Complaint No C29951 [2019] NZREAA 105 (26 August 2019)

Last Updated: 29 November 2019

Before the Complaints Assessment Committee

Complaint No: C29951

In the matter of

Part 4 of the Real Estate Agents Act 2008

and

Licensee One:

Licensee Two:

Licensee 1 (XXXXXXXX)

Licensee 2 (XXXXXXXX)

The Agency: The Agency (XXXXXXXX)

Decision to take no further action

26 August 2019

Members of Complaints Assessment Committee: CAC521

Chairperson: Garry Chapman

Deputy Chairperson: David Bennett

Panel Member: Josephine O'Donnell

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 21 February 2019 the Real Estate Authority (the Authority) received a complaint against

Licensee One, Licensee Two and the Agency from the Complainant.

1.2. Licensee One and Licensee Two are licensed Salespersons and the Agency is a licensed

Company Agent under the Real Estate Agents Act 2008 (the Act).

1.3. The complaint relates to the attempted sale of the Property. Licensee One was the selling salesperson and Licensee Two was the listing salesperson. At the time of the conduct Licensee One and Licensee Two were engaged by the Agency.

1.4. The details of the complaint are that Licensee One and Licensee Two did not properly draft the Agreement for Sale and Purchase of Real Estate (the ASP) which allowed the purchaser (the Purchaser) to avoid the contract, the Agency retained the deposit in their trust account longer than required and that the attitude towards the Complainant by the Licensees and the Agency was unprofessional.

1.5. In particular, the Complainant advised that:

a) Licensee One presented an offer to the Complainant. After negotiation the offer was accepted. The settlement date was recorded as being “28 April 2017 or 10 working days after the code compliance certificate issue whichever is later.”

b) The Code Compliance Certificate (the CCC) was issued on 31 January 2018 but was rejected by the Purchaser.

c) The ASP was void due to the uncertainty of the settlement date.

d) The deposit paid by the purchaser was held by the Agency for around 18 months instead of being dispersed to the Complainant.

e) The transaction failed to settle. The ASP was cancelled and the deposit was returned to the Purchaser.

f) The Licensees were negligent in drafting the ASP which meant the Complainant incurred substantial legal and body corporate costs.

1.6. The Complainant requested a remedy, being that the Agency accept responsibility for the costs incurred.

1.7. The Licensees and the Agency responded to the complaint against them.

1.8. In particular, Licensee One commented that:

a) Licensee One did not fail her “duty of care” to the Complainant in respect to the settlement date in the ASP.

b) Clarity about the CCC had already been obtained at the date of the ASP. It was clear that the parties’ common intention was that the relevant CCC referred to work for which a building consent had already been obtained.

c) Licensee One was not involved in the operation of the Agency’s trust account and the disbursement of deposit monies.

d) Licensee One was not involved in the decision by the Agency not to pay the claimed for costs to the Complainant.

In particular, Licensee Two commented that:

e) Licensee Two was new to the real estate industry and followed Licensee One’s instructions.

The agency agreement was signed with Licensee One present.

f) Licensee Two only did open homes and was not present when the ASP was presented to the Complainant.

g) Licensee Two no longer works for the Agency and does not have access to emails and other documentation related to this matter.

In particular, the Agency commented that:

g) There was no confusion between the Purchaser and the Complainant as to the work that was subject of the CCC. The parties agreed and understood that settlement would be required when the CCC was issued for that work.

h) The Purchaser and the Complainant disputed who was entitled to the deposit. The Agency held the deposit until the matter could be resolved.

i) Communication between the Agency and the Complainant was courteous and professional.

j) The Agency did not reimburse the Complainant for the costs he sought because the

Agency did not have liability.

2. What we decided

2.1. On 1 March 2019 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 8 August 2019 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 2012.

3. Our reasons for the decision

The Committee concluded:

3.1. The drafting of the ASP did not create a void ASP, the deposit was properly retained by the Agency and there was no evidence that the Agency and the Licensees were unprofessional in their dealings with the Complainant.

Drafting of the ASP

3.2. The facts are not in material dispute. The Complainant and the Purchaser were involved in a lengthy dispute over whether the Purchaser was obliged to complete the purchase of the

Property. We do not have to determine that matter. Our task is to decide, upon the evidence and on the balance of probabilities, whether the Licensees and the Agency breached the standards required under the Act and the Rules. Anything less than a properly drafted and executed agreement creates a real risk of not achieving those standards. The Complainant alleged the Licensees did not properly draft the ASP which in turn allowed the Purchaser to avoid the contract. The Licensees (and the Agency) denied the same.

