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New Zealand Real Estate Agents Authority |
Last Updated: 14 December 2017
Before the Complaints Assessment Committee
Complaint No: C15664
I n the matter of
Part 4 of the Real Estate Agents Act 2008
Licensee 1: Dean Cations (10046427)
The Agency: Mike Pero Real Estate Limited (10050480)
Decision on Orders
26 June 2017
Members of Complaints Assessment Committee: CAC409
Chairperson: Jane Ross
Deputy Chairperson: Peter Brock
Panel Member: Josephine O'Donnell
Complaints Assessment Committee
Decision on orders
1. Background
1.1. On 31 March 2017 the Complaints Assessment Committee (the Committee) found Licensee Dean Cations (the Licensee) and Mike Pero Real Estate Limited (the Agency) guilty of unsatisfactory conduct under section 89(2)(b) of the Real Estate Agents Act 2008 (the Act).
1.2. The Complainant, the Licensee and the Agency were given the opportunity to make submissions to the Committee on orders.
Submissions
1.3. The Complainant submitted that:
a) the Licensee apologise s to her for his conduct which she considers fell short of the standard she was entitled to receive from him as a reasonable member of the public.
b) the Licensee undergoes training or education in methods of effective communication.
c) the Licensee cancels the commission of $10,867.79 taking into account that she has suffered the loss in the sum of $16,256.09 being the sum she was required to credit the purchaser on settlement of the sale as a result of the Licensee’s conduct.
d) the Licensee pays the costs she incurred in relation to her complaint being a solicitor’s invoice for $1,500.00.
1.4. The Licensee submitted via counsel that:
a) a censure would be a more than adequate punishment in ligh t of the Committee’s finding that he was telling the truth and that his failure was solely in not having a record so that the Complainant could not deny the truth of the matter.
b) In respect of the Complainant’s submissions for cancellation of commission and payment of costs, he submits that she should not be rewarded for making untruthful allegations against him.
1.5. The Agency submitted via counsel that:
d) the complaint arose from the Complainant making untruthful allegations for which she should not be rewarded.
e) in respect of the Complainant’s claim for cancellation of commission, it is not accepted that the Complainant lost the sum of $16,256.09. The Agency considers that if the purchasers had realized the paths and driveway needed to be fixed, then in all likelihood they would not have offered the price they did. Also, in offering the price they did, the purchasers would have seen and taken into account the pergola, which the Complainant informs she spent the insurance money on, which no doubt improved the desirability of the Proper ty and therefore
the price they were prepared to pay for it.
g) if, contrary to counsel’s submissions, the Committee is minded to order payment of, or a contribution to, the Complainant’s lawyer’s fee, that such contribution should take into account that the majority of the Complainant’s allegations were rejected and the Licensee and Agency incurred costs in combatting the same. For this reason it submits that if there is to be any payment towards the Complainant ’s lawyers fee it should be comparatively modest.
2. Orders
The Licensee:
2.1. Having made a finding of unsatisfactory conduct against the Licensee, the Committee decided to make the following orders pursuant to s93 of the Act:
a) make an order censuring the Licensee1;
The Agency:
Having made a finding of unsatisfactory conduct against the Agency, the Committee decided to make the following orders pursuant to s93 of the Act:
a) make an order censuring the Agency2;
3. Our reasons
The Licensee:
3.1. The Committee made a finding that it was more probable than not that the Licensee did ask the Complainant about private insurance claims at the Property and that his error was not noting that information in writing and having the vendor or her lawyer verify that information at the time the agency agreement was signed. The Committee does not consider ordering the Licensee to apologise to the Complainant to be an appropriate orde r in view of its finding
that the Licensee did ask for the information the Complainant subsequently denied supplying.
3.2. The Complainant requested that the Licensee undergo training or education to ensure that in future all relevant information (including but not limited to EQ claims and issues) relating to a property is obtained from vendor clients and that clear and comprehensive instructions are obtained from a vendor as to how that information is dealt with in an ASP. The Committee considers the relevant i nformation was asked for and obtained by the Licensee but that he
1 Section 93(1)(a) of the Act
2 Section 93(1)(a) of the Act
3 Section 93(1)(g) if the Act
failed to verify that information in writing. It does not consider a lack of training or education to be the issue here, rather a lack of care and detail in breach of Rule 5.1. It does consi der an order of a censure to be an appropriate penalty and a reminder to the Licensee to be diligent in his future practice in this respect.
