Complaint No C16766 [2017] NZREAA 140 (13 October 2017)

1.1. On 19 September 2016, the Real Estate Agents Authority (the Authority) made a complaint about the conduct of Licensee 1 (the Licensee).

1.2. On 8 November 2016, the Committee decided to inquire into the complaint under section

1.3. The Licensee is a licensed Salesperson under the Real Estate Agents Act 2008 (the Act).

a) when the Licensee applied to renew his licence in February 2016 he failed to notify the

b) the Licensee failed to notify the Authority in writing of changes in circumstances that may have caused him to no longer be a fit and proper person to hold a licence;

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27/9/15	Incident involving the Licensee which later results in a Police charge of doing an indecent act.
27/9/15	Licensee interviewed by Police about the indecent act allegation.
3/11/15	Licensee spoken to (again) by Police about indecent act allegation and declines to make a further statement.
22/2/16	Licensee submits online application for renewal of his licence.
17/3/16	Licensee signs Police vetting consent/authority.
1/4/16	Licensee charged with doing an indecent act.
3/6/16	Police vetting report discloses indecent act charge.
28/6/16	Licensee spoken to by Police about allegations of serious sexual offending.
13/7/16	Police diversion completed for the indecent act charge and it is dismissed.
18/7/16	Licensee charged with 12 counts of serious sexual offending.

e) the Licensee failed to notify the Registrar in writing of a change in circumstances having bearing on whether he was a fit and proper person to hold a licence when he was being investigated for the indecent act allegation;

g) the facts underlying the Licensee having received diversion for an offence of doing an indecent act and the serious sexual offence charges is conduct which may amount to misconduct.

c) he has never done anything wrong (in respect of all allegations of offending);

e) he did not commit the sexual offences for which he has been charged and he is innocent;

g) the Registrar’s cancellation of his licence was overturned by the Real Estate Agents

h) he describes the Registrar’s actions and the Committee’s investigation as a “witch hunt” and asks that it stop and that he be allowed to continue selling real estate which he has done since 2007 without any blemishes on his career;

i) he seeks compensation for lost income for being “...forced out of my career by the

2.1. On 17 January 2017 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

2.3. This decision was made under section 89(2)(c) of the Act. The decision was also made after considering section 73 and sections 84 of the Act.

3.1. It is not satisfied the Licensee failed to notify the Registrar in writing of a pending charge at the time he submitted his online application to renew his licence on 22 February 2016.

3.2. It is not satisfied the Licensee failed to notify the Registrar in writing of a change in circumstances (about being interviewed for the indecent act allegation) at the time he applied to renew his licence or that he misled the Registrar when he advised there had been

no change in circumstances that would or might make him not a fit and proper person to hold a licence.

3.3. It is not satisfied the Licensee failed to notify the Registrar in writing of a change in circumstances when he was charged with the indecent act charge.

3.4. It is not satisfied the Licensee failed to inform the Registrar of a change of circumstances affecting his fitness to hold a licence at the time, or soon after he was interviewed for the serious sexual offences;

3.5. It is satisfied that when the Licensee was charged with serious sexual offences, the existence of the charges (and the underlying facts) was a change in circumstances that might mean he was not a fit and proper person to hold a licence. As soon as practicable after he was charged he should have informed the Registrar in writing of the charges. However, for the reasons to follow the Committee has decided to take no further action.

3.6. It has insufficient evidence to decide if a prima facie case exists to lay a misconduct charge or charges before the READT in relation to the indecent act charge for which the Licensee received diversion, or for the serious sexual charges for which the Licensee is currently pending trial and it has decided not to investigate those matters further.

3.7. Being a “fit and proper person” to hold a licence is a foundation stone of the licensing provisions of the Act.1 It is a common requirement in other licensing regimes as well. There are also several specific statutory criteria whereby persons are not eligible to hold a licence. These include being “convicted of a crime involving dishonesty” within 10 years of the application and being convicted of specified FairTrading Act 1986 (FTA) offences within 5 years of the application2. The criteria for prohibition does not include convictions for other

serious criminal offences, although such will have bearing on whether a licensee was a fit and proper person.

