Poppelwell - Complaint No C14332 [2018] NZREAA 165 (23 October 2018)

Last Updated: 2 December 2019

Before the Complaints Assessment Committee

Complaint No: C14332

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee 1: David Poppelwell (10006725)

The Agency: Astute Real Estate Limited (10020131)

Decision on Orders

23 October 2018

Members of Complaints Assessment Committee: CAC410

Chairperson: Nigel Dunlop

Deputy Chairperson: Paul Elenio

Complaints Assessment Committee

Decision on orders

1. Background

1.1. On 29 August 2018 the Complaints Assessment Committee (the Committee) determined under section 89(2)(b) of the Real Estate Agents Act 2008 (the Act) that David Poppelwell (the Licensee) and Astute Real Estate Limited (the Agency) were guilty of unsatisfactory conduct.

1.2. With respect to the definition of unsatisfactory conduct in section 72 of the Act, the

Committee found that the Licensee and the Agency had carried out real estate work that:

(a) Falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee

(b) Contravenes a provision of the Act or Rules

(c) Would reasonably be regarded by agents of good standing as being unacceptable.

1.3. The unsatisfactory conduct concerned was providing the Complainant, who was the vendor client, with an incomplete agency agreement. The agency agreement did not contain commencement or end dates, nor was it signed on behalf of the Agency.

1.4. This conduct breached the following rules of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules):

• Rule 5.1 (the requirement of skill, care, competence and diligence)

• Rule 9.9 (the requirement not to submit an agency agreement for signature unless all material particulars have been inserted)
  
• Rule 10.6 (b) (the requirement to set out in writing before a client signs an agency agreement as to when it ends)
  

1.5. The Complainant complained about other aspects of the conduct of the Licensee, but none of those complaints were found by the Committee to have been proven.

1.6. The Complainant and the Licensee and Agency were given the opportunity to make submissions to the Committee on orders. They all took that opportunity.

2. Orders

Having made a finding of unsatisfactory conduct against the Licensee, the Committee has decided pursuant to s93 of the Act to:

• censure both the Licensee and the Agency

• order the Licensee and the Agency to each pay a fine to the Authority of $2,500 by no later than 21 November 2018.

3. Our reasons

3.1. The Complainant submits that the Licensee should be required to undergo further training, and that the commission she paid to the Agency be repaid in full. She does not want an apology to be ordered because she does not consider it would be sincere. This submission reflects the Complainant’s general ongoing disaffection with the Licensee. This disaffection extends to alleged conduct beyond the narrow finding of unsatisfactory conduct made by the Committee. The Committee’s orders, however, must relate only to the conduct which the Committee found to be unsatisfactory. The Committee does not consider that the nature or degree of unsatisfactory conduct involved in this case suggests a need for the Licensee to undergo further training. And having regard to the circumstances, an order for the repayment of commission would be inappropriate and completely disproportionate. The Licensee undertook real estate work for the Complainant over many months, the end result of which was a sale, the terms and conditions of which were at least satisfactory, if not favourable to the Complainant.

3.2. The agency agreement was prepared by the Licensee and sent to the Complainant for signing.

The Complainant signed it before the Licensee undertook real estate work on her behalf. The Complainant did not apparently notice that the commencement or end dates were missing from the agreement. Nor was she apparently aware or concerned that the agreement had not been signed on behalf of the agency, because she treated the agreement as a mutually binding and enforceable document, and did not send the agreement back to Licensee after she had signed it. The Complainant was not, in the event, prejudiced by the absence of the commencement and end dates in the agreement, or the absence of a signature on behalf of the Agency. The deficiencies in the agency agreement were identified by the Committee, rather than the Complainant.

3.3. Nonetheless, agency agreements are a fundamental and important part of real estate work, because they determine the respective rights and obligations of vendors and licensees. That is why both the Act and the Rules have provisions relating to them. Both the Licensee and the Agency should have picked up on the deficiencies of the agreement in this case. Although no prejudice resulted from the incompleteness of the agreement, there was potential for that to occur. Both the Licensee and the Agency failed to check that there was a fully complete agency agreement in place. It is appropriate therefore that both the Licensee and the Agency should be censured. The question then arises as to whether censures on their own would be sufficient, as submitted on behalf of the Licensee and the Agency, or whether a further sanction should be imposed.

3.4. The only appropriate additional sanction in this case, from those set out in section 93, is that of a fine.

3.5. A relevant consideration applying to the Licensee is that on 29 August 2016 a complaints assessment committee censured and fined the Licensee $2,000 in relation to three breaches of the Rules. Those breaches involved a failure to obtain all vendor signatures on an agency agreement, failure to provide the trustee client with a copy of the approved guide, and failure to supply a copy of the listing agreement to the client. The first and third of these breaches were of a broadly similar category to the current breaches which involve a client being sent an incomplete agency agreement, without that incompleteness being rectified at any stage. Both the past and current breaches involved a failure to ensure that required documentation and administrative tasks were properly undertaken and completed. The Licensee’s previous disciplinary history counts against leniency.

3.6. On the other hand, the facts of the previous case were different. The circumstances outlined in paragraph 3.2 are important. Furthermore, the investigation of the previous complaint

commenced in early 2016, whereas the incomplete agency agreement was sent to the Complainant in the current case in August 2015. Had the Licensee already been under investigation by August 2015, or had he had been found guilty of unsatisfactory conduct before that date, the fine now being imposed by the Committee would be considerably higher. Having said that, given that this is a second finding of unsatisfactory conduct against the Licensee, it is apposite that the level of fine be no lower than the level previously imposed.

3.7. In fixing the amount of the fines, the Committee takes some account of the fact that the Licensee and Agency have been involved in a lengthy and time consuming complaints investigation in which the principal allegations were found not to have been proven. On the other hand, there is a possibility that the Licensee and Agency have to take some responsibility for the wider complaints being made. In that regard, the Committee notes that there are striking parallels between the current case and the previous case. The Licensee and the Agency may do well to reflect on that.

3.8. The Committee does not perceive any reason to differentiate the level of fine being imposed on the Licensee and the Agency. Although the Licensee had immediate responsibility for ensuring that the agency agreement requirements were fulfilled, the Agency had ultimate responsibility, because after all the Agency rather than the Licensee was party to the agreement.

Principles considered

3.9. 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.

3.10. 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

3.11. 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."

3.12. One of the ways in which the Act states it achieves this purpose is by providing accountability through an independent, transparent and effective disciplinary process (Section 3(2)).

Maintaining professional standards

3.13. 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.

3.14. 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:

• make sure that no person unfitted because of his or her conduct is allowed to practise the profession in question

• protect both the public and the profession itself against persons unfit to practice

• enable the profession or calling, as a body, to ensure that the conduct of members conforms to the standards generally expected of them.
  

3.15. In the Committee's view, maintaining professional standards is also a function of the disciplinary processes under the Act.

Punishment

3.16. 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)).

3.17. 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 considered

3.18. 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 notice of this decision (section 111).

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

J usti ce -Tri bunal s ( ww w. justi ce. g ov t. nz/ tri bunal 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 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 standards and that is in the public interest.

Signed

Nigel Dunlop

Date: 23 October 2018

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 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.

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 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.