3.3. The Complainant requests that the Licensee cancel the commission of $10,867.79 on the basis she has suffered a loss in the sum of $16,256.09 on settlement of the sale due to the Licensee’s conduct. The Committee notes that the Licensee does not have the power to cancel the commission as the agreement to pay commission is between the Complainant and the Agency (not the Licensee) as per the agency agreement. The Licensee is paid a share of that commission by the Agency in the event of an unconditional sale. The Committee does have the power to “...reduce, cancel or refund fees charged for work where the work is the subject of the complaint. “4
3.4. If there was a causative connection between the omission (and lack of care) which has resulted in the unsatisfactory conduct finding the Committee could order the Licensee to refund his share of the commission. However, there is no causative connection. He asked the correct question but was not given the correct answer by the Complainant. Failing to record the answer in writing or to have the Complainant verify it is not causative of any loss she has suffered.
3.5. The Committee finds no justification to order any refund of commission.
3.6. The Complainant submits an invoice of $1,500 from her lawyer, being the cost of advice in relation to the complaint, and requests the Licensee reimburse her for that cost. As already noted above, the Committee’s finding is that the Licensee more probable than not did ask for the relevant information at the time the agency agreement was signed and was misinformed by the Complainant. Put another way, the dispute between the Complainant and her purchasers which resulted in her having to refund the insurance monies she ha d received, was of her making. As such the Committee does not find the Licensee responsible for the additional legal cost and does not make an order for reimbursement of those costs.
3.7. The Committee has noted and considered the Licensee has no prior disciplinary history.
3.8. In all the circumstances including the omission here being a failure to record and have the Complainant vendor verify information, rather than a failure to obtain the in formation, the Committee does not consider a penalty of a fine is necessary.
The Agency:
3.9. The Committee found that the Agency’s Sale’s Manager Checklist in respect of the agency agreement for the Property contained no information other than a tick against “Agency Agreement” and that information pertaining to earthquake claims at the Property was , for the most part, passed on verbally from the Licensee. The Committee considers the Agency did not have an adequate system in place to deal effectively with earthquake information at the time the Property was listed and sold. Further, the Committee found the Agency’s supervision of the Licensee was not effective as any error made, or incorrect information given, at the time the agency agreement was signed was not noted and was carried through to the ASP in the absence of an independent check by the Agency .
3.10. The Licensee did not adequately record information from the Complainant and the Agency
4 Section 93 (1)(e) of the Act
did not check that he had, did not require that he do so and did not provide a means of doing so on the agency agreement or in the CRM storage system. The Committee considered the Agency negligent in not having an effective system in place tailored for Canterbury Region property sales some six years after the first major earthquake in Christchurch and the Committee’s order of a censure is in direct relation to the Agen cy’s failure of supervision and systems in this respect.
3.11. The Agency advised it had introduced a new agency agreement form in July 2016 that provides for specific EQC and insurance information to be recorded on the agency agreement signed by vendor clients, and also provided detail of the Agency’s procedures for processing that information. The Committee has now been provided with a copy of th e new agency agreement form but considers it is still inadequate. The Complainant vendor was not “waiting on any payments from EQC/Insurance?” as she had been paid out, she could rightly say “No” to “Is there a land claim on the property?” as she had settled that claim , there is no provision for assignment of payments, or for information relating to land remediation, l and flood vulnerability or liquefaction vulnerability. There is also no clause warranting that the vendor has made full disclosure of all known claims, repairs and payments related to earthquake damage at the property as would have covered the situation the Licensee found himself in with the Complainant at the Property. The Committee strongly suggests the Agency takes appropriate advice and redrafts the section of its agency agreement entitled “EQC/Insurance” to avoid a repeat of the situation where incorre ct information or an omission at the point of
an agency agreement being signed, is carried through the “checking system” to an ASP.
3.12. The Committee found the Agency had not provided effective systems and had not provided adequate supervision in breach of Rul e 8.3. However, in setting the level of fine in its orders, the Committee does take account of the Agency’s effort to address the issue of earthquake information in its agency agreement and systems, and the fine of $2,000 is less than it would have been had there not been an attempt to address the issue .
3.13. The Complainant requests that an appropriate system be put in place to ensure all relevant information relating to a property being listed for sale is obtained from vendor clients. The problem here was a failure to properly record the information received and have the Complainant verify it, rather than a failure to ensure the relevant information is obtained. The Committee has no power to make an order requiring an appropriate system or systems be
put in place and has considered the attempt made by the Agency to fix the problem recording and verifying information, when fixing the level of fine.
