Cunningham - Complaint No C17051 [2017] NZREAA 99 (27 June 2017)

Last Updated: 20 June 2018

Before the Complaints Assessment Committee

Complaint No: C17051

In the matter of

Part 4 of the Real Estate Agents Act 2008

and

Licensee 1: Lorraine Cunningham (10028830)

Licensee 2: Lynne Baker (10016598)

The Agency: Edge Realty Whakatane Limited t/a Edge Realty

(20039227)

Decision finding of unsatisfactory conduct – asking for submissions on orders

27 June 2017

Members of Complaints Assessment Committee: CAC410

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

Complaints Assessment Committee

Decision finding unsatisfactory conduct – asking for submissions on orders

1. The Complaint

1.1. On 16 September 2016 the Real Estate Agents Authority (the Authority) received a complaint from Lorraine Cunningham (Licensee 1) about the conduct of a licensee from another agency (Licensee X).

1.2. The thrust of the complaint was that Licensee X sold a property for clients in disregard of a sole agency agreement arranged by Licensee 1. Licensee 1 considered that she was duty- bound to raise the complaint, having regard to her obligations under rule 7.1 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules). She considered that Licensee X had been guilty of unsatisfactory conduct.

1.3. On examining the complaint, the Authority decided not to refer Licensee X to a Complaints Assessment Committee. On the contrary, it identified concerns about Licensee 1’s conduct. It decided to initiate an own motion investigation into the conduct of Licensee 1, together with her supervising agent, and her agency. The Authority is authorised to do this by section

12(1)(k) of the Real Estate Agents Act 2008 (the Act).

1.4. The Authority referred the matter to Complaints Assessment Committee 410 (the

Committee). The Committee considered the matter under section 79 of the Act. On 19

January 2017 it decided that it would inquire into the conduct of Licensee 1, together with that of Lynne Baker (Licensee 2) and Edge Realty Whakatane Limited (the Agency). An investigator was duly appointed pursuant to section 82(2) of the Act, to assist it.

1.5. Licensee 1 is a licensed salesperson under the Act. At the time of conduct she was engaged by the Agency, which is a company agent. Licensee 2 is a licensed agent under the Act. She was Licensee 1’s eligible officer, responsible for her supervision.

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

1.7. Licensee 1 was endeavouring to identify a property for a Mr and Mrs Y to purchase. They will be referred to herein as her customers (the Customers), despite Licensee 1 (incorrectly) describing them in her complaint to the Authority as her clients.

1.8. Licensee 1 undertook cold-calling in the street where the Property was situated, hoping to find vendors willing to sell to the Customers. When she door knocked at the Property on 24

August 2016, the owners indicated that they were looking to sell, although not quite being ready to do so. They were, however, willing to have prospective purchasers look through the Property. The owners will be referred to as the Vendors.

1.9. After the door knock, events moved quickly. On the same day, 24 August, Licensee 1 had the Vendors sign a seven-day sole agency agreement in favour of the Agency. The Vendors thus became the clients of Licensee 1 and the Agency. The listing price was $725,000.00. One of the Customers inspected the Property later that day.

1.10. On the following day, 25 August, both Customers inspected the Property. One of the Vendors told Licensee 1 that they had invited other agencies to look through the Property. Licensee 1 told them that this was not allowed on account of the sole agency agreement, and an argument ensued.

1.11. On 27 August, the Customers again inspected the Property.

1.12. On 29 August, the Customers offered to purchase the Property for $725,000.00, its listing price. The Vendors told Licensee 1 that there was another prospective purchaser interested in buying the Property. Licensee 1 suspected that this other prospective purchaser had been

introduced by another agency. The Vendors nonetheless said that they would consider the

Customers’ offer.

1.13. On 31 August, the Vendors advised Licensee 1 that on reflection, they now wanted

$750,000.00 for the Property. Licensee 1 told them that they were being highly unethical to raise their price.

1.14. On 1 September, Licensee 1 told the Vendors that the Customers no longer wished to purchase the Property. The Vendors responded by saying that the Customers could have the Property for $735,000.00. Licensee 1 told them that the sale price had to be $725,000 as earlier “agreed upon”. The Customers then affirmed their decision not to proceed with the purchase.

