Complaint No C25563 [2019] NZREAA 106 (28 August 2019)

Last Updated: 29 November 2019

Before the Complaints Assessment Committee

Complaint No: C25563

In the matter of

Part 4 of the Real Estate Agents Act 2008

and

Licensee: The Licensee (XXXXXXXX)

The Agency: The Agency (XXXXXXXX)

Decision to take no further action

28 August 2019

Members of Complaints Assessment Committee: CAC1903

Chairperson: Nigel Dunlop Deputy Chairperson: Rachel Kent Panel Member: Ian Keightley

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 21 May 2018 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee and the Agency from the Complainant.

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 the Complainant owned a dairy farm at the Property, where he worked as a dairy farmer for the past 46 years. On 29 January 2018 he suffered a stroke. The Complainant says he was hospitalized for 3 weeks and during that period he was heavily medicated and in a very confused state of mind.

1.5. The Complainant says the Licensee, who had also been his farm advisor for 4 years, advised him to sell the Property. The Complainant says his family, persuaded by the Licensee, agreed that the Complainant should sell the Property. The Complainant says his family had believed the Licensee was looking out for his best interests. The Complainant says the Licensee organised for him to be taken out of the hospital twice to attend meetings and sign a listing agreement. He has no recollection of signing that agreement, nor does he have any recollection of the Licensee providing him with an appraisal for the Property.

1.6. The Complainant says while he was in hospital, his daughters approached a bank to secure finance to employ a farm manager for the next four months while he was unwell. The bank stated that the farm should be advertised for sale as a condition of the loan. The Complainant says there was no pressure by the bank to sell the Property provided it was advertised. The Complainant says he consented to the Property being put on the market on the understanding that it was to be advertised nationwide. He asked the Licensee to do this.

1.7. The Property had an RV of $1,930,000. The Complainant says the eventual purchaser, who is also a “mate” of the Licensee, made an offer through the Licensee for $1.6 million. The Complainant says he told the Licensee the Property had to be advertised but the Licensee said it would cost the Complainant more and there was already an offer. The Licensee allegedly told the Complainant “that’s all you’ll get for it”, there were “no other buyers” and pressured the Complainant to accept the offer, which he ended up doing.

1.8. The Complainant later saw in the paperwork that the Licensee had appraised the Property at

$1,350,000. The Complainant says the Property was not advertised and sold under value. He has attempted to cancel the Sale and Purchase Agreement (ASP) through lawyers but this has been unsuccessful.

1.9. The Complainant says that the Licensee had a conflict of interest – acting as both his farm advisor and as the listing agent. He feels that the Licensee did not act in his best interests and ignored his state of health to secure a sale.

1.10. The Complainant says his complaint is also against the Agency as he made a complaint to the South Island General Manager of the Agency. The Complainant says the manager was dismissive of his complaint and did not commit to trying to resolve it.

1.11. The Complainant requested a remedy, being:

a) That the Sales and Purchase Agreement to be withheld until such time as this complaint has been resolved.

b) The farm be re-advertised nationwide and for a more realistic price. If this can’t be done, for the Licensee and the Purchaser to pay the difference between the $1,600,000 sale price and the R.V. of $1,930,000 ($330,000).

1.12 The Licensee responded to the complaint against him as follows:

a) He had indeed been a farm consultant for the Complainant and that work had ceased prior to the Complainant having a stroke.

b) The Complainant’s daughter had contacted him to advise him of the Complainant’s stroke and he assumed that was because they already had a professional relationship.

c) He visited the Complainant in hospital and his daughters, and a Rural Support Trust representative were present.

d) After discussions over whether to continue to farm the property the Complainant advised he wanted the Licensee to sell it. The appraisal value was discussed and later confirmed with a Comparative Market Analysis (CMA). The Licensee’s initial estimate was $1.3M -

$1.5M. The Rural Support Trust representative said it may only realize $1.2M. The Licensee also offered to stand aside in favour of other Agents.

e) The family discussed power of attorney appointments but were told they would need medical support to effect such a move. The Complainant insisted he wanted to stay in control.

f) The Licensee was told by the daughters that the doctors advised them that the

Complainant was not mentally incapacitated.

g) Six days later the Licensee visited the Complainant in hospital with his 2 daughters and presented the CMA.

h) The Complainant left the hospital with his daughters to meet at the Licensee’s brother’s place to sign the agency agreement.

i) The next day the Licensee showed a prospective purchaser over the Property. This purchaser had already contacted the Complainant’s family to see if the Property was for sale.

j) Negotiations continued over the next 11 days.

k) The following day the Complainant, in his solicitor ’s office, signed the offer with minor amendments. The ASP was completed by the Purchaser 9 days later and this acceptance was conveyed to the Complainant who appeared happy with the sale price of $1.6M.

l) The Licensee met with the Complainant at the Property 2 days later to discuss management until settlement and meeting any obligations.

m) Subsequent to that meeting the Complainant started having second thoughts about the deal. The Licensee offered a fee reduction of $4000 to assist with a compliance issue.

n) Two days later the agreement went unconditional and the deposit was paid.

o) The Complainant then made an allegations that the Licensee did not give him an appraisal,

was in collusion with the Purchaser and that there was no agency agreement.

16. The Purchaser and the Licensee had no prior relationship other than competing in rugby matches some 20 years prior. The Licensee says he last saw him in either 1994 or 1995.
    

