Complaint No C32678 [2020] NZREAA 30 (23 April 2020)

Last Updated: 20 August 2020

Before the Complaints Assessment Committee

Complaint No: C32678

In the matter of

Part 4 of the Real Estate Agents Act 2008

and

Licensee: The Licensee (XXXXXXXX)

Decision to take no further action

23 April 2020

Members of Complaints Assessment Committee: CAC1907

Chairperson: Rachel Palu

Deputy Chairperson: Christine Hickey

Complaints Assessment Committee

Decision to take no further action

1. The Information

1.1. On 6 August 2019 the Real Estate Agents Authority (the Authority) received information relating to the conduct of the Licensee.

1.2. The Licensee is a licensed Salesperson under the Real Estate Agents Act 2008 (the Act).

1.3. The information relates to a residential property (the Property).

1.4. The details of the conduct are that the Licensee: continued to market the Property after his general listing authority had been cancelled and without a listing agreement; continued to act for the vendor and coerced him to negotiate a sale through the Licensee; sold the Property after an exclusive agency with another agency (Agency 2) had commenced, and after the Licensee had become aware of the exclusive agency; and failed to protect the vendor from a double commission.

1.5. In particular, the information advised that:

a) Agency 2 had held a general listing agreement over the Property for the period 5 April to

5 July 2019.

b) On 1 May 2019 the vendor had entered into a general listing agreement with the

Licensee’s agency, (Agency 1), for an open term.

c) On 4 June 2019 the person who ultimately purchased the Property (the ultimate purchaser) contacted the Licensee about the Property.

d) On 21 June 2019 the vendor sent a text to the Licensee advising that he wished to cancel the general listing with Agency 1 and remove Agency 1’s marketing.

e) On 27 June 2019 the ultimate purchaser made further enquiries about the Property and the Licensee visited the Property with the ultimate purchaser.

f) On 28 June 2019 a three-month exclusive listing agreement commenced with Agency 2.

g) On 3 July 2019 the Licensee presented an offer from the ultimate purchaser to the vendor for the Property.

h) By 15 July 2019, after further discussion with the vendor and ultimate purchaser an amended offer was presented by the Licensee to the vendor.

i) On 18 July 2019 the Licensee became aware of Agency 2’s exclusive listing. On the same day the Licensee inserted a vendor condition into the Agreement for Sale and Purchase (ASP) making the contract conditional upon confirmation from Agency 2 that no commission would be payable to it (the vendor condition).

j) On 24 July 2019 the vendor condition was waived by the vendor and the sale went unconditional.

1.6. The Licensee responded to the information alleging wrongful conduct and in particular commented that:

a) He did not coerce the vendor to negotiate a sale through him.

b) Agency 1’s general agency agreement required seven days’ notice of cancellation.

c) Multiple correspondence between the Licensee and the vendor concerning the ultimate purchaser’s interest revived the general agency agreement with Agency 1.

d) He thought Agency 2’s listing agreement had expired weeks prior to Agency 1’s listing and it was not until the ASP was in the final stages of agreement that he became aware of Agency 2’s exclusive listing.

e) After becoming aware of Agency 2’s exclusive listing agreement, he was instructed by the vendor’s lawyer to insert the vendor condition and to get the ASP signed.

f) Despite his lack of knowledge about the exclusive listing, Agency 2 was aware Agency 1 was still involved after it entered into the exclusive agency with the vendor.

2. What we decided

2.1. On 7 November 2018 Complaints Assessment Committee 519 considered the information provided and decided to inquire into it under section 79(2)(e) of the Act. On 28 January 2020 the information was transferred to Complaints Assessment Committee 1907 (the Committee). The Committee subsequently, considered the information and on its own initiative decided to inquire into the allegations under section 78(b) of the Act.

2.2. On 11 February 2020 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 information.

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 and in particular Rules 9.1, 9.6 and 9.10.

3. Our reasons for the decision

3.1. The Committee concluded that:

(a) Due to the seven-day notice period, Agency 1’s general listing agreement was scheduled to expire on 28 June 2019. This however did not occur, as up to that date the vendor affirmed the general agency, which effectively retracted the instruction to cancel and continued Agency 1’s general agency.

(b) As a consequence, the Licensee dealt with the ultimate purchaser while a listing agreement was in place.

(c) The Licensee was not aware, and could not have reasonably been aware of, Agency 2’s exclusive agency until 18 July 2019.

(d) As Agency 1’s general listing had not expired the Licensee was not required to caution the vendor about the risk of a double commission when the agency carried on.

3.2. The Committee also concluded there was insufficient evidence to establish that:

(a) The Licensee offered the Property for sale without an agency agreement.

(b) The Licensee coerced the vendor into dealing with him despite Agency 2’s exclusive

listing.

(c) The Licensee suggested the vendor clause be inserted into the ASP.

(d) The Licensee neglected his responsibility to protect the vendor from a double commission.

(e) The Licensee’s conduct brought the industry into disrepute or otherwise amounted to misconduct.