1.15. That same day, 1 September, Licensee X negotiated an unconditional sale of the Property for the Vendors.

1.16. On 5 September, the Vendors advised Licensee 1 of the identity of Licensee X. On the same day, one of the Agency’s directors emailed the branch manager of Licensee X’s agency, alleging interference with the Agency’s sole agency agreement. This was followed up with another email message on 9 September, in which the grievance of the Agency about X and his agency was pursued further. The Agency received a response on 15 September, which it considered unsatisfactory.

1.17. The complaint to the Authority from Licensee 1 (apparently on behalf of the Agency as well as herself) was sent to the Authority the following day. In that complaint Licensee 1 submitted that Licensee X should be reprimanded, and their agency ordered to reimburse the Agency lost commission, or failing that the Vendors should pay. She submitted that Licensee X and/or their agency should apologise to the Customers.

1.18. It should be noted that one of the Customers held an important civic position in the district, and that one of the Vendors was aspiring to replace them in that position.

1.19. When first considering this case, the Committee identified a range of concerns about the conduct of Licensee 1, Licensee 2, and the Agency. These have been consolidated by the Committee into the following areas of concern:

(i) Compliance with the Fair Trading Act 1986 (the FTA)

(ii) The timely provision of a Comparative Market Appraisal (CMA)

(iii) Incompleteness of the agency agreement

(iv) Accuracy of advice to the Vendors about whether they could increase their asking price

(v) Accuracy of advice to the Vendors about whether other agencies could inspect the

Property

(vi) The adequacy of the supervision of Licensee 1

1.20. Licensee 1 responded to the Authority’s complaint. In essence, she said that although she has a long and unblemished record in real estate, of which she is proud, in this case mistakes were made about which she is very embarrassed and contrite. She said that she was dealing with the strong personalities referred to in paragraph 1.18 above, and the sale process was time pressured. She said that she should have slowed down the process and taken the advice of her supervisor, Licensee 2.

1.21. The areas of concern listed in paragraphs 1.19(i)-1.19(v) apply to Licensee 1. In her response she admitted fault, or did not deny fault, in relation to all those areas of concern.

1.22. Licensee 2 responded to the complaints on her own behalf and that of the Agency. In essence, she said that the case was exceptional and unfortunate, because both she and

Licensee 1 work according to high standards, as their long respective histories in real estate practice attest. She regrets that Licensee 1 did not contact her for assistance, and said that the Agency has implemented procedures to ensure that there is no recurrence of the faults which occurred.

1.23. The response from Licensee 2 on behalf of the Agency does not specifically address the areas of concern numbered in paragraphs 1.19(i)-1.9(vi) above, but there is no denial of fault in relation to them.

1.24. The Committee’s investigator unsuccessfully attempted to engage the Customers and Vendors. He did not contact Licensee X or their agency, because the issues the Committee was called upon to decide only relate to the conduct of Licensee 1, Licensee 2, and the Agency. The Committee was not called upon to judge the conduct of Licensee X or their agency. The Committee’s decision is based solely on evidence provided by Licensee 1, Licensee 2, and the Agency.

2. What we decided

2.1. On 14 June 2017 the Committee held a hearing on the papers and considered all the information that had been gathered during the inquiry.

Licen see 1

2.2. The Committee determined under section 89(2)(b) of the Act that it has been proved, on the balance of probabilities, that Licensee 1 has engaged in unsatisfactory conduct.

2.3. Specifically, it determined that Licensee 1 had:

(i) Breached the “uninvited direct sale agreement” provisions of the FTA. As a result, she breached the requirement of Rule 5.1 to exercise skill, care, competence and diligence when carrying out real estate agency work;

(ii) Failed to provide the Vendors with a CMA by the time the agency agreement was entered into. As a result, she breached Rules 10.1 and 10.2 which set out the requirements of CMAs;

(iii) Failed to ensure that the agency agreement was complete. As a result, she breached Rule 5.1 already referred to, and also Rule 9.9 which requires that all material particulars have been inserted into agency agreements before they are submitted for signature;

(iv) Incorrectly advised the Vendors that they were not permitted to demand a higher price for the Property than they had previously advised that they would accept. As a result, she breached, firstly, Rule 5.1 already referred to, secondly, Rule 6.4 which prohibits licensees from misleading clients, and thirdly, Rule 9.1 which requires licensees to act in the best interests of their clients, and according to their instructions, unless to do so would be contrary to law;

(v) Incorrectly advised the Vendors that the sole agency agreement precluded other agencies from inspecting the Property. As a result, as in paragraph 2.3(iv), she breached Rules 5.1, 6.4, and 9.1.

