Complaint No C27888 [2019] NZREAA 52 (24 April 2019)

Last Updated: 28 November 2019

Before the Complaints Assessment Committee

Complaint No: C27888

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

and

Licensee 1: Licensee 1 (XXXXXXXX)

Licensee 2: Licensee 2 (XXXXXXXX)

Decision to take no further action

24 April 2019

Members of Complaints Assessment Committee: CAC519

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 18 September 2018 the Real Estate Agents Authority (the Authority) received a complaint against Licensee 1 and Licensee 2 from the Complainant.

1.2. Licensee 1 and Licensee 2 (the Licensees) are licensed Agents under the Real Estate Agents Act

2008 (the Act).

1.3. Licensee 1 is a former manager and director of Agency 2. At the time of the conduct Licensee

1 was engaged by Agency 3and Agency 4.

1.4. At the time of the conduct Licensee 2 was engaged by Agency 1 (the Agency) and was the managing director of the A group of companies.

1.5. The complaint relates to the Properties.

1.6. On 11 December 2018 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 78(a) of the Real Estate Agents Act

2008 (the Act).

1.7. The details of the complaint are that Licensee 2 made threats to the Complainant when seeking payment of overdue commissions following the sale of the Properties. Licensee 1 was aware of the threats but did nothing to intervene and both Licensees discussed the non-payment of commissions with an agent from another company.

1.8. The Complainant requested a remedy, being that:

a) The Licensees be held accountable for their conduct. b) Licensee 2 be charged with disgraceful conduct.

1.9. The Licensees responded to the complaint against them and say Licensee 2’s correspondence

with the Complainant contained proposals for payment of overdue commission, not threats.

1.10. The Licensees deny they discussed the non-payment of commissions with an agent from another company.

1.11. Agreed facts:

(a) On 12 October 2017, the Complainant, as director of Company 1

(the Vendor) signed agency agreements for the Properties with the Agency.

(b) Property 1 sold on 20 November 2017 and settlement took place on 20 December

2017.

(c) Property 2 sold on 24 November 2017 and settlement took place on 15 December

2017.

(d) The Agency invoiced the Vendor for commissions totalling $59,871.88 for both sales on

18 December 2017.

(e) The commissions were not paid.

2. What we decided

2.1. On 9 April 2019 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

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

2.3. 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

3.1. The Committee’s reason for not inquiring into the complaint is that, pursuant to section 79(2)(a) of the Act, the Licensees’ conduct is neither unsatisfactory conduct nor misconduct as defined by the Act.

The Committee concluded:

3.2. The conduct of the Licensees was not real estate agency work as defined by the Act.

3.3. The conduct of the Licensees was not misconduct.

Was Licensee 2’s correspondence with the Complainant regarding payment of

commission real estate agency work?

3.4. Section 72 of the Act provides that a finding of unsatisfactory conduct against a licensee can only be made if the conduct complained of is real estate agency work.

3.5. Real estate agency work is defined in the Act as “any work done or services provided, in trade, on behalf of another person for the purpose of bringing about a transaction.”

3.6. “Transaction” is defined in the Act as “the grant, sale, purchase or other disposal or acquisition of a freehold, or leasehold estate or interest in land.”

3.7. In a recent Tribunal decision1 Counsel for the Authority submitted that2 “”real estate agency

work” must be given an expansive, purposive interpretation”.

3.8. The sale of the Properties had settled two months before the actions complained of. There is no dispute as to the amount of commission payable. The commissions could not be paid from the sale proceeds of the Properties as is usual because the mortgagee of the Properties required all of the sale proceeds. In pursuing payment of the commissions, Licensee 2 was seeking to recover a debt properly due to the Agency.

3.9. Even on an expansive view, the Committee does not consider debt recovery falls within the ambit of “real estate agency work” and there is no suggestion by either the Complainant or the Licensees that this was real estate agency work.

3.10. The Committee finds Licensee 2, in his dealings with the Complainant, was not carrying out

1 Kooiman v Real Estate Agents Authority & Rodgers, Clarke and Cudby [2019] NZREADT 11

2 At [26]

real estate agency work and accordingly the Committee cannot make a finding of unsatisfactory conduct.

If the correspondence was real estate agency work, were the communications made fairly and in good faith?

3.11. Having found the correspondence was not real estate agency work, it is not necessary for the Committee to consider whether the communications were made fairly and in good faith. The Committee makes no finding on this issue.

3.12. If the correspondence was not real estate agency work, would the con duct reasonably be regarded by agents of good standing or reasonable members of the public as disgraceful?

3.13. Section 73 of the Act provides that a licensee is guilty of misconduct if the licensee’s conduct would be reasonably regarded by agents of good standing or, reasonable members of the public as disgraceful.

3.14. Carrying out real estate agency work is not a condition to a finding of misconduct under section 73 of the Act.

3.15. In its decision in Morton-Jones v Real Estate Authority 3 his Honour Justice Woodhouse in relation to findings of disgraceful conduct said:

“[29] ... if the charge is under s 73(a) the critical enquiry is whether the conduct is “disgraceful”. Conduct which involves a marked and serious departure from the requisite standards must be assessed as “disgraceful”, rather than some other form of misconduct which may also involve a marked and serious departure from the standards.”

