Complaint No C28738 [2019] NZREAA 89 (19 July 2019)

Last Updated: 29 November 2019

Before the Complaints Assessment Committee

Complaint No: C28738

In the matter of

Part 4 of the Real Estate Agents Act 2008

Licensee: The Licensee

Decision of Complaints Assessment Committee

Decision to take no further action

19 July 2019

Members of Complaints Assessment Committee: CAC 520

Chairperson: Bernardine Hannan

Panel Member: Craig Edwards

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 9 January 2019 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).

1.3. The complaint relates to a property (the Property).

1.4. The details of the complaint are that the Licensee was unprofessional in his communication and misled the Complainant about whether the development needed Resource Consent.

1.5. In particular, the Complainant advised that

1. He and his partner submitted an offer to purchase the Property with a supplementary term of sale agreement (Further Terms) attached.
   
2. The Further Terms related to the Vendor’s development of a portion of the Property at the rear of the dwelling.
   

100. The Further Terms prepared by the Licensee were littered with spelling mistakes and contained information that related to another property.
     

4. His solicitor suggested a clause be inserted relating to the completion of the subdivision within a certain timeframe (sunset clause).
   

e) The Licensee “lambasted” the Complainant for wanting to insert the sunset clause.

6. The Licensee was unprofessional in the way he communicated with the Complainant, verbally and via email.
   
7. The Licensee misled him when he told them the local City Council did not require resource consent for the new buildings.
   

1.6. The Complainant requested a remedy, being:

a) A written apology from the Licensee.

2. Compensation of $419.20 for the additional legal fees they incurred in having to deal with misleading information provided by the Licensee.
   

1.7. The Licensee responded to the complaint against him.

1.8. In particular, the Licensee commented that

1. His emails and texts do not indicate he was unprofessional and there is no evidence his verbal communication with the Complainant was unprofessional.
   
2. There were some mistakes in the Further Terms and he admits he is not known for good spelling.

100. He had explained to the Complainant that the heading on the Further Terms had an incorrect address as he had used a document from a similar property with similar Further Terms. The Complainant had accepted this explanation.
     

4. At the first viewing the Licensee explained that the Property was going through a subdivision and the Complainants were well informed of all the outstanding consents required. This was also reflected in the Sale and Purchase Agreement. At no point did he tell the Complainants that no consent was required.
   
5. Initially, resource consent was not required from Council to build multiple dwellings (confirmed by Council, architects and engineers), this was communicated to the Complainants.
   
6. He asks rhetorically, why would I say no Code of Consent is required? There is no such thing as a Code of Consent – why would I make something up?
   
7. When he described the Complainant’s suggested sunset clause as “ridiculous” he was only relaying what the vendor had said.
   
8. The vendors recently decided to make some changes to the new dwellings. This is outside the Council regulations and they are being instructed by the architects and engineers that it would be easier to go through resource consent for these changes – this is probably what the Complainants are now referring to. This was well after the Complainants cancelled the agreement and walked away.
   

2. What we decided

2.1. On 5 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 12 June 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. (the Rules). Rule 5.1 (skill, care and competence), 6.2 (good faith), 6.3 (industry disrepute) and 6.4 (not mislead).

3. Our reasons for the decision

The Committee concluded:

3.1. The Committee has determined that the Licensee’s conduct in respect of his communications with the Complainant did not fall short of the standard required under the Act and that the Licensee did not mislead the Complainant about matters relating to resource consent.

Licensee’s Communication

3.2. It is the Complainant’s evidence that the Licensee’s acted at times unprofessionally in his communication with the Complainant. The Committee finds there is insufficient evidence to conclude that the Licensee has breached any Rules.

3.3. The Licensee is required to exercise skill, care, competence and diligence at all times when carrying out real estate agency work (Rule 5.1). He is also required to act in good faith and deal fairly with all parties (Rule 6.2) and not engage in any conduct likely to bring the industry into disrepute (Rule 6.3).

3.4. While the Committee might form a view that in the Licensee’s email, where the Licensee describes the Complainant’s proposed sunset clause as “ridiculous”, could have been conveyed more diplomatically, the Committee does not find this or any of the other language or communication used by the Licensee to be a breach of the requirements under the Act.