2.4. As a result of the breaches of the Rules above, the Committee found Licensee 1 guilty of unsatisfactory conduct under section 72(b) of the Act, for carrying out real estate agency work that contravened a provision of the Rules.

2.5. The Committee also found Licensee 1 guilty of unsatisfactory conduct under section 72(a) of the Act, because her work fell short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee. Furthermore, in terms of Section

72(d), the Committee found she carried out real estate agency work that would reasonably

be regarded by agents of good standing as being unacceptable.

Licen see 2

2.6. The Committee determined under section 89(2)(b) of the Act that it has been proved, on the balance of probabilities, that Licensee 2 has engaged in unsatisfactory conduct, by failing to properly supervise Licensee 1.

2.7. Specifically, it determined Licensee 2 carried out real estate work that in terms of section

72(b) of the Act contravened a provision of the Act, namely section 50 of the Act.

T h e Ag en cy

2.8. The Committee determined under section 89(2)(b) of the Act that it has been proved, on the balance of probabilities, that the Agency has engaged in unsatisfactory conduct.

2.9. Specifically, it determined that the Agency had:

(i) Breached the “uninvited direct sale agreement” provisions of the FTA. As a result, it breached the requirements of Rule 5.1;

(ii) Failed to provide the Vendors with a CMA by the time the agency agreement was entered into with them. As a result it breached Rules 10.1 and 10.2 already referred to;

(iii) Failed to ensure that the agency agreement was complete. As a result it breached

Rules 5.1 and 9.9 already referred to;

(iv) Failed to ensure that Licensee 1 was properly supervised and managed. As a result it breached section 50 of the Act and Rule 8.3, which provides that agents acting as businesses must ensure that all salespersons employed by them are properly supervised and managed.

2.10. As a result of the breaches of the rules just referred to, the Committee found the Agency guilty of unsatisfactory conduct under section 72(b) of the Act, for carrying out real estate agency work that contravened a provision of the Act and the Rules. [A company agent such as the Agency is a licensee in terms of section 72 of the Act, having regard to the definitions of licensee and agent in section 4 of the Act.]

2.11. The Committee also found the Agency guilty of unsatisfactory conduct under section 72(a) of the Act, because its work fell short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee.

3. Our reasons for the decision

The Fair Trading Act

3.1. Section 36K of the FTA defines the meaning of an “uninvited direct sale agreement”. For current purposes it is, “... an agreement for the supply, in trade, of goods or services to a consumer... that is made as a result of negotiations... between a supplier and consumer... where the negotiations take place between the consumer and the supplier in each other’s presence, in the consumer’s home... where the consumer did not invite the supplier to come to that place for the purposes of entering into negotiations relating to the supply of those goods or services.” [It is noted that the definition also embraces approaches to consumers in their workplaces and by telephone.]

3.2. The circumstances of this case fall within the above definition, because an agreement for the supply of services was entered into in the Vendors’ home, where they had not invited Licensee 1 to come to the home for that purpose. Licensee 1 was acting on behalf of the Agency, therefore the Agency was required to comply with the requirements of the FTA. For

her part, Licensee 1 had a duty under Rule 5.2 to know the law, and a duty under Rule 5.1 to apply the law.

3.3. Section 36L of the FTA sets out a number of disclosure requirements that suppliers must meet when entering into uninvited direct sales agreements. Amongst other things, section

36L(2)(a)(ii) of the FTA requires that the supplier must ensure that on the front page of the agreement there is a summary of the consumer’s right to cancel the agreement under section

36M(1) of the FTA. Section 36M(1)(a) of the FTA provides that a consumer may cancel an uninvited direct sale agreement by giving notice to the supplier within 5 working days after the date on which the consumer receives a copy of the agreement. Section 36M(1)(b) of the FTA also provides for the right of cancellation at any time if the supplier has failed to comply with section 36L of the FTA.