3.14. To the extent the request to cancel commission applies to the Agency the Committee does not order any refund for the same reasons it was not appropriate to order the Licensee to make a refund of fees charged (his share of the commission).
3.15. The Committee found it more probable than not that the Licensee did ask the Complainant the appropriate questions in respect of earthquake damage, claims and repairs at the Property when the agency agreement was signed but that the Complainant failed to advise him of the payment she had received for the land claim at the Property. Accordingly , the Committee does not consider the Agency liable to reimburse the Complainant for the additional legal expense incurred by her as a result of the complaint and does not make an order to that effect.
3.16. The Committee notes two prior disciplinary finding against the Agency. One relates to the way the Agency dealt with a complaint and has no relevance to the situation here. One relates to a failure of system where there was no system in place to check multi ple copies of an agreement. The failure here is also a failure to have an appropriate system in place to
record and verify information about earthquake claims. The prior finding of a system(s)
failure has been taken into account when fixing the level of fine.
Principles considered
3.17. When determining whether or not to make an order under Section 93(1), the Committee has also had regard to the functions which the imposition of a penalty usually must serve in professional disciplinary proceedings.
(a) promoting and protecting the interests of consumers and the public generally (section
3(1))
(b) maintaining professional standards
(c) punishing offences
(d) rehabilitating the professional.
3.18. The Committee acknowledges that, when making an order under Section 93, the order/s made must be proportionate to the offending and to the range of available orders.
Promoting and protecting the interests of consumers and the public
3.19. Section 3(1) of the Act sets out the purpose of the legislation. The principal 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."
3.20. One of the ways in which the Act states it achieves this purpose is by provid ing accountability through an independent, transparent and effective disciplinary process (Section 3(2) ).
Maintaining professional standards
3.21. This function has been recognised in professional disciplinary proceedings involving other professions (for example, in medical disciplinary proceedings: Taylor v The General Medical Council (1990) 2 A11 ER 263; and in disciplinary proceedings involving valuers: Dentice v The Valuers Registration Board (1992) 1 NZLR 720.
3.22. Although different professions use different descriptions of the nature of the unprofessional or incompetent conduct that will attract disciplinary charges, there is a common thread of scope and purpose. The aim is to enforce a high standard of propriety and professional conduct. Professions seek to:
• protect both the public and the profession itself against persons unfit to practi ce
• enable the profession or calling, as a body, to ensure that the conduct of members
conforms to the standards generally expected of them.
3.23. In the Committee's view, maintaining professional standards is also a function of the disciplinary processes under the Act.
Punishment
3.24. The Committee accepts that a penalty in a professional discipline case is primarily about
maintaining standards and protecting the public. However, in the Committee's view there is also an element of punishment – indicated by the power the Committee has to impose a fine (Section 93(1)(g)); or make an order of censure (Section 93(1)(a)). The element of punishment has been discussed in the context of other professional disciplinary proceedings (see Patel v Dentists Disciplinary Tribunal (High Court, Auckland, CIV 2007-404-1818 Lang J 13
August 2007)).
3.25. At paragraph [27]-[28], the judge said:
“Such penalties may be appropriate because disciplinary proceedings inevitably involve issues of deterrence. They are designed in part to deter both the offender and others in the profession from offending in a like manner in the future. I therefore propose to proceed on the basis that, although the protection of the public is a very important consideration, nevertheless the issues of punishment and deterrence must also be taken into account in selecting the appropriate penalty to be imposed...”
Where appropriate, rehabilitation of the professional must be conside red
3.26. The Committee regards its power to make an order requiring a Licensee to undergo training or education (Section 93(1)(d)) as indicating that rehabilitation is a function of professional disciplinary processes under the Act.
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 Monday, 24 July 2017 (section 111).
4.2. For further information on filing an appeal, read Guide to Filing an Appeal at Mi n i s try o f
J u s ti ce -Tri b un als ( w w w.j u stice . gov t. nz / trib u nal s).
5. Publication
5.1. The Committee directs publication of its decision. The decision will be published without the names or identifying details of the Complainant (including the address of the Property), and any third parties. The decision will state the name of the Licensee and the Agency for which they work or worked for at the time of the conduct.
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 publ ication. 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 standards and that is in the public interest.
Signed
Jane Ross
Date: 26 June 2017
Appendix: 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 i t 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.
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
(d) 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 thi nks 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 Tri bunal 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.
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