Complaint No C31413 [2020] NZREAA 84 (7 October 2020)

Last Updated: 5 September 2021

Before the Complaints Assessment Committee
In the matter of	Complaint No: C31413 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

7 October 2020

Members of Complaints Assessment Committee: CAC1901 Chairperson: Rachael Schmidt-McCleave

Deputy Chairperson: Noel Cooper

Panel Member: Barbara Mackenzie

V20200813

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 10 January 2020 the Real Estate Agents Authority (the Authority) received a complaint against Licensee 1 and Licensee 2 from Complainant 1 and Complainant 2 (the Complainants).

1.2. Licensee 1 is a licensed Agent and Licensee 2 is a licensed salesperson under the Real Estate Agents Act 2008 (the Act).

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

1.4. The details of the complaint are that:

1. Complainant 1 is a licensed agent and is employed by Licensee 1. On the 10th of January 2019, the Complainants listed the Property as a general listing with Licensee 2 and marketed the Property themselves as a private sale.
   
2. On the 22nd of February 2019, Licensee 2 obtained a written offer for the Property and was advised by the Complainants that they had, at that time, obtained a private sale offer. On being advised of the offer by Licensee 2, Licensee 1 contacted the

Complainants and advised them that their private offer would have to be processed through the Agency, otherwise Licensee 2 would be compromised. Licensee 1 also

instructed that the agency offer would attract a commission and the private offer would not, and this would disadvantage the Agency customer’s offer.

100. The Complainants alleged that later that day Licensee 2 informed them that he was instructed by Licensee 1 not to present or enter into a multiple offer with them.
     

4. The Complainants entered into a sale and purchase agreement with their private buyer. This agreement was subject to the purchasers selling their property and it did not sell. The private sale did not proceed and in November 2019 the Complainants relisted the Property with a separate Agency. Licensee 1 terminated Complainant 1’s employment with his agency.
   

1.5. The Complainants said further:

1. The Complainants had the Property for sale privately and relisted it on the 10th of January 2019, as a general agency with the listing Licensees described as Licensee 2 (50% front man), Complainant 1 (50% listing controller, admin). On the 15th of February 2019, a private buyer who had previously been involved in building the Property,

viewed the Property privately with the Complainants. Licensee 2 showed his buyer through for a second viewing on the 16th of February. On the 18th of February, the

Complainants advised Licensee 2 that they had an interested private buyer. Licensee 2 advised the Complainants on 21st of February that he would have a written offer from his buyer the next day.

2. Licensee 2 obtained the written offer on the 22nd of February and advised both the Complainants and the Agency sales team about the offer. The Complainants advised Licensee 2 at 1.22pm, on the same day, that they had a written private offer and the Complainants advised their buyer that he would be competing in a multiple offer with Licensee 2’s buyer.

100. At 3.25pm on the 22nd of February, Licensee 1 texted the Complainants requesting they contact him. Licensee 1 then contacted the Complainants and said he could not present Licensee 2’s offer as a multiple offer, as the Complainants’ offer was a private offer. He stated that the Complainants should hand the private offer over to the Agency for

presentation and this would attract an Agency Commission payment. The Complainants advised Licensee 1 to do a modified multiple offer form with Licensee 2’s buyer and

that the Complainants would not hand over the private offer, as it was outside the jurisdiction of the General Agency Agreement. Licensee 1 advised the Complainants that this was not the right thing to do and was exposing the Agency to possible legal

action. The communication became heated between the Complainants and Licensee 1, and Complainant 1 informed Licensee 1 that the Complainants would cancel the

General Agency.

4. The following day, 23rd February, the Complainants cancelled the General Agency as per clause 2.2 of the Agency Agreement. The Complainants contacted Licensee 2 and

reminded him that he still had 7 days to present the buyer’s offer as per clause 2.2 of the Agency Agreement. When asked by the Complainants when he would present the buyer’s offer Licensee 2 said he had been instructed by Licensee 1 not to present the offer and when queried about this said “It’s above my pay scale’’.

5. As the multiple offer never eventuated, the Complainants entered into a private sale on the 25th of February 2019.
6. After the private sale was signed, Licensee 2 followed up with his buyer and, over a period of days, negotiations took place between the Complainants and Licensee 2’s buyer. The negotiations were not successful, and no agreement was reached.
   
7. In November 2019, the Complainants’ private sale did not look like it would proceed, so the Complainants listed the Property as a General Agency with another Agency.

Licensee 1, on being advised of this, terminated Complainant 1’s independent contract without giving 7 days’ notice.