3.4. In this case, the cancellation rights of the Vendors were not summarised anywhere in the agency agreement. Therefore section 36L of the FTA was not complied with. [It is noted that had the sole agency agreement extended beyond 7 days the Vendors would therefore have been able to cancel it at any time.]

3.5. Section 36L(3) of the FTA also provides that the supplier must give the consumer oral notice, before the agreement is entered into, of the consumer’s right to cancel the agreement within

5 working days, and how the consumer may do that. Licensee 1 did not do that. [Section

36M(2) of the FTA provides that cancellation may be expressed in any way (including oral or written) that shows the intention of the consumer to cancel or withdraw from the agreement.]

3.6. In summary, neither Licensee 1 nor the Agency ensured that there was compliance with the FTA, because the written summary of cancellation rights was not provided to the Vendors, and the oral notice of the right of cancellation was not provided.

3.7. Both Licensee 1 and the Agency were undertaking real estate agency work in relation to the transaction. Both had the obligation under Rule 5.1 to exercise skill, care, competence and diligence at all times. Both breached that obligation as a result of non-compliance with the FTA. In the case of the Agency, it does not matter that it was expecting Licensee 1 to ensure compliance with the FTA. It was the Agency which entered into the agency agreement with the Vendors, not Licensee 1. Licensee 1 was acting on its behalf. The Agency had final responsibility to ensure compliance with the FTA. In the case of Licensee 1, although she was working on behalf of the Agency, the requirements of the Rules applied to her. Although, strictly speaking, it was the Agency rather than she who breached the FTA (because the Agency was the supplier), she nonetheless was required by the Rules to know the law and apply it by exercising skill, care, competence and diligence.

Comparative market analysis

3.8. A CMA was required to be provided to the Vendors before or at the same time the agency agreement was entered into. It was not. In fact no CMA was provided to the Vendors by the Agency at any time. This breached Rules 10.1 and 10.2.

3.9. The above rules place the obligation of compliance on both the agent entering into the agency agreement (the Agency), and on any licensee employed by the agent (Licensee 1).

3.10. Therefore both the Agency and Licensee breached Rules 10.1 and 10.2.

Incompleteness of agency agreement

3.11. The seven-day sole agency agreement between the Agency and Vendors was incomplete in four respects:

1. It did not contain a summary of cancellation rights under the FTA on the front page, as already discussed;

b) Clauses requiring initialing by the Vendors were not initialed;

100. The entire terms and conditions section of the agreement was deleted but nothing was inserted in its place;
     

4. It does not make it clear that the agreement applied only to the Customers as it should have, as Licensee 1 has admitted was intended.
   

3.12. This incompleteness breached Rule 9.9, which requires all material particulars to be included in the agency agreement. That in turn indicated a breach of the requirements under Rule 5.1 of skill, care, competence and diligence.

3.13. Both Licensee 1 and the Agency are liable for these breaches, for equivalent reasons to those discussed in paragraph 3.7.

Incorrect advice about whether Vendors could increase asking price

3.14. The Customers made an offer to the Vendors. A process of negotiation ensued. In any process of negotiation it is open to parties to change their positions before a final agreement is reached, even if that is viewed as backsliding or reneging on a previously stated position. Although the Vendors had previously clearly signaled to Licensee 1 that they would be prepared to sell for $725,000.00, they were perfectly entitled to change their minds during the course of the negotiations, and increase their asking price. That might understandably have frustrated Licensee 1, and annoyed the Customers, but it was nonetheless the Vendors’ prerogative to do so.

3.15. It was therefore incorrect of Licensee 1 to tell the Vendors that it was not open to them to do that. She thereby breached the requirements of Rule 9.1 to act in the clients’ best interests and act in accordance with their instructions. She also breached Rule 6.4, which states that a licensee must not mislead a client or provide false information. Licensee 1 also breached the skill and competency requirements of Rule 5.1.

