Complaint No C28053 [2019] NZREAA 39 (4 April 2019)

Last Updated: 28 November 2019

Before the Complaints Assessment Committee

Complaint No: C28053

In the matter of Part 4 of the Real Estate Agents Act 2008

The Licensee: L i c e n s e e (XXXXXXXX)

Decision to take no further action

4 April 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 1 October 2018 the Real Estate Agents 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 conduct was engaged by Agency 1(the Agency).

1.3. The complaint relates to the unsuccessful purchase of a property (the Property). The Complainant was a prospective purchaser of the Property and the Licensee was the selling salesperson.

1.4. The complaint (in summary) is that the Licensee misled the Complainant that the Property had a Master Build 10-Year Guarantee (the Guarantee).

1.5. The Complainant advised that:

a) Before offering for the Property the Licensee told the Complainant that the Property had the Guarantee.

b) The Complainant requested further information about the Guarantee. The Licensee gave the Complainant a copy of an email (the Email) sent by a Builders Association that indicated that the Property had the Guarantee and was transferable to the purchaser of the Property.

c) The street name and suburb of the Property were correctly recorded in the Email.

However, the Email writer had incorrectly added one numeral to the street number meaning that the wrong street number was shown in the Email. The discrepancy between the actual street number of the Property and the incorrect street number was not identified by either the Complainant nor the Licensee.

d) The wrongly referred to property had the Guarantee whereas the Property did not.

e) Wrongly believing that the Property had the Guarantee the Complainant entered into a conditional agreement to purchase the Property. The agreement was conditional upon the Complainant obtaining a satisfactory building report, a Land Information Memorandum, an illicit substance report and an inspection of council records. The vendor also warranted to transfer the Guarantee to the Complainant prior to settlement.

f) The Complainant spent $2,341.00 undertaking due diligence on the Property.

g) The Complainant discovered that the Property did not have the Guarantee and cancelled the agreement to purchase the Property.

1.6. The Complainant requested a remedy, being that the Licensee apologise to the Complainant and that the Licensee reimburse the Complainant the money he spent on due diligence.

1.7. The Licensee responded to the complaint against him.

1.8. The Licensee commented that:

a) The information about the Guarantee came from the vendor and from the Builders Association. He did not know that the Property did not have the Guarantee nor any reason to suspect that it did not.

b) When the Complainant entered into the conditional agreement to purchase the Property both the Licensee and the Complainant believed that the Property had the Guarantee.

c) During the due diligence phase of the agreement the Complainant informed the Licensee that the Property did not have the Guarantee.

d) The Licensee contacted the Builders Association and they admitted that they had made a mistake in the Email by identifying the wrong property as having the Guarantee.

e) The Complainant still wished to purchase the Property.

f) It was discovered that the Property had a different 10-year guarantee. However, the underwriter of this guarantee was in liquidation effectively invalidating it. The vendor was willing to try to obtain another underwriter for this guarantee.

g) The Complainant did not agree to granting the vendor a reasonable period of time to secure another underwriter, and instead offered $30,000 less for the Property than the previously agreed purchase price.

h) The vendor refused the offer of $30,000 less and the Property sold to another purchaser.

2. What we decided

2.1. On 21 January 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 21 March 2019 the Committee held a hearing on the papers and considered all the information that had been 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 (the Rules).

3. Our reasons for the decision

3.1. The Committee concluded there is insufficient evidence that the Licensee misled the

Complainant that the Property had the Guarantee.

Insufficient evidence that the Licensee misled the Complainant

3.2. The facts are not in dispute. It is common ground that the Licensee told the Complainant that the Property had the Guarantee when it did not. It is also common ground that both the Complainant and the Licensee wrongly believed that the Property had the Guarantee.

3.3. Rule 5.1 holds that a licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work. It follows that a breach of Rule 5.1 would require the Committee to find that the Licensee failed to exercise skill, care, competence and

diligence in not identifying the additional numeral in the Email. This requires an assessment of the conduct in question by the Committee to determine whether there was a failure by the Licensee to exercise skill, care, competence and diligence. Here, the Licensee did not identify a single numeral discrepancy between the property address in the Email and the actual address of the Property.

3.4. In a’Beckett the Tribunal, in overturning a committee decision finding of unsatisfactory conduct, held that 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 Act is primarily to protect the public and to maintain standards. It is therefore important that agents are both competent to operate as agents in the public interest (and to protect the public) and for the maintenance of professional standards in the real estate industry.1

3.5. In a’Beckett one of the licensee’s errors was her failure to read a text closely meaning she sent information to the wrong person with a similar sounding name. The Tribunal described Ms a’Beckett’s conduct as a chapter of errors revealing a slightly muddled approach.2

3.5. In the present matter we have a single error rather than a chapter of errors, and no evidence of a muddled approach by the Licensee. In fact, the Licensee did most things correctly. After being told by the vendor that the Property had the Guarantee, the Licensee took the sensible precaution of seeking confirmation from the builders association. Unfortunately for everyone involved, the Email response from the builders association confirming the Guarantee was incorrect which resulted in the error on the part of the Licensee.

3.6. Clearly the Licensee should have checked that the Email had the correct address. But is this sufficient for a disciplinary finding? A breach of Rule 5.1 cannot be established every time an error occurs.3 To echo the words of Heath J in Vosper v The Real Estate Agents Authority “only conduct that truly warrants the attention of the disciplinary process will constitute such an offence.” The Licensee’s failure to identify the street number discrepancy between the two properties was sloppy, but a minor infringement that does not demonstrate a failure to exercise care, skill and competence in the exercise of his real estate agency work. A breach of Rule 5.1 cannot be established every time an error occurs 4 and here the conduct was not serious enough to justify the imposition of a disciplinary sanction.

3.7. In case the Committee is wrong and every error and mistake that a licensee makes is in fact a breach of Rule 5.1 or another Rule, then we adopt the reasoning of His Honour in Vosper v The Real Estate Agents Authority5 and conclude that in this case the breach is of such a minor nature that we exercise our discretion under s 80(2) to take no further action. However, we do consider that the Licensee ought to learn some lesson from this complaint. He should take care in checking details of information he is passing to others because this potentially could lead to some serious errors.

3.8. The Complainant was understandably annoyed at discovering that the Property did not have the Guarantee after having entered into its conditional purchase and after having incurred some costs undertaking his due diligence. Had we found that the Licensee had engaged in unsatisfactory conduct it would have been possible for steps to be taken at the Licensee’s expense to provide relief from the consequences of his error, namely meeting the legal and

1 a’Beckett v Real Estate Agents Authority & Yin [2017] NZREADT 30 at [13].

2 Ibid.

3 Ibid.

4 Ibid.

5 Vosper v The Real Estate Agents Authority [2017] NZHC 453.

other costs the Complainant was required to pay. We make the unusual suggestion that notwithstanding the finding of no further action, that the Licensee and the Complainant agree on some measure of financial relief for the Complainant.

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 Ministry of

Justice -Tri bunals (www.justice.govt.nz/tribunals).

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: 4 April 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 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

2012 are:

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