Continuing to act after cancellation and when there is an exclusive listing in favour of another agency

3.3. Rule 9.1 requires a licensee to act in the best interest of a client and in accordance with the client’s instruction unless to do so would be contrary to law.

3.4. Rule 9.6 states that a Licensee must not offer or market a property without being authorised through an agency agreement.

3.5. Rule 9.10 provides that a licensee must explain to a prospective client that if he or she enters into or has already entered into other agency agreements, he or she could be liable to a double commission if a transaction is concluded.

3.6. The information provided to the Committee claims that the Licensee continued to market the Property after his listing authority had been cancelled and without a listing agreement and coerced the vendor to deal with him directly. However, this is not established. The evidence provided shows that after the vendor communicated his desire to cancel Agency 1’s general listing, and before the notice period expired, the Licensee was contacted by the ultimate purchaser and the Licensee asked the vendor to give him one more chance. Prior to the agency coming to an end the vendor allowed and encouraged the Licensee to deal with the ultimate purchaser and on 28 June asked the Licensee to bring him a deal. The Committee is satisfied that in doing so, the vendor effectively retracted his cancellation request and continued Agency

1’s agency. As a consequence, the Licensee’s continued dealings with the prospective purchaser occurred while the listing agreement was on foot. In addition, the vendor did not inform the Licensee that he had entered into another sole agency. This occurred despite the vendor making Agency 2 aware that the Licensee had forwarded a conditional contract for the vendor, and despite Agency 2’s advice that any sale was to go through it on 3 July 2019.

3.7. The Committee also accepts that the Licensee was not aware of Agency 2’s exclusive agency and could not have been reasonably aware of it, until he was informed of it by the vendor’s solicitor. As referred to above, the vendor’s information confirms that he did not tell the Licensee of the exclusive listing with Agency 2. The information also confirms that the Licensee did not know about the exclusive agency until the vendor’s lawyer informed the Licensee on

18 July. In addition, there is no evidence showing that there was other information reasonably available to inform the Licensee that the Property was listed with Agency 2 and the Committee accepts that Agency 2 had no signage, web or other visible presence.

3.8. The information also refers to a claim that the Licensee suggested the vendor clause be inserted into the ASP. However, from the Licensee’s file note and correspondence with the vendor’s lawyer, it is clear that the vendor clause was a requirement put on the Licensee by the vendor’s lawyer and as such was an instruction from the vendor.

3.9. The Licensee has also referred to the fact that Agency 2 did nothing after it became aware of his continued involvement. It is unclear why Agency 2 did not notify Agency 1 of its exclusive agency or issue a cancellation of agency, which would have given Agency 1 an opportunity to

declare any interested parties. However, it is possible that this was due to the fact that Agency

2 was aware of the vendor’s text cancelling Agency 1’s general listing on 21 June 2019 and because the vendor neglected to tell either Agency 1 or Agency 2 of his continued dealings with each of them. In any event, the Committee is satisfied that the Licensee could not have been aware of Agency 2’s exclusive agency.

3.10. The information also raises a concern that the Licensee neglected his responsibility to protect the vendor from a double commission as required under r 9.10. However, the Committee is not satisfied that beyond informing the vendor about the risks of a double commission when the vendor first listed with Agency 1 on 1 May 2019, the Licensee had an obligation to caution the vendor again. This is because the Committee is satisfied that the general listing was continued by the vendor and was not cancelled. Inclusion of the vendor condition also sought to protect the vendor from a double commission. The Licensee has also confirmed that prior to the vendor first signing up with Agency 1, he was aware that the vendor had a six week general listing agreement with Agency 2 and he went over the risks of double commission at that time with the vendor.

3.11. Correspondence by Agency 2 to Agency 1 on 26 July 2019 records that Agency 2 agreed not to charge the vendor a commission in accordance with its fiduciary obligations owed to the vendor under r 6.1 and to avoid conduct likely to bring the industry into disrepute under r 6.3. Agency 2’s correspondence to Agency 1 also refers to a view that the totality of the Licensee’s conduct amounted to misconduct.

3.12. However, for the reasons already given above, the Committee is not satisfied that the Licensee’s conduct infringed any duties owed by him to the vendor or amounted to conduct unbecoming of a Licensee. Consequently, the Committee takes no further action in relation to the information received concerning the conduct of the Licensee.

4. Publication

4.1. 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.

4.2. 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.

4.3. 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.

5. Your right to appeal

5.1. 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.

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

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

agents/ ).

Signed

Rachel Palu

Date: 23 April 2020

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 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.

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

2012 are:

Rule 6.1 A licensee must comply with fiduciary obligations to the licensee’s client.

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

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 9.6 Unless authorized by a client, through an agency agreement, a licensee must not offer or market any land or business, including by putting details on any website or by placing a sign on the property.

Rule 9.10 A licensee must explain to a prospective client that if he or she enters into or has already entered into other agency agreements, he or she could be liable to pay full commission to more than 1 agent in the event that a transaction is concluded.