3.16. Arguably, given that Licensee 1 was acting on behalf of the Agency, the latter should also be held responsible for the incorrect advice given to the Vendors. In respect of this area of complaint however, the Committee views the transgression as personal to Licensee 1, and so exercises its discretion under section 80(2) of the Act to take no further action against the licensee (being the Agency), on the grounds that further action is inappropriate.

Incorrect advice about the right of other agencies to inspect the Property

3.17. Licensee 1 told the Vendors that it was unethical for them to allow other agencies to inspect the Property during the life of the sole agency agreement. That was incorrect. There was nothing contained in the sole agency agreement to prohibit that. The Vendors were at liberty to invite inspection by other agencies, and those other agencies were at liberty to inspect. It was perfectly reasonable for the Vendors to invite Licensee X to inspect the Property. The sole agency agreement was for seven days only, and was put in place specifically to enable the Customers to inspect the Property. [Generally, sole agency agreements, whatever their duration, do not prevent clients from inviting into their homes whomever they wish, including other agencies.]

3.18. By giving the incorrect advice to the Vendors, Licensee 1 breached Rules 5.1 (skill and competency), 6.4 (not to mislead), and 9.1 (best interests).

3.19. With regards to the Agency, the Committee considered the same view and considerations apply to this area of the complaint as are referred to in paragraph 3.16, and so no finding is made.

Supervision

T h e Ag en cy

3.20. Rule 8.3 requires that agents operating as businesses must ensure that all employed salespersons are properly supervised and managed. Section 50 of the Act provides that proper supervision and management must be sufficient to ensure that the salespersons’ work is performed competently.

3.21. The Agency submitted that its supervision of Licensee 1 did not prevent her errors, because the events concerned moved quickly, Licensee 1 did not request assistance from her supervisor, and she was an experienced licensee expected to work with a degree of independence. The Agency inferred that its supervision of Licensee 1 was reasonable.

3.22. In the Committee’s view however, the errors made by Licensee 1 as set out above demonstrate that she was not properly supervised. She was left to her own devices from 24

August, when she first approached the Vendors, until the Vendors told her on 1 September that they would not be selling to the Customers. This case in fact illustrates the need for adequate supervision. On her own admission, Licensee 1 was struggling in relation to this transaction. This should have been picked up by the Agency.

3.23. Also indicative of a lack of supervision was the fact that right up until 16 September, when the Agency forwarded Licensee 1’s complaint to the Authority, the Agency, and presumably Licensee 2 as well, were still unaware that the work undertaken by Licensee 1 might be open to criticism.

3.24. Finally, the Agency told the investigator that in response to the events it had altered its procedures such that Licensee 2 is now required to check agency agreements before any marketing can begin. Although that change is laudable, the Committee’s view is that this policy should already have been in place as an important feature of supervision.

3.25. Accordingly, the Committee concludes that the Agency breached both section 50 of the Act and Rule 8.3.

Licen see 2

3.26. Rule 8.3 does not apply to the individuals appointed by agencies to undertake the supervision of salespersons. That is because Rule 8.3 only refers to agencies (“An agent operating as a business...”) and not to the individual supervisors themselves.

3.27. Section 50 refers to the requirement that salespeople be properly supervised. It follows from that, that supervisors must carry out their supervision properly. If they do not do so, they breach section 50 of the Act.

3.28. In order that a licensee be found guilty of unsatisfactory conduct, that must be in relation to real estate agency work. That is clear from the opening words of section 72 of the Act.

3.29. The expression “real estate agency work” is defined in section 4 of the Act. [See the appendix]. It is not immediately obvious that a supervisor falls within that definition. That is because on a narrow interpretation of the definition, a supervisor such as Licensee 2, who in this case had no contact with the clients or customers, is not undertaking work for the purpose of bringing about a transaction. Rather, it could be said that Licensee 2 as supervisor was working for Licensee 1 and the Agency.