3.8. An application for a licence must be made in a prescribed form and be accompanied by a statutory declaration in a prescribed form.3 The Registrar must grant a licence if the Registrar is satisfied the applicant is entitled to be licensed under section 36 and is not prohibited from being licensed under section 37. To be entitled to a licence under section 36 an applicant must be a fit and proper person. The prescribed application form for the renewal of a licence includes statement to the effect that there had been no change in circumstances affecting eligibility to hold a licence. The prescribed statutory declaration includes a question; “ There are no other circumstances that would or might make me not a fit and proper person to hold a licence”.

3.9. The licensing regulations4 require an individual licensed as an agent to give written notice to the Registrar of any change in specified circumstances that causes “or may cause” the licensee to be prohibited from holding a licence (these include conviction for a crime of dishonesty and conviction for specified FTA offences) and which “...may result in that individual no longer being a fit and proper person to be licensed as an agent...”5

3.10. The investigation report includes a document titled “Individual Renewal Application Answers” which is stated to have been submitted on 22 February 2016. This contains information from an application and statutory declaration. The information discloses the Licensee stating he does not have any current or pending charges and that there are no circumstances that

3.11. When the Licensee submitted his application and statutory declaration he had been interviewed by the police about the indecent act allegation. He was interviewed on 27

September 2015. He had also been spoken to again on 3 November 2015 and had declined to

make a further statement. He had not been charged and he was not charged until 1 April

2016, more than 6 months after first being interviewed by the Police. The investigation report does not disclose why there was such a long delay between the initial interview and time of charge.

3.12. The investigation report does not disclose any useful information about the facts of the indecent act charge. The Police provided little assistance to the Committee’s investigator. The Licensee tells the Committee he did not commit the offence and was innocent but he took a Police offer of diversion as a pragmatic response to resolving the matter. It is implicit

in accepting an offer of diversion that the essential allegation is acknowledged and there is an

acceptance of responsibility for the offending6. If a defendant completes diversion then the law requires the charge be formally dismissed. When the charge is dismissed the defendant is deemed to have been acquitted of it.7

3.13. The New Zealand Police operate a Police diversion scheme. The investigation report does not disclose why the Licensee was offered diversion. It might have been because the Police considered the offence not to be particularly serious.

3.14. If the Licensee knew there was a “pending” charge at the time he made his licence renewal application and he said there was not, he would be making a deliberate misrepresentation which would lead to the Committee referring the matter to the READT.

3.15. The Committee does not know what the relevant Police officer said to the Licensee about a potential charge at the time the Licensee was interviewed on 27 September 2015 or when he was spoken to again on 3 November 2015. The fact he was not charged for more than 6 months from initial interview is curious and may be indicative of some difficulty in the Police investigation and decision-making process.

3.16. “Pending” is defined in the Cambridge dictionary as “about to happen” and in the Oxford dictionary as “awaiting decision or settlement”. “About to happen” is more immediate then “awaiting decision or settlement”. The Committee prefers “about to happen” as the appropriate definition for the purposes of an application for renewal of a licence.

3.17. Unless the Licensee was told a charge was going to be laid against him, or had other information from which it was reasonable for him to infer he was about to be charged, he is justified in answering “no” to a question about whether he had any pending charges. The charge is not pending unless the Licensee knows he is going to be charged or has sufficient information from which it is reasonable for him to infer (or should know) he is about to be charged.

3.18. The Licensee says that at the time he applied to renew his licence he had not been notified by the Police charges were pending. The Committee has no evidence from which it can infer he should have known he was about to be charged.

3.19. The information provided by the Police to this investigation does not establish there was a charge of doing an indecent act pending at the time the Licensee submitted his application for renewal of licence. He says he had not been notified he was to be charged. The Committee takes no further action in respect of the allegation that the Licensee failed to notify the Registrar of a pending criminal charge.

3.20. An individual who is licensed as an agent has an obligation to inform the Registrar in writing if at any time there is a relevant change in circumstances. Regulation 10(2)8 defines when a licensee must inform the Registrar of a change in circumstances. It identifies several of the specific criteria in section 37 which define when a licensee is prohibited from holding a licence. It also requires disclosure of a change in circumstances “...that...may result in that individual no longer being a fit and proper person to be licensed...”

