Karlytzky - Complaint No C16151 [2017] NZREAA 187 (30 August 2017)

Last Updated: 21 June 2018

Before the Complaints Assessment Committee

Complaint No: C16151

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee : Luiza Karlytzky (10007850)

Decision finding unsatisfactory conduct asking for submissions on orders in the matter of

Luiza Karlytzky

30 August 2017

Members of Complaints Assessment Committee: CAC 413

Chairperson: Garry Chapman Deputy Chairperson: Sarah Eyre Panel Member: Barbara Mckenzie

Complaints Assessment Committee

Decision finding unsatisfactory conduct asking for submissions on orders

1. The Complaint

1.1. On 13 September 2016 the Real Estate Agents Authority (the Authority) received a complaint against Luiza Karlytzky (the Licensee) from the Complainant.

1.2. The Licensee is a licensed Salesperson under the Real Estate Agents Act 2008 (the Act) and at the time of conduct was engaged by the Agency.

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

1.4. The details of the complaint are that the Complainant was the purchaser of the Property. He had two complaints about the Licensee’s conduct. First, the Complainant stated he had made an offer of $20,000.00 below the RV, based on the RV advertised on Trade Me. It was subsequently found that this RV was incorrect. Secondly, the Complainant complained that the Property was advertised with a heat pump when it does not actually have a heat pump.

1.5. In particular, the Complainant advised that he considered the Licensee misrepresented the Property and that the incorrect RV meant that he paid more than he had intended to, as he actually paid $20,000.00 over the RV.

1.6. The Complainant requested a remedy, being:

(a) Compensation for his financial loss as a result of the Licensee’s error.

1.7. The Licensee responded to the complaint against her. In particular, the Licensee commented that:

(a) The wrong RV was listed on Trade Me by mistake by a new employee, but that as soon as she was made aware of the error this was corrected. The Licensee also noted she had listed it correctly on the listing agreement and that the Complainant could have canceled the agreement after he found out about the incorrect RV.

(b) There had been a mix up between the heat pump and the HRV and she considered that the Complainant would have realised this when he initialed Schedule 1 of the Agreement for Sale and Purchase which only lists the HRV system.

2. What we decided

2.1. On 27 August 2016 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 78(a) of the Real Estate Agents Act

2008 (the Act).

2.2. On 20 June 2017 the Committee held a hearing on the papers and considered all the information that had been gathered during the inquiry.

2.3. The Committee found the Licensee has engaged in unsatisfactory conduct under section

89(2)(b) of the Act.

3. Our reasons for the decision

3.1. The Committee found, pursuant to section 72 of the Act, that the Licensee’s actions fall short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee.

3.2. The Committee concluded:

(a) The repeated reference to the heat pump in advertising the Property is a breach of

Rule 5.1, and is unsatisfactory conduct;

(b) The wrong RV being written in the Trade Me listing was a simple administrative error and does not require any further action by the Committee, as it does not amount to unsatisfactory conduct.

The repeated reference to the heat pump in advertising the Property is a breach of Rule 5.1, and is unsatisfactory conduct

3.3. Rule 5.1 requires Licensees to “exercise skill, care, competence and diligence at all times when carrying out real estate work”.

3.4. The Committee finds that the Licensee did not exercise skill, care or diligence when she referred in at least two separate types of advertising to the Property having a heat pump. The advertising for a property is a critical aspect of a licensee’s work and all licensees are aware of the importance of ensuring accuracy and not providing misleading or incorrect information. The Licensee should therefore have been careful and diligent in checking her advertising against the information she had about the Property.

3.5. The Committee finds that the simple fact that the Licensee incorrectly stated in both the Trade Me listing and the colour flyer for the Property that it had a heat pump, demonstrated a lack of diligence and a failure to carefully check details about the Property. It is notable that the reference to a heat pump is not just a box that has been ticked, but it is included in a sentence that also refers to the HRV system. It clearly stated in the Agency listing agreement that there was an HRV system and it did not state there was a heat pump - a simple check of her own records would have made this clear to the Complainant.