1.6. The Complainant requested a remedy, being:

1. An apology and compensation.
   

1.7. The Licensees responded to the complaint against them.

1.8. In particular, the Licensees said:

1. Licensee 2 introduced the buyer for the first time on 16th February 2019 and for a second look with the buyer’s family on 19th February 2019.
2. On the 22nd February at 9am Licensee 2 received a written offer from the buyer by

email. At 2.30pm the buyer was advised that there was a second offer. The buyer was suspicious that a second offer had been received but confirmed at 2.45pm that he would proceed with a multiple offer. Licensee 2 then arranged to meet the buyer at 6.30pm to complete the multiple offer form.

100. At 3.25pm Licensee 2 contacted Licensee 1 to advise him of the situation. Licensee 1 was concerned that they were presenting an “Agency A Multi Offer” when the vendor (Complainant 1) is the 50% listing agent with a private buyer.
     

4. Licensee 1 considered that there was a strong conflict of interest involved and a possible breach of Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012 Rule 6.2 and 6.4. He was also concerned that there was a breach of the Agency A Policy and Procedures Manual clause 17.6, that Complainant 1 was required to comply with (in accordance with clause 3 of Complainant 1’s Agency A Agreement for Sales Consultants (Independent Contractors)). Clause 17.6 states:

Clause 17.6 Sale of a Property Owned by a [Agency A] Franchise Owner, Salesperson Licensee or Employee. Every [Agency A] franchise owner, salesperson licensee or employee must not act as agent on the sale of any property owned by them or conduct a private sale of any of their properties (whether directly or

indirectly owned by them). It is acknowledged that where this obligation is breached in this agreement: (a) disciplinary action may follow from Company and The Real Estate Authority: and (b) insurance policies may not respond to any claims relating to any actions and omissions in selling the property. When a salesperson, licensee or

employees use the services of another [Agency A] licensee or salesperson for the sale of their property they must list the property with the office and complete the normal listing agreement. The commission fees in such circumstances will be the normal fees charged by the franchise owner and approved by [Agency A].

5. Licensee 1 referred to this policy as underscored by the precedent decisions such as Hamid v England [2011] NZHC 1149 and REAA v England [2013] NZREADT 9 which refers to the private sale of a licensee’s property. These decisions refer to the conflict of interests that are evident in licensees selling their own properties. Licensee 1

instructed Licensee 2 to contact the buyer and explain the situation to them as to the conflicts involved and the disadvantages of the negotiating position.

6. Licensee 1 duly contacted the Complainants and requested that the Agency take the private buyer’s agreement and process it as an Agency buyer. Licensee 1’s reasoning was that, without this course of action, there would be a conflict of interest between Complainant 1 and Licensee 2’s buyer. He considered that the Agency A Policy and Procedures Manual directives were not being followed and that the REA Real Estate Professional Conduct and Client Care Rules were being breached. The Complainants refused this request and indicated that they would cancel the General Agency, and the following day they did that.
   
7. Licensee 2 at 4.31pm contacted the buyer and explained that the vendor was a

Licensee Agent with the company who had the private buyer and that the Agency was concerned about the conflicts of interests involved and also that it did not comply with the Agency A multiple offer processes. He explained that the private buyer was in a better negotiating position, as the vendors did not have to pay commission on their sale. The buyer expressed frustration as they had previously had several bad

experiences with multiple offer situations, and they instructed that they did not want to compete with someone who is a private buyer. The buyer was also confused as to why an Agency A Agent would sell privately when the Property was listed with their company. The buyer was appreciative of the good faith and disclosure given and

indicated that if the Property did not sell privately, then they would consider re- negotiating with the Complainants.

8. The Complainants, on the 23rd of February, confirmed with Licensee 2 that the private offer would be accepted, and that Licensee 2 still had 7 days to present his buyer’s offer to them.
   
9. Licensee 2’s buyer confirmed, on the 26th of February, that he would now resubmit an offer as the Complainant’s agreement was subject to a house sale and had a break

clause in the agreement. The offer was presented at 5pm on the 27th of February by a supervising Agent and negotiations continued until 6th March, at which time

negotiations were not successful and the buyer withdrew his offer.

10. In late 2019, Complainant 1 was dismissed in accordance with clause 22 of the Complainant 1’s independent contract, dated 29th of March 2016. The basis for this

termination was that these breaches were unrelated to the circumstances around this complaint and are a separate employment issue between Complainant 1 and the

Agency.

2. What we decided

2.1. On 2 April 2020 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 19 August 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 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, namely Rule 5.1 (skill, competence), 5.2 (sound knowledge of the Act and Rules), 6.1

(fiduciary obligations), 6.2 (Fiduciary obligations) and 6.4 (not to mislead).

