Complaint No C27362 [2019] NZREAA 26 (7 March 2019)

Last Updated: 28 November 2019

Before the Complaints Assessment Committee

Complaint No: C27362

In the matter of

Part 4 of the Real Estate Agents Act 2008

and

Licensee: Licensee (XXXXXXXX)

Decision to take no further action

7 March 2019

Members of Complaints Assessment Committee: CAC409

Chairperson: Jane Ross

Deputy Chairperson: Sarah Eyre

Panel Member: Maria McElwee

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 21 August 2018 the Real Estate Authority (the Authority) received a complaint against the

Licensee from the Complainant.

1.2. The Licensee is a licensed Salesperson under the Real Estate Agents Act 2008 (the Act) and, at the time of the conduct, was engaged by the Agency.

1.3. The complaint relates to the Property.

1.4. The details of the complaint are that the Licensee did not tell the Complainant about a death that had occurred at the Property before the Complainant purchased the Property at auction.

1.5. In particular, the Complainant advised that

a) He viewed the Property with the Licensee.

b) After viewing the Property he asked the Licensee if anyone had died at the Property in the past and was informed “no”.

c) The Licensee was aware that there had been a suicide at the Property and tried to conceal this information from him.

d) He purchased the Property at auction on 28 July 2018.

e) On 31 July 2018 he met with the Licensee and the owner of the Agency (the Agency

Owner) and was told that there had been a murder at the Property in the previous year.

f) He asked the Licensee why he didn’t tell him about this when he asked previously if anyone had died at the Property and the Licensee said he was sorry.

g) He spoke to one of the licensees who had listed the Property and was told there had been a suicide at the Property and that the Licensee had known this.

h) He would not have purchased the Property if he had known about the suicide.

1.6. The Complainant requested a remedy, being:

a) that the Licensee lose his licence.

1.7. The Licensee responded to the complaint against him.

1.8. In particular, the Licensee commented that

a) The licensees who listed the Property had verbally disclosed to all salespeople that there had been an accidental death at the Property and this information was to be disclosed to buyers showing genuine interest in the Property.

b) He rejects the allegation that he purposely misled the Complainant about the death at the Property and at no point did the Complainant ask him if there had been a death or murder at the Property.

c) He acknowledges that he forgot to tell the Complainant about the accidental death at the Property and believes that the error occurred because he had visited multiple properties with the Complainant.

d) On 31 July 2018, after the Complainant had purchased the Property at auction, the Complainant met with the Licensee and the Agency Owner to discuss options for the Property and at that meeting the Complainant was told of the fatal accident at the Property.

e) After the meeting on 31 July 2018 the Complainant contacted the Licensee and the

Licensee apologised for not mentioning the accident at the Property prior to the auction.

f) On 10 August 2018 the Complainant emailed the Licensee and the Agency Owner saying that he would hold them accountable if any issues arose in relation to what the Complainant described as a suicide at the Property.

g) The Manager obtained further information from the vendors about the circumstances around the accidental death at the Property. This information was passed on to the Complainant.

2. What we decided

2.1. On 24 September 2018 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 30 January 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. (Rules 6.4 and 5.1)

3. Our reasons for the decision

The Committee concluded:

3.1. The Licensee did not provide false information or withhold information that should in fairness have been provided to the Complainant (Rule 6.4) nor did the Licensee fail to exercise skill, competence and diligence (Rule 5.1).

Did the Licensee provide false information, or withhold information that should in fairness have been provided to the Complainant?

3.2. Rule 6.4 provides “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.”

3.3. The Property was listed with the Agency on 14 June 2018. The listing agents (the Listing Agents) were 2 licensees employed by the Agency. In late June/early July 2018, and following comments from neighbours, the Listing Agents discovered there had been a death at the Property. Confirmation was sought from the vendors who advised that their granddaughter’s boyfriend had died the previous year following an accident with a gun. An enquiry into the death confirmed that it had been an accident and the boyfriend had not intended to injure himself or anyone else.

