Complaint No C21196 [2018] NZREAA 15 (25 January 2018)

New Zealand Real Estate Agents Authority

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Complaint No C21196 [2018] NZREAA 15 (25 January 2018)

Last Updated: 22 June 2018

Before the Complaints Assessment Committee

Complaint No: C21196

In the matter of

Part 4 of the Real Estate Agents Act 2008

and

Licensee 1: Licensee 1 (XXXXXXXX)

Licensee 2: Licensee 2 (XXXXXXXX)

Decision to take no further action

25 January 2018

Members of Complaints Assessment Committee: CAC 416

Chairperson: Marjorie Noble

Deputy Chairperson Rachael Schmidt-McCleave

Panel Member: Geoff Warren

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 3 July 2017 the Real Estate Agents Authority (the Authority) received a complaint against

Licensee 1 and Licensee 2 from the Complainant.

1.2. Licensee 1 is a licensed Salesperson and Licensee 2 is a licensed Branch Manager under the

Real Estate Agents Act 2008 (the Act).

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

1.4. The details of the complaint are that the Licensees misrepresented the Property and failed to rectify associated defects prior to settlement.

1.5. In particular, the Complainant advised that Licensee 1 made an “unreasonable misrepresentation” when she advertised the unbuilt Property in promotional material, which showed concept plans. The Complainant says the completed Property differed from the advertised plans as a window was missing and, as such, she has made an unsubstantiated representation under the Act, and has breached the Fair Trading Act 1986.

1.6. The Complainant states Licensee 1 failed to ensure the Property was ready for the Complainant’s initial pre-settlement inspection on 4 March 2017. The Complainant says there was rubbish “everywhere”, the Property was dusty, the garage floor had paint splashes, and there was a 3-metre crack across the concrete floor.

1.7. The Complainant says Licensee 1 should have taken action to remedy this before the inspection, and her lack of action on these matters has breached the “REAA Code of Conduct” *being the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012+.

1.8. The Complainant also says Licensee 1 breached the “REAA Code of Conduct” by failing to provide all manuals as specified in clause 24 of the Agreement for Sale and Purchase (ASP).

1.9. The Complainant says Licensee 1 failed to ensure a waste disposal unit, as specified in the chattel list, was installed prior to settlement and that she accessed the Property, without authority, to effect installation of the waste disposal unit on 16 March. The Complainant asserts Licensee 1 is therefore guilty of misconduct as described under Sections 73(a), (b), and (c) of the Act.

1.10. The Complainant also says that Licensee 2 failed to provide customer service as required under the “REAA Code of Conduct”.

1.11. The Complainant requested a remedy, being:

a) Reimbursement of costs as follows:

• $700 for the missing window

• $69.99 for redundant shade for the missing window

• $198 for return airfare

• $81.04 for fuel to travel for purpose of undertaking second pre-settlement inspection
  

• $500.97 for stress, loss of productive time, and inconvenience

b) Written apologies from both Licensees

c) Licensees to be held accountable under the provisions of the Act and the Rules

1.12. The Licensees responded to the complaint against them.

1.13. Licensee 1 commented that she was involved in two pre-settlement inspections, which is unusual as there is normally just the one. There was also a series of communications regarding things the Complainant wanted rectified prior to settlement which Licensee 1 was privy to. None of these communications involved any discussion around a waste disposal unit.

1.14. Licensee 1 states the Complainant’s solicitor (the Solicitor), phoned her the day following settlement and asked her to inspect the Property to ensure there was a waste disposal unit installed. The Solicitor instructed Licensee 1 to use the keys held for settlement for the Complainant, which he had not yet collected, to access the Property.

1.15. Licensee 1 says she confirmed visually the waste disposal unit was installed and took two photos, which she emailed to the Solicitor as proof of the installation.

1.16. Licensee 2 commented that he had undertaken an internal investigation of complaints raised by the Complainant and notified to him, and was satisfied Licensee 1, on behalf of the vendor, had done everything to facilitate the Complainant’s purchase in a professional manner.

1.17. Licensee 2 states that upon receiving a complaint from the Complainant about Licensee 1 he was in constant contact with the Complainant throughout the latter part of settlement. Following settlement, Licensee 2 states he personally delivered a City Council recycling bin to the Property after the Complainant demanded it.