3. Our reasons for the decision

3.1. The Committee concluded after carefully reviewing all the evidence that:

Licensee’s request for the Complainants’ private offer

3.2. The Committee is satisfied that the Complainants had a General Agency Agreement dated the 10th of January 2019, with Licensee 1’s Agency. The Committee notes that on this General

Agency, Complainant 1 is shown as “50% Listing Controller & Admin” and on a previous General Agency dated the 9th of October 2017, is stated as “50% Listing Controller, zero commission payout’’. The Committee is of the view that the General Agency dated 10th

January 2019 could be interpreted that Complainant 1 would be due an Agency Commission fee. The Committee is also concerned that by Complainant 1 appearing on both General

Agencies under Listing Details Agents, she was in breach of the Agency’s Policy and Procedures Manual clause 17.6.

3.3. The Complainants did not provide the Licensees with the private sale offer when requested.

The Committee is aware that the Licensee’s had formed the view that, by obtaining the

private sale and processing it as an Agency sale, the conflicts with the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 Rule 6.2, 6.4 could be alleviated. Although clause 17.6 of the Agencies Policy and Procedures Manual prohibits a Licensee from selling privately, the Committee has the view that Complainant 2 had a right to sell privately and hold that buyer information as confidential.

3.4. In submissions, Licensee 1 referred to the private buyer having called the Agency about the Property and having received a follow up email on 9th January 2020. Licensee 1 is of the view that the Complainants’ private buyer was therefore introduced by the Agency’s efforts. The Committee does not agree as the buyer was never physically introduced through the

property by an Agency’s Licensee and does not consider the provision of one email is sufficient to claim a commission. The Committee further notes that, as the Complainants did

not provide Licensee 1 and 2 with the private sale, there was no proof as to who the private buyer was.

Refusal of Licensees to present a Multiple offer

The Committee has sympathy for the situation that Licensee 1 and 2 had in representing the conflicting interests of their vendor clients and buyer customer. The Committee, having viewed all timeline evidence presented, is satisfied that the buyer upon being informed of the conflicting situation with the private buyer and that Complainant 1 was employed by the Agency, did withdraw their offer. There was therefore no multiple offer to present and Licensee 1 and 2 did not withhold the offer to the Complainants. This has further been confirmed by the buyer’s email evidence:

“I made it very clear to you at the onset that I was interested in the property, that I was prepared to negotiate withthe vendor but after several bad experiences I did not want to participate in a multi offer situation. You advised methat the vendor had an offer from a private buyer on the 22nd Feb 2019 and it was now a multi offer situation. I was very clear with you that I did not want to be involved in a multi-offer but would consider re-negotiating one to one with the vendor should this private offer not be successful.”

The Committee notes that Licensee 2 did present a further offer, from the buyer, at a later date and endeavoured to act fairly and in good faith with all parties.

Licensee 1 Termination of Complainant 1’s Independent Contract

The Committee has taken note of the terms of Complainant 1’s Independent Contract paragraph 3 ‘Performance Standards’ and Para 22 ‘Termination’. The Committee does note that Licensee 1 appears to have terminated Complainant 1’s Independent Contract, in accordance with those requirements, but has determined that it is beyond the Committee’s jurisdiction to decide this issue.

Findings

The Committee therefore considers there is no basis to impose a finding of unsatisfactory conduct on Licensee 1 and 2 and takes no further action on the complaint.

4. Publication

4.1. The Committee directs publication of its decision. This decision will be published without the names or identifying details of the Complainant (including the address of the Property), and

the Licensees.

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 of the Act. 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 the 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. The Notice of Appeal form, which includes information on filing an appeal, can be located on the Ministry of Justice’s website: https://www.justice.govt.nz/tribunals/real-estate-

agents/apply/.

6. Provisions of the Act and Rules referred to

6.1. The provisions of the Act and the Rules referred to in this decision are set out in the Appendix.

Signed

Chairperson: Rachael Schmidt-McLeave

Deputy Chairperson: Noel Cooper

Member: Barbara Mackenzie Date: 7 October 2020

Appendix: Provisions of the Act and Rules referred to

The Real Estate Agents Act 2008 provides:

78 Functions of Committees

The functions of each Committee are—

(a) to inquire into and investigate complaints made under section 74:
(b) on its own initiative, to inquire into and investigate allegations about any licensee:
(c) to promote, in appropriate cases, the resolution of complaints by negotiation, conciliation, or mediation:
(d) to make final determinations in relation to complaints, inquiries, or investigations:
(e) to lay, and prosecute, charges before the Disciplinary Tribunal:
(f) in appropriate cases, to refer the complaint to another agency:
(g) to inform the complainant and the person complained about of its decision, reasons for the decision, and appeal rights:
(h) to publish its decisions.

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 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 Rules from the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 referred to in this decision are:

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

Rule 5.2 A licensee must have a sound knowledge of the Act, regulations, rules issued by the Authority (including these rules), and other legislation relevant to real estate agency work.

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

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

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.