1.13 The Agency responded to the complaint as follows:

a) The General Manager says he never received a complaint other than a phone call from the

Complainant on 20 May 2018.

b) He offered to travel to the West Coast and meet with the Complainant to discuss the matter, however the Complainant refused to meet and advised he had complained to the Authority.

100. He says he was not dismissive or rude, but the Complainant was not interested in reasonable dialogue.
     

2. What we decided

2.1 On 4 July 2018 Complaints Assessment Committee 403 considered the complaint and decided to inquire into it under section 79(2)(e) of the Act. This decision was later reaffirmed by Complaints Assessment Committee 518, and finally reaffirmed by Complaints Assessment Committee 1903 (the Committee).

2.2 On 12 July 2019 the Committee held a hearing on the papers and considered all the information.

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

Licensee or the Agency.

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, namely Rules 9.1 (must act in best interests of client); 9.2 (no undue or unfair pressure); 9.8 (no taking advantage of client’s inability to understand relevant documents), and 9.14 (conflict of interest).

3. Our reasons for the decision

Conflict of Interest

3.1. The Committee cannot identify a conflict of interest between the Licensee having been the Complainant’s farm advisor and then later being his real estate agent. On the contrary the Committee considers that as farm values are influenced by how the Property has been farmed, the Licensee may indeed have been the best-informed agent to handle the task of its sale.

3.2. Furthermore, there was approximately 7 months since his last advisory tasks for the

Complainant.

3.3. The family called him to sell the farm and this indicates the strength of the then existing relationship. The Complainant chose the Licensee to market his farm even though the Licensee had offered to stand aside in favour of others.

3.4. Given that the Licensee did not breach the Act or Rules in relation to taking advantage of the

Complainant, the Committee is taking no further action under this head of the complaint.

Taking advantage of the client

3.5. While the Committee do not have the expertise or evidence to make a judgement about the Complainant’s mental capacity at the time, the Committee considers the Licensee did not influence the Complainant to sign documents or make any decisions without other parties present.

3.6. Others were present at pivotal and important points during this real estate transaction. Other parties were at the Licensee’s initial consultation with the Complainant and at the appointment where the agency agreement was signed.

3.7. Importantly, the ASP was signed by the Complainant in the presence of his lawyer.

3.8. The Licensee was informed by the Complainant’s daughters that the doctors had advised them that the Complainant was mentally competent. None of the Complainant’s trusted advisors, namely his daughters, his lawyer or his West Coast Rural Support person made any suggestion that he lacked mental capacity and therefore could not enter into contractual relations. The Licensee’s own assessment was that although the Complainant was tired, he knew what he was doing. While there is some evidence that he had difficulties with his sight and therefore reading documents, the Licensee had no warning or indication from anyone involved that the Complainant was not able to enter into legal or contractual relations.

3.9. The Committee is of the opinion that the Licensee handled a difficult situation wisely and at all times was acting in the best interests of the Complainant. The Committee considers that the Licensee was cognizant of the Complainant’s illness and acted sensibly and in good faith having regard to his stroke.

3.10. Given that the Licensee did not breach the Act or Rules in relation to taking advantage of the

Complainant, the Committee is taking no further action under this head of the complaint.

Pressure to accept a low price

3.11. The Committee considered the appraisal information provided to the Complainant. This appraisal supports the eventual sale price which was towards the upper end of the indicated range.

3.12. This appraisal was given to the Complainant in the presence of 3rd parties and as mentioned above, the ASP was signed in the presence of his lawyer.

3.13. Given that the Licensee did not breach the Act or the Rules in relation to pressuring the Complainant to accept a low price for his farm, the Committee is taking no further action under this head of the complaint.

The Property wasn’t advertised

3.14. There was a clear intention to advertise the property, but the speed of events meant the property was under contract before the marketing could commence.

3.15. The Licensee received an offer from the eventual purchaser very quickly and as is required it was presented to the Complainant for consideration. We consider that the Complainant knew the marketing had not commenced and that the pressure of finding a sale of the farm, and the advice from family members influenced his decision to accept the offer. He signed the ASP in front of his solicitor. He was not obliged to sign the offer. He could have elected to wait for response from any marketing.

3.16. We see no evidence that Licensee was asserting pressure for him to sign as 3rd parties were always involved. We find no grounds that the Licensee acted in a way to prevent the farm being

advertised. It was the Complainant’s decision to accept the offer before the marketing commenced.

3.17. Given that the Licensee did not breach the Act or the Rules in relation to not advertising the

Property, the Committee is taking no further action under this head of the complaint.

The Agency was dismissive

3.18. The Committee considered this part of the complaint and found the Agency did try to resolve the matter as best they could, however the Complainant proceeded to the REA to make his complaint before the Agency had time to deal with it further.

3.19. Given the Agency did not breach the Act or Rules in relation to resolving the complaint, the

Committee is taking no further action under this head 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

Ian Keightley

Date: 28 August 2019

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

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 f

for this reason need not be pursued:

(c) determine that the complaint is frivolous or vexatious or 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 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.

The relevant provisions from the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012 are:

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 9.2 A licensee must not engage in any conduct that would put a prospective client, client, or customer under undue or unfair pressure

Rule 9.8 A licensee must not take advantage of a prospective client’s, client’s, or customer’s inability to understand relevant documents where such inability is reasonably apparent

Rule 9.14 A licensee must not act in a capacity that would attract more than 1 commission in the same transaction