3.6. In making this finding the Committee has had regard to the Licensee’s submissions that because the schedule to the Agreement of Sale and Purchase listed an HRV system and no heat pump the Complainant should have been aware of that. However, while it is correct that an HRV system was listed in the Agreement for Sale and Purchase that does not justify a licensee providing incorrect information on two occasions in advertising the Property. It in fact further illustrates the lack of attention the Licensee has paid to ensuring her documentation is correct and consistent.

3.7. The Licensee’s reference to a heat pump in the advertising for the Property is a breach of Rule

5.1 and the Committee finds this is low-level unsatisfactory conduct.

The wrong RV being written in the Trade Me listing was a simple administrative error and does not require any further action by the Committee, as it does not amount to unsatisfactory conduct

3.8. As noted above, Rule 5.1 requires licensees to “exercise skill, care, competence and diligence at all times when carrying out real estate” and Rule 6.4 requires licensees to “not mislead a

customer or client, nor provide false information”.

3.9. The Committee has had very careful regard to the complaint that the Licensee misled the Complainant and/or failed to exercise skill, care and competence by incorrectly recording the RV on the Trade Me listing. The Licensee has acknowledged that the wrong RV was listed, but has noted that this was an administrative error and was changed as soon as she was made aware of it.

3.10. The Committee notes that the RV was correctly listed on the printed colour brochures and other sale documentation but that it was only the Trade Me listing that had the RV recorded as $480,000.00 rather than $440,000.00. The Committee accepts that this was a simple error and that it could be relatively easily made as it was a numerical entry error. This contrasts with the advertising of a heat pump which was done by adding a whole sentence to the listing incorrectly. This error also contrasts with the heat pump as it was only an error made on one occasion and it was a fact that was easily discoverable by the Complainant within seconds by checking other online records.

3.11. For these reasons the Committee finds that this is a simple error and not a breach of Rules

5.1 or 6.4. Not every single mistake will be a failure to exercise skill or care as even the most careful person could make a small mistake. Accordingly this was not a breach of Rule 5.1. The Committee also finds it is not a breach of Rule 6.4 as it was not misleading, due to the fact it was corrected as soon as it was spotted and easily able to be checked by the Complainant.

3.12. Finally, the Committee has had regard to the Complainant’s assertions that this error caused him to lose significant money by paying more than he intended to. However, the Committee is not persuaded by that complaint as it is clear the Complainant became aware of the RV before the agreement was unconditional and could potentially have mitigated his possible loss by addressing the issue at that time. Furthermore, if the Complainant’s sole criterion for determining at what level he should make an offer for the Property was the RV, it would be expected that he would double-check this. The Committee finds that the Licensee’s conduct in relation to the RV was not misleading nor was it a failure to exercise skill, care, competence and diligence.

3.13. The Committee will be taking no further action on this aspect of the Complaint.

4. Request for submissions on orders

4.1. The Complainant is to file submissions (if any) on what orders should be made within ten working days (by 13 September 2017) from the date of this decision. These submissions, if any, will then be provided to the Licensee, with a timeframe for filing final submissions.

4.2. The Committee requires the CAC Administrator to obtain a record of any previous disciplinary decision in respect of the Licensee and, if any such decision exists, provide it to the Committee.

5. What happens next

5.1. The Committee will consider all submissions and issue a decision on orders.

Your right to appeal

5.2. The Committee considers that the 20 working day appeal period does not commence until it has finally determined this complaint by deciding what orders should be made, if any.

Publication

5.3. The Committee has deferred making any decision on publication until its hearing to decide what orders, if any, should be made.

Signed

Sarah Eyre

Date: 30 August 2017

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 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.

(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.

(2) 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

(c) 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 1 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 Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012 are: include relevant provisions from the Rules.

Rule 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.

Rule 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.