3.4. The evidence before the Committee shows that the Agency gave serious consideration as to how to deal with this information including taking guidance from the Authority’s “Disclosure of Sensitive Issues “ information sheet and the Barfoot1 High Court decision referred to in the information sheet.

3.5. In the Barfoot decision the High Court confirmed that whether or not something should in fairness be disclosed will very much depend on the facts of the case. The Barfoot case involved a property that was sold where a tenant had committed suicide in the garage 12 months before the listing. The deceased’s wife and son continued to live in the property. One year after the suicide the property was listed for sale and the suicide was disclosed to potential purchasers. The property did not sell and was re-listed with Barfoot & Thompson who made the decision not to disclose the suicide because it was a personal matter of the occupants and did not relate to the condition of the property. The complainants purchased the property not knowing about the suicide and when they decided to sell 5 months later a neighbour asked them if they were selling because of the suicide. This was the first time that the complainants had heard about the death at the property. The complainants disclosed the circumstances of the death to their purchaser who then on sold because they did not want to live in the property.

3.6. The High Court in the Barfoot case concluded that because the decision as to whether to disclose the suicide was so finely balanced, and as there was no industry standard or guideline available at that time, it would be inappropriate to find a breach of Rule 6.4.2

3.7. The Authority’s information sheet on “Disclosure of Sensitive Issues” was produced as a result of the Barfoot decision and, following the findings in the Barfoot case, gives examples of factors to be taken into account when deciding whether to disclose sensitive issues including:

a) what happened - for example murder or suicide.

b) the location of the event – sometimes it will be reasonable to view an event that occurred on the grounds of a property differently from one that occurred in the dwelling.

c) how long ago the event happened.

d) the circumstances following the event - for example whether the dwelling continued to be lived in and, if so, for how long.

e) the circumstances of the event and whether it has a degree of local or wider notoriety.

f) the likely reaction of potential buyers and the possible impact on the price.

3.8. Having reviewed the Authority’s sensitive issues guidelines and after discussions with the vendors, the Agency concluded that in all the circumstances and as the death at the Property was an accident, it was likely that it did not require disclosure. Nevertheless, the Agency decided to take a conservative approach and all salespeople were verbally advised that the accident at the Property should be disclosed to serious prospective purchasers.

3.9. The Licensee says the Complainant was first told of the death at the Property at a meeting with the Agency Owner and the Licensee on 31 July 2018, after the Complainant had purchased the Property at auction. The Licensee says that the Complainant did not appear unduly concerned.

3.10. After the meeting on 31 July 2018, the Licensee says that the Complainant called him to discuss the accident at the Property and told him that he did not hold the Licensee responsible but, as

1 Barfoot and Thompson v REAA & Campbell [2014] NZHC 2817

2 At [83]

he was considering renting the Property before he proceeded with his development, he did not want prospective tenants to be deterred by what had happened at the Property. The Licensee’s impression was that the conversation ended amicably.

3.11. The Licensee says that he spoke to the Complainant again after this conversation, about other properties that may be suitable for him. The Licensee thought they continued to have a good rapport.

3.12. The Complainant emailed the Agency Owner and the Licensee on a number of occasions throughout August 2018 saying there was no disclosure in the Property history about a suicide at the Property and he would hold them accountable if his tenants were not happy or if he could not get a tenant because of the suicide.

3.13. One of the Listing Agents has also provided a statement to the Committee and says the Complainant asked him about the murder at the Property. He explained to the Complainant that there had not been a murder at the Property but there had been an accident and the vendor’s granddaughter’s boyfriend had died. He says he explained as best he could that although it was like a suicide, it was not suicide it was an accident with a gun.

3.14. The Committee has had regard to the concerns of the Complainant that the death at the Property should have been disclosed as it would have impacted his decision to purchase the Property, but the focus of the Complainant's submissions have been on the fact he was misled and his concern about the non-disclosure relates to his mistaken belief that the death was not an accident. The Complainant has variously referred to the death at the Property as murder or suicide. The Committee finds that there is no evidence that the Agency, the Listing Agents or the Licensee in their discussions and correspondence with the Complainant referred to the death at the Property as anything other than accidental.