3.30. In the case, however, of House and Barfoot & Thompson v REAA and Henton [2013] NZHC

1619, the High Court gave a broad interpretation to the meaning of real estate agency work. It held that once an agency relationship is established with a client, then not only are the licensees directly involved in dealing with the client and customers undertaking real estate agency work, but so too are other licensees whose work in a broader sense is contributing towards bringing about the transaction. Each case turns on its own facts, but the Court held that a supervisor can be deemed to be undertaking real estate agency work, where this is

feeding into the work of the frontline licensees who are being supervised. The Court also held that the liability of supervisors arises not only in respect of acts, but also in respect of omissions, even though the definition of real estate agency work does not explicitly refer to omissions. Therefore, even when failing to properly supervise or not supervising at all, a supervisor can be deemed to be undertaking real estate agency work.

3.31. In the present case, Licensee 2 should have been closely supervising Licensee 1 but failed to do so, for reasons already discussed above in relation to the Agency. Her duties towards Licensee 1 amounted to real estate agency work. By failing to properly supervise Licensee 1 she breached section 50 of the Act. She is therefore guilty of unsatisfactory conduct as outlined in paragraphs 2.6 and 2.7 above.

4. Request for submissions on orders

4.1. Licensee 1, Licensee 2, and the Agency are to file submissions on what orders should be made within 10 workings days from the date of notice of this decision (by no later than 11

July 2017).

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

5. What happens next

5.1. The Committee will conduct a separate hearing on the papers to consider all submissions and issue a decision on orders, if any, under section 93 of the Act (Refer to the Appendix of this decision).

6. Your right to appeal

6.1. The Committee considers 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.

7. Publication

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

Signed

Nigel Dunlop

Date: 27 June 2017

Appendix: Relevant provisions

The Real Estate A g ents A ct 2008 provides:

4 Interpretation

(1) In this Act, unless context otherwise requires, -

agent means a real estate agent who holds, or is deemed to hold, a current licence as an agent under this Act

licensee means an agent, a branch manager, or a salesperson

real estate agency work or agency work –

(a) means any work done or services provided, in trade, on behalf of another person for the purpose of bringing about a transaction; and

(b) includes any work done by a branch manager or salesperson under the direction of, or on behalf of an agent to enable the agent to do the work or provide the services descried in paragraph (a); but

(c) does not include –

(i) the provision of general advice or materials to assist owners to locate and negotiate with potential buyers; or

(ii) the publication of newspapers, journals, magazines, or websites that include advertisements for the sale or other disposal of any land or business; or

(iii) the broadcasting of television or radio programs that include advertisements for the sale or other disposal of any land or business; or

(iv) the lending of money on mortgage or otherwise; or

(v) the provision of investment advice; or

(vi) the provision of conveyancing services within the meaning of the Lawyers and Conveyancers Act 2006

12 Authority’s functions

(1) The functions of the Authority are to—

(a) administer the licensing regime for agents, branch managers, and salespeople, including the granting and renewal of licence applications; and

(b) appoint a Registrar of the register of licensees; and

(c) ensure that the register of licensees is established, kept, and maintained; and

(d) develop practice rules for the Minister’s approval and maintain these rules for licensees, including ethical responsibilities; and

(e) set fees and levies; and

(f) appoint Complaints Assessment Committees and maintain a panel of persons suitable to serve as members of Complaints Assessment Committees; and

(g) develop consumer information on matters relating to real estate transactions, including approved guides on agency agreements and sale and purchase agreements; and

(h) develop and provide consumer information on matters relating to the provision of real estate services, including providing the public with information on how to make a complaint; and

(i) set professional standards for agents; and

(j) investigate and initiate proceedings in relation to offences under this Act and any other enactment; and

(k) investigate of its own motion any act, omission, allegation, practice, or other matter which indicates or appears to indicate unsatisfactory conduct or misconduct on the part of a licensee; and

(l) provide procedures for the lodging of complaints; and

(m) receive complaints relating to the conduct of licensees; and

(n) carry out any other function that the Minister may direct the Authority to perform in accordance with section 112 of the Crown Entities Act 2004; and

(o) carry out any other functions that may be conferred on the Authority by this Act or any other enactment.

(2) The Authority may, where it considers it appropriate to do so, consult with representatives of the real estate industry about any matter that relates to the functions of the Authority.

