Complaint No C18427 [2018] NZREAA 47 (22 February 2018)

Last Updated: 18 December 2018

Before the Complaints Assessment Committee

Complaint No: C18427

In the matter of

Part 4 of the Real Estate Agents Act 2008

and

Licensee 1: The Licensee (XXXXXXXX)

Decision to take no further action

22 February 2018

Members of Complaints Assessment Committee: CAC413

Chairperson: Garry Chapman

Deputy Chairperson: Sarah Eyre

Panel Member: Barbara Mackenzie

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 25 January 2017 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee from the Complainants.

1.2. The Licensee is a licensed Salesperson under the Real Estate Agents Act 2008 (the Act).

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

1.4. The details of the complaint are that on 18 November 2011, the Complainants purchased the Property through the Licensee. The Licensee did not disclose the asbestos content in the Super 6 roof cladding. The Complainants subsequently had difficulty selling the Property. The Property was eventually sold in December 2016 at a price that the Complainants considered was low. The Complainants have also had difficulties with the septic tank system, but acknowledged they did not raise any concerns about this at the time of inspection, despite noticing a mess around it.

1.5. The Complainants requested a remedy, being compensation of $70,000.00, which is the difference between the offer they accepted for the Property of $415,000 and the valuation of the Property which was $485,000.

1.6. The Licensee responded to the complaint against them. In particular, the Licensee commented that:

a) When the Property was listed in September 2011, the listing recorded “Super 6 (sprayed)”. The Property was appraised at that time as being in the range of $400,000 to

$425,000.

b) The Complainants only attended one open home that the Licensee was aware of and they were “adamant in not wanting a building report saying they knew the property well

... [complainant] informed me she had worked previously for the architect that designed the home and that “there was nothing to know”.”

c) Special Condition 19 was inserted to enable both parties to obtain legal advice and the Licensee had expected that the Complainants’ lawyer would have advised them to obtain a LIM report.

d) There was no asbestos disclosure from the original vendors, the Licensee was present at the original meeting when the Property was listed and her manager was there also. The Licensee recalled her manager telling her the roof was concrete and that was best for coastal areas and that it also had a generous guttering system.

e) A report that the Complainants obtained in December 2013 in relation to the roof confirmed that the roof was good for the area and that the roof and gutters should be retained.

f) The Licensee did not discuss the roof with the Complainants at all in 2011 and had no knowledge there were asbestos issues. While the Licensee does now know about issues with Super 6, she had no knowledge of that at the time.

g) The License noted she also had no knowledge of problems with the septic tank and the owners had told her that it was in good working order and maintained.

h) The Licensee provided a number of other comments regarding the sale price of the Property and the valuations. In particular, she noted that at the time the Complainants purchased the Property they purchased it for $409,000 when the QV was $485,000. When they sold it for $414,500 the Property also had a QV of $485,000.

2. What we decided

2.1. On 22 August 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. On 4 December 2017 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

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

2.4. 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 2009, in particular Rules 5.1, 6.2, 6.4 and 6.5.

3. Our reasons for the decision

The Committee concluded:

3.1. There is no evidence that the Licensee had any knowledge or could reasonably have been expected to know, that the roof contained asbestos or that the septic tank was not working correctly.

3.2. At the time of the sale of the Property, the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2009 (‘the 2009 Rules’) were in force. Rule 6.5 stated “A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Further, where it appears likely, on the basis of the licensee’s knowledge and experience of the real estate market, that land may be subject to hidden or underlying defects, the licensee must either - (a) obtain confirmation from the client that the land in question is not subject to defect; or (b) ensure that a customer is informed of any significant potential risk so the customer can seek expert advice if the customer so chooses”.

3.3. Licensees also had obligations under the 2009 Rules to exercise skill, care, competence and diligence (Rule 5.1); to act in good faith and deal fairly (Rule 6.2); and to not mislead a customer, nor provide false information, nor withhold information (Rule 6.4).

3.4. The Committee finds that there is no evidence that the Licensee had any knowledge that the roof contained asbestos or that the septic tank was not working correctly. The original vendors were contacted as part of the investigation and although the husband has since died, his wife confirmed they did not know the roof contained asbestos and accordingly did not say anything about the roof to the Licensees. The Committee is satisfied the Licensee had no knowledge so she cannot have been required to disclose these matters as they were not known defects. Furthermore, there is no evidence or submissions that compel us to determine that the Licensee should have known that the Property was subject to hidden defects either in regard to the roof or the septic tank.

3.5. It is clear from the Complainants’ submissions that they are adamant that the Licensee knew the roof contained asbestos, but they have no evidence of that. We have viewed the listing

authority and there is nothing listed on there, nor is there any evidence that this was disclosed to the Licensee in any other communication. The Committee cannot find a licensee has engaged in unsatisfactory conduct unless there is sufficient evidence to convince a Committee that it is more probable than not that the licensee knew about this defect and did not disclose it.

3.6. The Committee has had very careful regard to the comments made by the Licensee’s manager that he knew the roof contained asbestos and that he thought any licensee “worth their salt” would know. However he also stated that the issue of asbestos had not been discussed at all during the listing process, it was not discussed by him with the Licensee, the

vendors or the Complainants, and it was just something he knew. The Committee finds that while this is evidence that the Licensee’s manager knew of the asbestos issue, it does not actually confirm that the Licensee knew, as he agreed with other evidence that there was no discussion of asbestos at that time. The Committee has considered whether the Licensee’s manager’s comments should be taken as meaning that the Licensee should have known, but in the absence of any further evidence that this was commonly known amongst licensees in

2011, this evidence is not strong enough to convince the Committee of this point, particularly when read in conjunction with the Licensee’s manager’s follow up email. In the email he indicated his comments related more to the current climate than at the time of the sale in

2011 and this is consistent with the submissions made by the Licensee regarding the knowledge of asbestos at the time and the more limited access to online resources. The Committee finds that there is no evidence to prove the Licensee should have known of this at the time of the original sale.

3.7. The Committee has turned its mind to whether the Rules relating to skill, care and competence; acting in good faith; and not misleading have been breached. However, as there is no evidence that the Licensee did know about the asbestos, it cannot be found that her failure to disclose it was a breach of any of these other rules.

3.8. Finally, in relation to the septic tank the Committee is also satisfied that the Licensee had no knowledge of any difficulties or failure of it to work properly. There is no evidence that this was told to the Licensee or that the vendors had any understanding of the problem. Accordingly, for the same reasons explained above the Licensee cannot have engaged in unsatisfactory conduct in this regard, if she did not know about it.

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 Thursday, 22 March 2018) (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. 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 Licensee 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

Sarah Eyre

Date: 22 February 2018

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

89 Power of Committee to determine complaint or allegation

(1) A Committee may make 1 or more of the determinations described in subsection (2) after both inquiring into a complaint or allegation and conducting a hearing with regard to that complaint or allegation.

(2) The determinations that the Committee may make are as follows:

(a) a determination that the complaint or allegation be considered by the

Disciplinary Tribunal:

(b) a determination that it has been proved, on the balance of probabilities, that the licensee has engaged in unsatisfactory conduct:

(c) a determination that the Committee take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

(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

2009 are:

Rule 5 Standards of professional competence

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

Rule 6 Standards of professional conduct

6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

6.3 A licensee must not engage in any conduct likely to bring the industry into disrepute.

6.4 A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or fairness be provided to a customer or client.

6.5 A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Further, where it appears likely, on the basis of the licensee’s knowledge and experience of the real estate market1, that land may be subject to hidden or underlying defects, the licensee must either–

(a) obtain confirmation from the client that the land in question is not subject to defect; or

(b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.