3.16. In its decision in Complaints Assessment Committee 304 v Chapman4, the Tribunal said:

“Thus, conduct charged against a licensee under s 73(a) may be found to be disgraceful (whether or not it is the course of real estate agency work) if it meets the ordinary meaning of “disgraceful”.”

3.17. The key conduct which the Committee is considering is whether an email sent by Licensee 2 to the Complainant on 26 March 2018 contained a threat as alleged by the Complainant and would be considered disgraceful conduct.

3.18. In February/March 2018 Licensee 2 emailed the Complainant chasing payment of the overdue commissions. On 26 March 2018, a proposal for payment was made by the Complainant proposing staged payments over a three month period. Licensee 2 sent a counter proposal by email to the Complainant the same day requiring payment in two payments over two months and as consideration for agreeing to the delay in payment, the Agency expected interest, property management referrals, a written testimonial and payment of legal fees.

3.19. The Complainant says this email was a threat, it amounted to extortion and as such was disgraceful conduct.

3.20. However, Licensee 2 refers to the Complainant’s response to the email which stated the

Complainant could not meet the payment schedule proposed, as payment could only be made

3 [2016] NZHC 1804, at [29]

4 [2018] NZREADT 6 at [108]

from trading profits but he was happy to promote the Agency’s business. Licensee 1 says there was nothing in the Complainant’s response that indicated he had viewed the 26 March 2018 email as a threat and as Licensee 1 did not see the email as a threat either he did not see any need to intervene. Licensee 2 agrees and says the suggestion by the Complainant the email was a threat and disgraceful was made later after the Agency had commenced liquidation proceedings against the Vendor.

3.21. The Committee finds Licensee 2’s email on 26 March 2018 was not a threat or extortion.

Threatening language was not used nor was the email phrased as a threat in that there was no mention of repercussions for the Vendor if the proposal was not accepted.

3.22. This was a commercial transaction, the Licensees were dealing with an experienced Vendor known to them, they were concerned that the commissions had not been paid and had been seeking payment of the commissions for some time. It is not unreasonable for a robust approach to be taken in this context.

3.23. The Committee finds Licensee 2’s email dated 26 March 2018 did not involve a marked and serious departure from requisite standards, nor did language used by Licensee 2 meet the ordinary meaning of “disgraceful”. The Committee finds Licensee 2’s conduct would not reasonably be regarded by agents of good standing or reasonable members of the public as disgraceful, accordingly, this was not misconduct.

Discussions with another agency regarding nonpayment of the commissions

3.24. Rule 9.17 states that a licensee must not disclose confidential personal information about a client except in defined circumstances.

3.25. The Complainant says the Licensees were discussing the non-payment of commission by the

Vendor with another agency.

3.26. However, Licensee 1 says he was simply communicating with his previous employer regarding unpaid commissions by the Vendor in respect of sales not related to the Properties or the Agency and discussing what actions should be taken. Licensee 2 denies discussing the non- payment of commissions to the Agency with another agency.

3.27. There is no evidence to corroborate the Complainants’ claim that discussions took place which would have resulted in a breach of Rule 9.17 and the allegation is denied by the Licensees, so no further action can be taken on this issue.

Other matters

3.28. Fair Trading Act 1986

3.29. The Complainant also says the actions taken by Licensee 2 breach the Fair Trading Act. The Committee’s jurisdiction is limited to breaches of the Act and the Rules and accordingly, the Committee can make no finding about breaches of the Fair Trading Act.

3.30. The Complainants post disclosure affidavit

3.31. In response to the Authority’s Investigation Report, the Complainant provided an affidavit which makes a number of new allegations concerning both Licensees which are unrelated to this complaint. The Committee is unable to consider the new allegations as part of this 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 Guide to Filing an Appeal on the Real Estate Agents Disciplinary Tribunal website (https://www.justice.govt.nz/tribunals/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

Maria McElwee

Date: 24 April 2019

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

72 Unsatisfactory conduct

For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that –

(a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or

(b) contravenes a provision of the Act or of any regulations or rules made under this Act; or

(c) is incompetent or negligent; or

(d) would reasonably be regarded by agents of good standing as being unacceptable.

73 Misconduct

For the purposes of this Act, a licensee is guilty of misconduct if the licensee’s conduct –

(a) would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful; or

(b) constitutes seriously incompetent or seriously negligent real estate agency work; or

(c) consists of a willful or reckless contravention of –

(i) this Act; or

(ii) other Acts that apply to the conduct of licensees; or

(iii) regulations or rules made under this Act; or

(d) constitutes an offence for which the licensee has been convicted, being an offence that

reflects adversely on the licensee’s fitness to be a licensee.

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 9.17 A licensee must not disclose confidential personal information relating to a client unless— (a) the client consents in writing; or

(b) disclosure is necessary to answer or defend any complaint, claim,

allegation, or

proceedings against the licensee by the client; or

(c) the licensee is required by law to disclose the information; or

(d) the disclosure is consistent with the information privacy principles in section 6 of the Privacy Act 1993.