3.3. Licensee Two is easily dealt with. Licensee Two was within her first six months as a licensed salesperson and was therefore barred under section 36 of the Lawyers and Conveyancers Act

2006 from preparing the ASP. Licensee two had no part in drafting the ASP or in its presentation to the Complainant. Accordingly, for Licensee Two, we find there was no unsatisfactory conduct in respect to this part of the complaint.

3.4. Licensee One drafted the ASP. Apart from two further terms of sale the ASP was completed by hand. The settlement date is described as “28 April 2017 or 10 working days after the code compliance certificate issue whichever is later.” Presumably the provision was meant to read “is issued” but nothing turns on that. What was argued between the Complainant and the Purchaser was the particular work the CCC related to. The Complainant argued the CCC related only to the work for which a building consent had been issued while the Purchaser argued it related to a wider range of work carried out on the building. Licensee Two said that at the time of agreement there was no uncertainty between the two parties as to what the CCC related to.

3.5. Best practice in drafting the settlement provision would have been to provide absolute clarity as to what work the CCC related to. However, there is sufficient evidence before us that at the time of signing the ASP the Complainant, the Purchaser and Licensee Two all understood the issue of the CCC related only to the work for which a building consented had been issued. Moreover, the Tribunal has stated that not every departure from best practice will amount to unsatisfactory conduct requiring a disciplinary response.1

3.6. Although understandably annoying for the Complainant to have found himself involved in a protracted dispute with the Purchaser, the Committee does not accept there was a breach of the Act or of the Rules in drafting the ASP. Accordingly, for Licensee One (and the Agency) we find that there was no unsatisfactory conduct in respect to this part of the complaint.

The deposit

3.7. The Complainant said that the Agency retained the deposit in their trust account for longer than required and returned it to the Purchaser. The Agency said it was apparent that there was a dispute between the Complainant and the Purchaser over entitlement to the deposit. The Agency made extensive efforts to ascertain the party entitled to the deposit.

3.8. Section 122(2) of the Act states Despite subsection (1), if an agent is in doubt on reasonable grounds as to the person who is lawfully entitled to the money, he or she must take all reasonable steps to ascertain as soon as practicable the person who is entitled and may retain the money in his or her trust account until that person has been ascertained. The Agency had reasonable doubt whether the Complainant or the Purchaser was entitled to the deposit and took the only proper course of action available to them and retained the deposit in their trust account until that party had been ascertained. To have done otherwise would likely have been a serious breach of the Agency’s obligations under the Act and the Rules. Accordingly, we find that there was no unsatisfactory conduct in respect to this part of the complaint.

1 See, for example, Wetzell v CAC & MacVicar [2011] READT 8 at [37] and Ryan v REAA [2013] READT 45 at [51].

Unprofessional dealings with the Complainant

3.9. The Complainant claimed the attitude towards the Complainant by the Agency and the Licensees was unprofessional. In reaching a decision and making a finding the Committee has to look carefully at the evidence before it and then come to a decision based on our assessment of what we believe is more likely than not to have occurred. Whilst the Complainant may believe that the attitude towards the Complainant by the Agency and the Licensees was unprofessional, the Committee could not find evidence that supported this allegation. Given that the onus of proof is on the Complainant, we cannot make a finding of unsatisfactory conduct in respect of this part of the complaint.

4. Your right to appeal

4.1. If you are affected by this decision of the Committee, the right to appeal is set out in section

111. You may appeal in writing to the Real Estate Agents Disciplinary Tribunal (the Tribunal) within 20 working days after the date notice is given of this decision. Your appeal must include a copy of this decision and any other information you wish the Tribunal to consider in relation to the appeal. The Tribunal has a discretion to accept a late appeal filed within 60 working days after the date notice is given of this decision, but only if it is satisfied that exceptional circumstances prevented the appeal from being made in time.

4.2. For further information on filing an appeal, read Gu id e to Fi lin g a n Ap p ea l on the Real Estate

Agents Disciplinary Tribunal website ( https:/ / www. justi ce. gov t. nz/ tri bunal s/ real -estate -

agents/ ).

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

Garry Chapman

Date: 26 August 2019

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 Disciplinary Tribunal against the determination within 20 working days after the day on which notice of the relevant decision was given under section 81 or 94, except that no appeal may be made against a determination under section 89(2)(a) that a complaint or an allegation be considered by the Disciplinary Tribunal.

(1A) The Disciplinary Tribunal may accept a late appeal no later than 60 working days after the day on which notice was given to the appellant if it is satisfied that exceptional circumstances prevented the appeal from being made in time.

(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

(ab) the prescribed fee, if any; 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.

(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.