(3) For the avoidance of doubt, nothing in subsection (1) affects the role of an industry training organisation for the time being recognised under the Industry Training and Apprenticeships Act 1992 as an industry training organisation for the real estate industry.

50 Salespersons must be supervised

(1) A salesperson must, in carrying out any agency work, be properly supervised and managed by an agent or a branch manager.

(2) In this section properly supervised and managed means that the agency work is carried out under such direction and control of either a branch manager or an agent as is sufficient to ensure—

(a) that the work is performed competently; and

(b) that the work complies with the requirements of this Act.

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.

79 Procedure on receipt of complaint

(1) As soon as practicable after receiving a complaint concerning a licensee, a Committee must consider the complaint and determine whether to inquire into it.

(2) The Committee may—

(a) determine that the complaint alleges neither unsatisfactory conduct nor misconduct and dismiss it accordingly:

(b) determine that the complaint discloses only an inconsequential matter, and for this reason need not be pursued:

(c) determine that the complaint is frivolous or vexatious and not made in good faith, and for this reason need not be pursued:

(d) determine that the complaint should be referred to another agency, and refer it accordingly:

(e) determine to inquire into the complaint.

80 Decision to take no action on complaint

(1) A Committee may, in its discretion, decide to take no action or, as the case may require, no further action on any complaint if, in the opinion of the Committee,—

(a) the length of time that has elapsed between the date when the subject matter of the complaint arose and the date when the complaint was made is such that an investigation of the complaint is no longer practicable or desirable; or

(b) the subject matter of the complaint is inconsequential.

(2) Despite anything in subsection (1), the Committee may, in its discretion, decide not to take any further action on a complaint if, in the course of the investigation of the complaint, it appears to the Committee that, having regard to all the circumstances of the case, any further action is unnecessary or inappropriate.

82 Inquiry by Committee

(1) If a Committee decides to inquire into a complaint or into matters raised by allegations about a licensee, it must inquire into the complaint or those matters as soon as practicable.

(2) The Committee may authorise any person to assist it with its inquiry.

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.

(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.

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 A g ents Act (P rofessi onal C onduct and C l i ent C are) Rules

2012 are:

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

Rule 5.2 A licensee must have a sound knowledge of the Act, regulations, rules issued by the Authority (including these rules), and other legislation relevant to real estate agency work.

Rule 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.

Rule 7.1 A licensee who has reasonable grounds to suspect that another licensee has been guilty of unsatisfactory conduct1 may make a report to the Authority.

Rule 8.3 An agent who is operating as a business must ensure that all salespersons employed or engaged by the agent are properly supervised and managed.

Rule 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.

Rule 9.9 A licensee must not submit an agency agreement or a sale and purchase agreement or other contractual document to any person for signature unless all material particulars have been inserted into or attached to the document.

Rule 10.1 This rule applies to an agent (and any licensee employed or engaged by the agent) who is entering, or has entered, into an agency agreement with a client for the grant, sale, or other disposal of land or a business.

Rule 10.2 An appraisal of land or a business must—

(a) be provided in writing to a client by a licensee; and

(b) realistically reflect current market conditions; and

(c) be supported by comparable information on sales of similar land in similar locations or businesses.

The relevant provisions from the Fai r Tradi ng A ct 19 86 are:

36K Meaning of uninvited direct sale agreement

(1) In this subpart, uninvited direct sale agreement means an agreement for the supply, in trade, of goods or services to a consumer—

(a) that is made as a result of negotiations (whether or not they are the only negotiations that precede the making of the agreement) between a supplier and the consumer in a situation described in either subsection (2) or (3); and

(b) where the price paid or payable by the consumer under the agreement— (i) is more than $100; or

(ii) cannot be ascertained at the time of supply (regardless of whether the

price ultimately paid or payable is $100 or less).

(2) The first situation is where the negotiations take place between the consumer and the supplier, in each other ’s presence, in the consumer’s home or workplace, where the consumer did not invite the supplier to come to that place for the purposes of entering into negotiations relating to the supply of those goods or services (whether or not the consumer made such an invitation in relation to a different supply).

(3) The other situation is where the negotiations take place by telephone, where the consumer did not invite the supplier to make the telephone call for the purposes of entering into negotiations relating to the supply of those goods or services (whether or not the consumer made such an invitation in relation to a different supply).