3.21. The forms prescribed by the Regulations including the statutory declaration to be submitted with an application for a licence or renewal include questions that enquire as to whether a licensee is a fit and proper person.

3.22. The “Individual Renewal Application Answers” form provided to the Committee shows the Licensee answered “no” to a question that asked if there are any circumstances that would or might make him not a fit and proper person to hold a licence. At the time he answered the question he had been spoken to by the Police twice about allegation of an offence (of doing an indecent act) but he had not been charged.

3.23. The legislation does not give any guidance to a licensee about when a circumstance will cause or may cause (or which would or might make) a Licensee to be not a fit and proper person to hold a licence.

3.24. In some circumstances it will be obvious, such as where a licensee is convicted of a serious criminal offence (even if the offence does not involve dishonesty). However, the position is much more difficult when an allegation is made of criminal offending and that allegation is disputed by a licensee. A licensee who has done nothing wrong or believes he or she has done nothing wrong and is innocent may well be justified in concluding there has been no change in circumstances bearing on the licensee’s fitness to hold a licence. The obligation to disclose will also be affected by the seriousness of the allegation(s).

3.25. Once a charge has been laid the situation will be different, but whether an obligation to disclose is triggered still depends on the circumstances. These include the nature of the charge and the seriousness of it. A belief in innocence may also be relevant. It is unlikely the laying of a minor charge (not involving dishonesty or violence) would have bearing on whether a licensee was a fit and proper person to hold a licence.

3.26. The investigation into this matter discloses that at the time Licensee submitted his application and statutory declaration he had not been charged with an offence. The Committee does not know anything about the facts which led to the charge. It does not know what the Licensee was told by the Police when he was interviewed on 27 September 2015. It does not know what he was told when he was spoken to by the Police on 3 November 2015. It knows the Licensee says he did not know he was to be charged/a charge was pending. It does not know why the Licensee was offered diversion. It has his explanation as to why he accepted diversion.

3.27. On the evidence, the Committee is not persuaded the Licensee had an obligation to disclose there had been a change in circumstances affecting his fitness to hold a licence at the times he was interviewed/spoken to by the Police nor at the time he made his application for renewal of his licence in February 2016.

3.28. Consequently, it is not satisfied his failure to disclose he was being investigated for an offence was a breach of Regulation 10(2) and it is not satisfied that when he submitted his application for renewal of his licence he answered the change in circumstances question incorrectly and made a misleading statement. For reasons to follow the Committee has decided not to require further investigation.

3.29. The Committee takes no further action in respect of the allegation the Licensee failed to disclose a change of circumstances when he was being investigated and when he applied for renewal of his licence in February 2016.

3.30. If the Licensee was applying for renewal of his licence after being charged with the serious sexual offences the Committee considers he would be obliged to disclose the charges as a

change in circumstances. The charges and the facts underlying them is a change in circumstances which “may result” in him being no longer a fit and proper person to hold a licence. His claim of innocence and the presumption of innocence in a criminal case does not excuse disclosure where the charges are so serious.

3.31. If the Licensee is obliged to disclose the charges in answer to a question about fitness at the time of applying for renewal of his licence then he must also be obliged to disclose them pursuant to the continuing obligation to disclose circumstances which may result in him no longer being a fit and proper person to hold a licence. The Licensee is in breach of regulation

10(2) by failing to disclose to the Registrar in writing the serious sexual charges, as soon as practicable after he had been charged. These charges and the circumstances of them “may result” in him no longer being a fit and proper person to hold a licence.

3.32. However, the Committee has decided to take no further action in respect of the Licensee’s breach of Regulation 10(2) for the following reasons:

k) the Licensee did not attempt to hide the fact he was being investigated in respect of the indecent act charge or that he had been charged with the serious sexual charges. The Licensee signed a Police vetting authority on 17 March 2016 which authorised the Police to provide information about his conviction history, active charges and information about his interactions with the Police even where he had not been charged or where charges had been withdrawn. In response to this authority the Police provided information about the indecent act charge on 3 June 2016 and information about the serious sexual charges on 3 August

3.33. At the time the Licensee applied for renewal of his licence he had not been charged with any offence. On 1 April 2016 he was charged with doing an indecent act. He accepted an offer of Police diversion and when diversion was successfully completed, the charge was dismissed.