1.18. Licensee 2 says following settlement he also liaised, at the Complainant’s request, with various tradespeople to attend to maintenance items notified by the Complainant.

1.19. Licensee 2 says in June 2017 and in an attempt to resolve constant ongoing complaints to him by the Complainant, he made a written offer, in full and final settlement, of monetary compensation to the Complainant which was rejected.

2. What we decided

2.1. On 8 September 2017 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. The Committee considered the complaint also raised issues about Licensee 2, and under section 78(b) of the Act, decided to inquire into them.

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

2.4. The Committee has decided to take no further action on the complaint.

2.5. This decision was made under section 89(2)(c) of the Act. The decision was also made with reference to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules), in particular Rules 5.1 (skill, care, competence and diligence), 6.1 (fiduciary obligations), and 6.4 (misleading information).

3. Our reasons for the decision

3.1. The Committee concluded:

a) Licensee 1 did not misrepresent the Property in advertising.

b) Licensee 1 did not commit an offence in re-entering the Property after settlement.

100. It was not Licensee 1’s responsibility for the condition of the Property prior to settlement or for providing manuals.
     

d) Licensee 2 provided adequate customer service.

Licensee 1 did not misrepresent the Property in advertising

3.2. The Committee were provided with development plans showing the layout of each unit in a multi-unit development, which was headed “Proposed Building Consent for a 7 Unit Development and a Dairy”, together with an artist’s impression showing various visual layout perspectives.

3.3. Licensee 1 used these in promotional material for advertising including attaching some to a marketing flyer. This flyer was in part generic as it advertised both the Property and mentioned two other units, in a mix of two- and three-bedroom units.

3.4. The flyer stated at the bottom, “Prospective purchasers should not be confined to the contents of the material herein and should make their own inquiries to satisfy themselves in the accuracy of all aspect.”

3.5. It is quite clear to the Committee that Licensee 1 used plans and concept drawings that had been supplied to her by her vendor for the purposes of marketing and effecting sales of the units. These plans were more for showing the layout of each unit rather than more detailed plans which would be submitted to the local Council for issue of a Code Compliance Certificate.

3.6. In so doing, Licensee 1 made it very clear in her marketing that she was relying on information supplied to her by her vendor. Whether a window was to be included in the area the Complainant has indicated is unclear looking at the concept drawings, however this would have been made clear by perusing the working drawings, which should have been made available by the vendor to the Complainant once an agreement for sale and purchase was entered into.

3.7. Licensee 1 made it clear in the advertising material this was the purchaser’s responsibility to satisfy themselves as to the accuracy of such detail.

3.8. The Committee is satisfied that Licensee 1 used advertising material supplied to her and advertised that in good faith, and in so doing did not misrepresent the Property.

3.9. It was noted by the Committee following an investigation that a window was indeed supposed to be in the location indicated by the Complainant, but not installed. Subsequently monetary compensation was paid to the Complainant by the vendor/builder for the error.

Licensee 1 did not commit an offence in re-entering the Property after settlement.

3.10. The Complainant says Licensee 1 allowed/committed unauthorised access to his Property on

16 March 2017 (post-settlement), thus committing a felony and constituting misconduct under the Act.

3.11. Licensee 1 explained she received a telephone call from the Solicitor the day after settlement (16 March 2017) asking the Licensee to inspect the Property to ensure there was a waste disposal unit installed. Licensee 1 was instructed to use the keys she held for the Complainant post-settlement, which the Complainant had not yet collected, to access the Property.

3.12. The Committee accepts Licensee 1 entered the Property, checked the waste disposal unit was

installed, took photos, and emailed them through to the Solicitor as proof the waste disposal unit had been installed.

3.13. The Committee found this part of the complaint to be both vexatious and unwarranted and dismisses it accordingly. Permission to re-enter the Property came from the Solicitor which is equivalent to the Complainant authorising such access himself.

It was not Licensee 1’s responsibility for the condition of the Property prior to settlement or for providing manuals.

3.14. In considering this part of the complaint the Committee have considered clause 24.0 of the

ASP to which the Complainant often refers to:

24.0 On settlement the vendor shall transfer to the purchaser all manufacturers’ warranties in respect of any material or installation in the dwelling and provide a builder ’s warranty for 7 years.