(4) However, uninvited direct sale agreement does not include a renewal agreement. (5) For the purposes of this section, a consumer has not invited a supplier to—

(a) come to the home or workplace, or to make a telephone call, merely because the consumer has—

(i) given his or her name or contact details to the supplier other than for the predominant purpose of entering into negotiations relating to the supply of goods or services; or

(ii) contacted the supplier in connection with an unsuccessful attempt by the supplier to contact the consumer:

(b) enter into negotiations for a supply merely because the supplier has provided an unsolicited quote or estimate.

(6) In subsection (4), renewal agreement means a new agreement that replaces an existing agreement between a supplier and consumer where—

(a) the existing agreement—

(i) involves the supply, in trade, of goods or services to the consumer by the supplier; and

(ii) is in force at the time the negotiations for the new agreement occur; and

(b) the new agreement involves the supply, in trade, of goods or services—

(i) of the same, or of a similar, kind as those supplied under the existing agreement; and

(ii) by the same supplier to the same consumer (being the parties to the existing agreement); and

(iii) on the same, or similar, terms and conditions as those in the existing agreement.

36L Disclosure requirements relating to uninvited direct sale agreements

(1) A supplier must ensure that—

(a) every uninvited direct sale agreement entered into by that supplier— (i) is in writing; and

(ii) is expressed in plain language; and

(iii) is legible; and

(iv) is presented clearly; and

(v) complies with the requirements of subsection (2); and

(b) a copy of the agreement is given to the consumer— (i) at the time the agreement is entered into; or

(ii) in the case of an agreement entered into over the telephone, within 5

working days after the date on which the agreement was entered into. (2) The requirements referred to in subsection (1)(a)(v) are that—

(a) the following information is set out on the front page of the agreement:

(i) a clear description of the goods or services to be supplied under the agreement; and

(ii) a summary of the consumer’s right to cancel the agreement under section

36M(1); and

(iii) the supplier’s name, street address, telephone number, and email address; and

(iv) the consumer’s name and street address; and

(b) either—

(i) the total price payable, and any other consideration to be given, under the agreement is disclosed in the agreement; or

(ii) if the total price or consideration is not ascertainable at the time at which the agreement is entered into, the method by which the total price or consideration will be calculated is disclosed in the agreement; and

(c) the agreement is dated.

(3) The supplier must give the consumer oral notice, before the agreement is entered into, of—

(a) the consumer’s right to cancel the agreement within 5 working days after the date on which the consumer receives a copy of the agreement; and

(b) how the consumer may cancel the agreement.

(4) However, if an uninvited direct sale agreement is, or includes, a consumer credit contract (as defined in section 11 of the Credit Contracts and Consumer Finance Act

2003), in relation to that consumer credit contract only,—

(a) Part 2 of that Act applies in place of this subpart; and

(b) the supplier must give the consumer oral notice, before the agreement is entered into, of—

(i) the consumer’s rights to cancel the agreement under that Act; and

(ii) how the consumer may cancel the agreement under that Act.

(5) For the purposes of subsection (4), a consumer credit contract is included in an uninvited direct sale agreement if that contract was entered into for the purpose of financing the purchase of the goods or services that are the subject of the uninvited direct sale agreement.

(6) To avoid doubt, where an uninvited direct sale agreement includes a consumer credit contract, this subpart continues to apply to every part of the agreement that is not a consumer credit contract.

36M Cancellation of uninvited direct sale agreement by consumer

(1) A consumer may cancel an uninvited direct sale agreement by giving notice of the cancellation to the supplier—

(a) within 5 working days after the date on which the consumer receives a copy of the agreement; or

(b) if the supplier has failed to comply with section 36L (except to the extent provided for in section 36N(2)), at any time.

(2) Notice of cancellation may be expressed in any way (including oral or written) that shows the intention of the consumer to cancel or withdraw from the agreement.

(3) For the purposes of subsection (2), the consumer must communicate with the supplier—

(a) by way of the contact details provided in accordance with section 36L(2)(a)(iii);

or

(b) in any other way agreed to by the consumer and the supplier.