency, who immediately discovered that CCCs had not been granted for the double carport, attic addition, and pot belly stove installation.

j) She raised the issue with the Licensee who did not seemed concerned and implied it should make no difference to potential buyers.

k) Potential buyers for the Property lost interest once they were made aware that there

were outstanding CCCs.

l) She met with the manager of the Agency to complain about the Licensee but he failed to follow up.

1.8. The Complainant requested a remedy, being:

a) Licensee to be censured.

b) Compensation towards cost of making the Property compliant.

1.9. The Licensee responded to the complaint against her.

1.10. In particular, the Licensee commented that:

a) Any comment made about legal compliance was made to the husband of the

Complainant and would have been with respect to the two flats issue.

b) The Complainant would have been given a copy of the LIM as part of the auction documentation.

c) It was up to the Complainant to do her own due diligence. She (the Licensee) merely acted as a conduit between the vendor and potential purchasers with respect to passing on the LIM.

d) She did not go through the details of the LIM with the Complainant and dealt only with the husband through the entire sales process.

e) She did not go through the details of the LIM with any potential purchasers because in

an auction program she makes sure they all do their own due diligence.

1.11. The Agency also responded to the complaint against them.

1.12. In particular, the Agency commented that:

a) The Agency has robust procedures and systems around supervision and management.

b) The sale of the Property was straightforward, and no complaints were brought to their attention during the marketing and sale of the Property.

c) If it is outside their expertise, salespeople are advised not to comment or give professional advice as to the content of any document provided.

d) The LIM clearly showed that CCCs had not been issued for the stove, carport, and attic

extension.

e) They have sold a number of properties for the vendor of the Property and to their knowledge no one in the Agency is related to him.

2. What we decided

2.1. On 26 August 2015 Complaints Assessment Committee 407 considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. On 6 April 2016 Complaints Assessment Committee 410 (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) Rules, most particularly Rules 5.1 (skill, care and competence) and 6.4 (misleading or false information).

3. Our reasons for the decision

The Committee concluded that:

Code of Compliance Certificates

3.1. The statement purported to be made that everything was legal, was made with respect to the flats issue, and was not a broad statement that guaranteed that there were no building compliance issues.

3.2. The Complainant and her husband would have received a copy of the LIM as part of the auction documentation. The Committee accept that auction documentation is often bundled and supplied to all prospective purchasers. There is no reason to believe that in this instance this was not the case.

3.3. On pages 4 and 5 of the LIM the fact that building consents for a double carport, an attic addition, and a pot belly stove installation have been granted, is clearly stated. The absence of matching CCCs is therefore able to be readily ascertained.

3.4. The Complainant and her husband appear to have failed to do their due diligence and are attempting to expand out the scope of the statement about legality around the two flats issue to all other legal issues.

3.5. The Licensee contends that she did not read the LIM and simply passed this to prospective purchasers as part of the auction documentation and suggested they seek legal assistance should they wish. The Committee notes that had the Licensee been aware that CCCs had not been issued for the three items for which building consents had been obtained, then she would have had to disclose this to all prospective purchasers. The evidence did not establish however, that she had noted the absence of CCCs matching three building consents.

3.6. While it may seem to be best practice to read any document before passing them to prospective purchasers, in this case the LIM, there is no legal obligation to do so. Decisions such as LB v The Real Estate Agents Authority [2011] NZREADT 39 and Donkin v Real Estate Agents Authority & Morton-Jones [2012] NZREADT 44 relate to situations where representations have been made by licensees. In this case, the Licensee did not make any representations about CCCs.

Supervision

3.7. There is sufficient evidence supplied to satisfy the Committee that the Licensee was properly supervised through the marketing and sales process.

Relationship with the Vendor

3.8. The evidence establishes that there were no personal relationships between the Agency and the vendor of the Property such as to give rise to any duty of disclosure 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 (no later than 31 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

Garry Mason

Panel Member

For Complaints Assessment Committee 410

Real Estate Agents Authority

Date: 3 May 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.

5 Standards of professional competence

5.1 A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

6 Standards of professional conduct

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.