3.34. The law deems the dismissal to be an acquittal. This raises an important issue about whether a Committee is entitled to investigate the conduct leading to the charge notwithstanding completion of a criminal justice process and a deemed acquittal.

3.35. It is the view of the Committee that it is entitled to investigate conduct which has otherwise been dealt with in a criminal process. That is because the purpose of the disciplinary process is quite different from that of a criminal process. The purpose of the Act is to “promote and protect 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.”10 This purpose would be rendered ineffective if there was a bar to investigating a licensee’s conduct because that conduct had been the subject of a criminal process which resulted in either a finding of guilty or not guilty. If conduct that was the subject of a criminal process could be misconduct (which often will be the case) a Committee is entitled to investigate the conduct and refer the matter to the READT if it considers there is misconduct which should be the subject of a disciplinary hearing.

3.36. The Police have not provided any useful information about the facts of the indecent act offending. The Licensee denies the offending notwithstanding his acceptance of diversion.

3.37. The Committee currently has insufficient evidence to make any finding about whether the facts underlying the indecent act charge are such that the Licensee should be referred to the READT on a charge of misconduct.

3.38. The Committee could use its power under section 85 of the Act to compel the Police and/or the Licensee to produce any statements or documents relevant to the indecent act offending. This would give the Committee knowledge of the underlying facts and of what happened

3.39. The Committee has decided not to pursue its investigation of the underlying facts of the indecent act charge any further for the following reasons:

a) the Licensee was offered and received diversion. This indicates that the Police did not regard the offending as particularly serious;

b) the Licensee has already been subjected to a process around the cancellation of his licence;

3.40. The serious sexual offence charges which have been laid by the Police against the Licensee are of concern to the Committee.

3.41. A claim of innocence (no matter how vigorous) is not an answer to a disciplinary investigation. That there is a criminal case ongoing and a trial pending and that a defendant has a presumption of innocence and that the Crown must prove criminal allegations beyond reasonable doubt is not an answer to a disciplinary investigation.

3.42. A barrister acting for the Licensee has submitted that only convictions affect an assessment of whether the Licensee is a fit and proper person to have a licence. That submission is wrong. An assessment of fitness is not limited to considering convictions.

3.43. The Committee is entitled to inquire into the facts of the allegations of serious sexual offending and to determine whether to lay charges of misconduct and refer the Licensee to the READT. The Committee can use its power under section 85 of the Act to compel the Police and/or the Licensee to provide statements and documents relevant to the facts underlying the charges.

3.44. The Committee has given careful consideration to how it should proceed here. It can only decide to refer the Licensee to the READT if it has sufficient evidence to find a prima facie case of misconduct. It currently has insufficient evidence make that call. The options are for it to issue section 85 notices and to continue its investigation or for it to end its investigation now and to take no further action. It has decided to end its investigation now and to take no further action for the following reasons;

a) there would be a significant investment of investigator and Committee time in a further investigation;

b) the active charges report provided by the Police indicates offending occurring over the period December 2011 to May 2016. The nature of the charges suggests they have no connection with the Licensee’s work as a real estate agent;

d) there is an alternative and a simpler process available to assess the relevance of the serious sexual allegations to the fitness of the Licensee to continue to hold a licence. When he renews his license he must satisfy the Registrar he is a fit and proper person to hold a licence. To satisfy the Registrar he must provide information within his possession or control which is relevant to the underlying facts. If he does not provide that information it is the opinion of the Committee that the Registrar is entitled to find he is not a fit and proper person on the bare fact of the serious sexual allegation charges.

e) the Committee is informed by the Authority that the Licensee’s license was due for renewal in March 2017 with the renewal still pending at the date of this decision (“referred to registrar”) so that he has continued to be licensed beyond the license expiry date. It is a matter for the Registrar as to how the Authority proceeds.

3.45. The Committee’s decision to take no further action is a case specific one. If there was not an alternative process available as referred to above, it is probable the Committee would have decided to continue this investigation.

3.46. The Registrar’s action in cancelling his licence and the Committee investigation is not a “witch hunt” as alleged by the Licensee. Further, he needs to understand that being charged with serious sexual offences is a matter of legitimate concern for both the Registrar and the Committee.