3.5. Licensees are entitled to some freedom on how they express themselves and communicate with parties in the carrying out of real estate agency work provided such conduct meets the requirements of the Act. The Committee is satisfied in this case that the Licensee’s conduct does not bring the industry into disrepute or breach any other Rule.

3.6. Accordingly, the Committee determines to take no further action on this issue.

Resource Consent

3.7. In the scenario anticipated by the proposed sale, the existing property was to be subdivided with the Complainant acquiring the existing home and the developer the vacant land for further development of two new homes. The mechanism for achieving this was for the title to the whole property to be transferred to the Complainant initially, with the developer to complete the subdivision and new development upon which titles to the new properties would transfer back to the developer. One of the advantages of this structure is that it enables the buyer to secure mortgage funding and settle more quickly than say, if a new title was first to be issued. Significant though is that all matters relating to subdivision and what can be built on the land are at the developer’s own risk. The Committee has had to consider the evidence carefully in this context and determine if the Licensee misled the Complainant about resource consent matters.

3.8. It is the Complainant’s position that they were misled by the Licensee about whether the vendor’s development required a resource consent. Various terms have been used by the parties with regard to consenting matters relating to the Property and proposed transaction. Consents are required from the local authority for a range of matters relating to the proposed activity including land use, subdivision, building work, drainage etc.

3.9. It is clear that the Licensee and the Complainant both understood that the developer would need to obtain consent for the subdivision and development. Matters relating to the developer’s requirement to obtain consents are referred to in the Further Terms contained in the agreement for sale and purchase (Agreement). These matters were discussed at some length between the Complainant’s and developer’s solicitors and the Complainant knew that the developer would need the Complainant’s assistance with obtaining these consents and that this assistance was a condition of the sale.

3.10. What is clear from the evidence of both parties is that the Licensee sought to reassure the Complainant that what the developer sought to do would be possible. That is, that the various consents necessary to enable the subdivision and development would in all likelihood be obtained. The Committee is satisfied that the basis for the Licensee’s assurance regarding this centered around whether the zone permitted the development of multiple dwellings on this site. The evidence supports that it did. This includes references to enquiries to the developer’s architect and surveyor and copy of the applicable planning rules. Further, there has been no evidence presented to suggest that the developer’s intended development

would have been opposed by the local authority or that such activity was not permitted in the zone.

3.11. This is not to suggest that the developer would be able to do whatever he wanted without any controls. The consenting process ensures that the various statutory and planning requirements are met. The developer must also be happy with and be able to meet any consent conditions. What is significant in the way this transaction is structured is that the risk in respect of all these matters lies with the developer. If it were the case, that he was unable to subdivide or develop to the extent he desired, this would be to the detriment of the developer rather than the Complainant.

3.12. In an email to the Complainant the Licensee has stated that “no resource consent is required”. He goes on to explain that “this means the site is already approved by council for multiple dwellings”. It is clear that such statements cannot be viewed in isolation from other factors apparent to the parties at this time as outlined above. In this context the Committee does not believe this statement should have been interpreted to mean that no aspect of the proposed development would require consent, only that the building of multiple dwellings is permitted. Therefore, what the Committee is focused on is whether the Licensee misled the Complainant about the likelihood that the development would be able to proceed as intended.

3.13. The evidence does not convince the Committee that the developer’s proposal was non- compliant under the local authority plan. The existence of a historic resource consent application (on hold) on the same site does not lead to a conclusion that the developer’s proposed activity was prohibited or would not be consented. Further, no evidence has been presented to satisfy the Committee that a development could not have been completed along the lines proposed in compliance with the planning rules.

3.14. Therefore, on the balance of probabilities the Committee determines the Licensee’s conduct does not breach the standard required under the Act and determines to take no further action on this issue.

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 Filin g a n Ap p ea l on the Real Estate

Agents Disciplinary Tribunal website ( https:/ / ww w. justice. g ov t. nz/ tri bunal s/ real -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

Craig Edwards

Panel Member

For Complaints Assessment Committee 520

Date: 19 July 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 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 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 Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 provides:

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

6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

6.3 A licensee must not engage in any conduct likely to bring the industry into disrepute.

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.