3.15. The Committee agrees that the Agency was not obliged to make disclosure of the death at the

Property under Rule 6.4 as:

a) The event at the Property was an accident, not murder or suicide.

b) The accident had occurred the previous year.

100. The vendors had continued to live in the Property and were selling because they were retiring not because of what had happened at the Property.
     

3.16. The Agency did not consider that the accident would be a factor that would affect the value of the Property. The Committee accepts that the Agency had no obligation to disclose the death at the Property and accordingly finds there was no failure by the Licensee under Rule 6.4.

Did the Licensee provide misleading information?

3.17. Given the Committee’s finding that the Licensee was not required disclose the death, the Licensee could only be found to have engaged in unsatisfactory conduct if he had misled the Complainant and/or if failure to comply with the Agency decision to disclose was unsatisfactory conduct.

3.18. The Committee finds that there is insufficient evidence to prove that the Complainant asked whether there had been a death at the Property. The only evidence this question was asked is the Complainant’s own assertions. This is strongly disputed by the Licensee’s assertions that he was not asked that question.

3.19. In situations where the evidence is in dispute, the Committee must determine on the balance

of probabilities which evidence is more probable. The Committee finds that there is insufficient evidence to prove that it was more probable than not that the Complainant asked this question. It is a very unusual question to ask if one had no knowledge at all of any death at a property and the Complainant did not ask it at any other viewings he went to with the Licensee. Further, the email correspondence between the Complainant and the Agency is not consistent with the Complainant having questioned whether there was a death at the Property after he viewed the Property. The Complainant makes no mention of having asked the question in his correspondence. The Committee is of the view that if the question had been asked then this would certainly have been raised by the Complainant at the 31 July 2018 meeting, during phone conversations or in his correspondence with the Licensee and the Agency.

3.20. For these reasons the Committee finds that the Complainant has not proven to the standard of the balance of probabilities that he asked about a death at the Property and that the Licensee answered this question by saying there was no death at the Property. .

3.21. Accordingly, the Committee finds the Licensee did not engage in unsatisfactory conduct by providing misleading information to the Complainant about the death at the Property.

Did the Licensee fail to exercise skill, care, competence, and diligence in the transactions for the Property?

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

3.23. It is undisputed that the Licensee did not follow his Agency’s instructions to disclose the death at the Property after the Complainant showed serious interest in the Property.

3.24. While best practice requires that mistakes are not made, not every failure to comply with best practice or every error will necessarily amount to unsatisfactory conduct under the Act.

3.25. In considering whether the Licensee’s failure to follow his Agency’s direction and disclose the death at the Property amounted to a breach of Rule 5.1, the Committee had regard to the findings in a’Beckett3, where the the Tribunal found4:

“Not every mistake by an agent is a failure to exercise skill, care, competence and diligence. The function and purpose of the disciplinary process under the Real Estate Agents Act is primarily to protect the public and maintain standards (see s.3 Real Estate Agents Act) ... A breach of rule

5.1 cannot be established every time an error occurs”.

3.29 The Committee finds that, although the Licensee did fail to comply with his Agency’s directions that failure was not a breach of Rule 5.1.

3.30 The Committee has determined to take no further action against the Licensee on any of these matters.

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)

3 Donna Rae a’Beckett v REAA (CAC407) & Anqi Yin [2017] NZREADT 30

4 At [13]

within 20 working days after the date notice is given of this decision.

4.2. 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.

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

Agents Disciplinary Tribunal website ( https:/ / www. justi ce. g ov t. nz/ tri bunal s/ rea l -estate -

ag ents/).

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

Maria McElwee

Date: 7 March 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 secti on 81 or 94, except that no appeal may be made against a determination under secti on 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 secti on 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.

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 6.4 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.