3.47. The Committee has no jurisdiction to investigate a complaint by the Licensee of loss of income due to cancellation of his licence.

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 the notice given of this decision (no later than Friday, 22 December 2017) (Section 111).

4.2. For further information on filing an appeal, read Guide to Filing an Appeal at Mi ni stry of

5.1. At the Committee’s discretion, the decision will be published without the names or identifying details 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.

(1) The purpose of this Act is to promote and protect 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.

(a) regulating agents, branch managers, and salespersons: (b) raising industry standards:

(1) An individual may be licensed as an agent or branch manager if the individual satisfies the Registrar that he or she—

(e) has obtained 3 years’ experience in real estate agency work within the 10 years preceding the application to be licensed as an agent or branch manager under this Act.

(2) An individual may be licensed as a salesperson if the individual satisfies the Registrar that he or she—

(3) A company may be licensed as an agent if at least 1 officer of the company satisfies the

(a) a person who has been convicted, whether in New Zealand or another country, of a crime involving dishonesty (or of a crime that, if committed in New Zealand, would be a crime involving dishonesty) within the 10 years preceding the application for a licence:

(b) a person who has been convicted of an offence under sections 12A, 14, 17 to 22,

or 24 of the Fair Trading Act 1986, within the 5 years preceding the application for a licence:

(c) a person whose licence or certificate of approval has been cancelled within the preceding 5 years or whose licence is suspended at the time of application under the Real Estate Agents Act 1976:

(i) whose licence has, within the preceding 5 years, been cancelled under section

(e) a person subject to an order made, or a notice given, under the law of a country, State, or territory outside New Zealand, within the preceding 5 years who is prohibited from acting as an agent, branch manager, or salesperson (or equivalent) in that country, State, or territory, unless the person satisfies the Authority that he or she is a fit and proper person to hold a licence:

(f) a person who is an officer of a licensee company, a chief executive officer of a

licensee company, or a branch manager and who has been disqualified from holding a licence or whose licence has been suspended under theReal Estate Agents Act 1976:

(g) a person who is prohibited from being a director or promoter of, or being concerned or taking part in the management of, an incorporated body under the Companies Act

(h) a company, or other corporate entity or partnership, where a person concerned in its management is disqualified from being licensed in his or her own right under paragraph (a):

(2) A person is not eligible to hold an agent’s licence if he or she is an undischarged bankrupt or is subject to subpart 4 of Part 5 of the Insolvency Act 2006.

(b) be accompanied by a declaration made in the form prescribed in the Oaths and

(1) A Committee may make 1 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.

(a) a determination that the complaint or allegation be considered by the Disciplinary

(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.

(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—

(b) any other information that the appellant wishes the Tribunal to consider in relation to the appeal.

(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.

(1) The court may dismiss a charge at any time before or during the trial, but before the defendant is found guilty or not guilty, or enters a plea of guilty.

(2) The court may dismiss the charge on its own motion or on the application of the prosecutor or the defendant.

(3) A decision to dismiss a charge may be made on the basis of any formal statements, any oral evidence taken in accordance with an order made under section 92, and any other evidence and information that is provided by the prosecutor or the defendant.

(4) Without limiting subsection (1), the court may dismiss a charge if— (a) the prosecutor has not offered evidence at trial; or

(b) in relation to a charge for which the trial procedure is the Judge-alone procedure,

(c) in relation to a charge to be tried, or being tried, by a jury, the Judge is satisfied that, as a matter of law, a properly directed jury could not reasonably convict the defendant.

(6) If a charge is dismissed under this section the defendant is deemed to be acquitted on that charge.

(7) Nothing in this section affects the power of the court to convict and discharge any person.

148 Prosecutor must notify court if defendant completes programme of diversion

(1) The prosecutor must ensure that the court is notified if a defendant has successfully completed a programme of diversion (being a programme conducted in relation to any public prosecution) in respect of the offence charged.

(2) If notification is given under subsection (1), the court or the Registrar must dismiss the charge under section 147.

New Zealand Real Estate Agents Authority

Complaint No C16766 [2017] NZREAA 140 (13 October 2017)