3.15. This clause is quite clear that responsibility for the condition of the Property is the vendor’s responsibility. There was no evidence provided that Licensee 1 was in any way the vendor, indeed she was contracted by the vendor to market and effect unconditional sales of the vendor’s development.

3.16. It became evident to the Committee that the Complainant was confusing the responsibilities of those of Licensee 1 in her role as vendor’s agent and those of the vendor/builder.

3.17. The Complainant undertook two pre-settlement inspections, one ten days and one four days prior to settlement. Following both inspections he stated he was shocked at the condition of the Property with rubbish, dust, etc. evident.

3.18. The Complainant further states on settlement Licensee 1 failed to provide all manuals to chattels, materials or installations in the Property, and some chattels were missing.

3.19. The Complainant quite rightly brought these to Licensee 1’s attention, however has continued to hold Licensee 1 and her agency responsible for remedial action and costs he has incurred.

3.20. The Committee has concluded Licensee 1 role as vendor’s agent is to convey these to the vendor, whose responsibility to remedy such defects is contained in clause 24.0 and is between the vendor and the Complainant.

3.21. The Committee agrees entirely with the Authority’s letter to the Complainant dated 16

August 2017, which says:

“The Authority would not expect a licensee to be responsible for ensuring a new build property is built to the original specification, or that defects in/at a property are fixed, and that chattels included in the ASP are in place on completion.”

3.22. The Committee concludes that the matters raised by the Complainant are largely contractual matters and are therefore the responsibility of the vendor from whom the Property was purchased, and finds no further action against Licensee 1.

Licensee 2 provided adequate customer service.

3.23. Licensee 2 provided information to the investigation that he had conducted an internal investigation about the conduct of Licensee 1 following a complaint to him from the Complainant.

3.24. Following the investigation, Licensee 2 was satisfied Licensee 1 had acted professionally throughout the sale. However, and because the Complainant had intimated a query over his

part in the complaint by failing to provide adequate customer service, he entered into email discussion with the Complainant in an attempt to resolve the Complainant’s issues.

3.25. Licensee 2 provided an email trail detailing his involvement post-settlement with the Complainant including an email dated 31 March 2017 which satisfied the Committee that Licensee 2 had gone above and beyond what would be expected of an agency in matters directly related to Clause 24 of the ASP.

3.26. The Committee concluded the Complainant had continued to hold both Licensee 1 and the agency responsible for matters relating to Clause 24 and which should have been more properly addressed to the vendor.

3.27. It was apparent to the Committee that Licensee 2, by sending an email in June 2017, some three months post-settlement, had attempted to provide a full and final settlement with the Complainant to bring the various complaints to a conclusion.

3.28. It is the Committee’s decision that Licensee 2 provided adequate customer service and finds no further action against him.

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 notice of this decision (no later than Friday, 23 February 2018) (Section 111).

4.2. For further information on filing an appeal, read Guide to Filing an Appeal at M inistry o f

Justice-Tribunals ( ww w.justice. go v t.nz/ tribunals ).

5. Publication

5.1. At the Committee’s discretion, the decision will be published without the names or identifying details of the Complainant (including the address of the Property), the Licensees, and any third parties.

5.2. The Authority will publish the Committee’s decision after the period for filing an appeal has ended, unless the Tribunal receives an application for an order preventing publication. The Authority will not publish the Committee’s decision until the Tribunal has made a decision on the application.

5.3. Publishing the Committee’s decision supports the purpose of the Act by ensuring that the disciplinary process remains transparent, independent and effective. The Committee also considers that publishing this decision helps to set industry standards and that is in the public interest.

Signed

Geoff Warren

Date: 25 January 2018

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

78 Functions of Committees

The functions of each Committee are—

(a) to inquire into and investigate complaints made under Section 74:

(b) on its own initiative, to inquire into and investigate allegations about any licensee:

(c) to promote, in appropriate cases, the resolution of complaints by negotiation, conciliation, or mediation:

(d) to make final determinations in relation to complaints, inquiries, or investigations:

(e) to lay, and prosecute, charges before the Disciplinary Tribunal: (f) in appropriate cases, to refer the complaint to another agency:

(g) to inform the complainant and the person complained about of its decision, reasons for the decision, and appeal rights:

(h) to publish its decisions

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.

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.

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:

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

Rule 6.1 A licensee must comply with fiduciary obligations to the licensee’s client.

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.