Complaint No 34695 [2021] NZREAA 11 (15 February 2021)

Last Updated: 22 May 2021

Before the Complaints Assessment Committee
In the matter of	Complaint No: 34695 Part 4 of the Real Estate Agents Act 2008
and
Licensee 1:	The Licensee (XXXXXXXX)

Decision to take no further action

15 February 2021

Members of Complaints Assessment Committee: CAC2105 Chairperson: Andrew Hayes

Deputy Chairperson: Emily Douglas Panel Member: Ian Keightley

V20200813

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

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

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

1.3. The complaint relates to a residential property situated at the Property which was purchased by the Complainants.

1.4. The details of the complaint are that the Licensee did not explain to the Complainants the meaning of the “Retrofit Your Home Scheme (insulation)” clause on the Sale and Purchase agreement for the Property (the Agreement) before asking them to initial the clause and sign the Agreement.

1.5. In particular, the Complainants said:

1. The Licensee was the listing agent for the sale of their property.
   
2. She was also the listing agent for the sale of the Property.
   

100. The Complainants entered negotiations for the purchase of the Property through the Licensee.
     

4. Several changes were proposed to the Agreement for sale of the Property while one of the Complainants, Complainant 1 was overseas. On 12 November 2017 these changes were attached to an email sent to Complainant 1 by the Licensee requesting that he either print off the changes and initial his acceptance or that he put in writing that he accepts the changes to the Agreement.
   
5. One of these changes was the addition of a clause 23 to the Agreement headed “Retrofit Your Home Scheme (insulation)”.
   
6. On 13 November 2017 Complainant 1 replied by email stating that he accepted all the changes with the rider “However, I can’t see how the latter [meaning clause 23] is relevant since the work is long ago finished and paid for” (the rider).
   
7. At the time Complaiant 1 thought the reference to clause 23 was in relation to the property they were selling not the property they were purchasing. The property they were selling had had a government insulation home loan on it that the Complainants had repaid in a lump sum some years ago.
   
8. Given the rider this misunderstanding should have been obvious to the Licensee.
   
9. The Licensee never responded to that email.
   
10. At a meeting on 15 November 2017:
    
    1. the Licensee did not take them through the Agreement or explain to them the added clauses, including clause 23.

2. They both signed the Agreement, including initialing beside clause 23.
   

3. They did not understand the effect of clause 23 because the Licensee never explained it to them.
   

11. The Agreement stated a LIM report was required by the Complainants however they were not provided with a LIM report.
    

50. Complainant 1 assumed as there had been no response to his email rider and it was never explained to them, that there was “nothing to” clause 23.
    

13. They purchased the Property.
    
14. As the Licensee had not discussed clause 23 with them they had not discussed it with their lawyer when they discussed the Agreement with him.
    
15. In July 2019 they discovered for the first time that they had been repaying, through their rates, money owed under the Retrofit Home Scheme.
    
16. Council A advised them the loan was for the installation of insulation in the Property. The loan had been processed in March 2017 with an opening balance of $5,000.00, repayments had commenced in in July 2018 and were due to finish in June 2028 with interest charges included in each repayment.
    

1.6. The Complainant requested a remedy, being:

1. That the Licensee and/or the Agency pay the remaining outstanding balance of the Retrofit Your Home Scheme (insulation) loan.
   

1.7. The Licensee responded to the complaint against her.

1.8. The Licensee said:

1. She was unsure as to the meaning of the rider in Complainant 1’s email of 13 November 2017. She did not respond to it as she was due to meet with the Complainants in person on 15 November 2017. She would then have the opportunity to discuss Complainant 1’s statement (the rider) and clause 23, with both the Complainants, face to face, before they signed the Agreement. This was preferable to corresponding with Complainant 1 while he was travelling overseas.
   
2. She met with the Complainants at their home at 9:15am on Wednesday 15 November 2017.
   

100. At that meeting:
     
     1. She went over the Agreement with the Complainants including explaining, in detail, the meaning of clause 23, why it had been included and that they understood they would be liable for the outstanding balance of the Retrofit Your Home Scheme (insulation) loan on the Property.
        
2. A copy of the signed Agreement was hand delivered to the Complainants along with the LIM report and Title.
   

4. The LIM report clearly states on page 3 that there was a retrofit loan registered against the Property.

5. The LIM report was also provided to the Complainants’ solicitor by email on 15 November 2017.
   

2. What we decided

2.1. On 11 August 2020 the Complaints Assessment Committee 2001 considered the complaint and decided to inquire into it under section 79(2)(e) of the Act. On 23 October 2020 the

information was transferred to Complaints Assessment Committee 2105 (the Committee).

2.2. On 25 November 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 r5.1, r6.2 and r6.4.

3. Our reasons for the decision

3.1. The Committee concluded that there is insufficient evidence to establish that it is more likely than not that the Licensee did not explain the meaning of the “Retrofit Your Home Scheme (insulation)” clause to the Complainants before asking them to initial the clause and sign the Sale and Purchase agreement.

Explanation of the meaning of Retrofit Your Home Scheme (insulation) clause 23.

3.2. The key issue in this complaint is whether the Licensee adequately explained the meaning of clause 23 to the Complainants before they initialed clause 23 and signed the Agreement at the meeting on 15 November 2017.

3.3. The Licensee says clause 23 was fully explained to both Complainants at the meeting of 15 November 2017.

3.4. The Complainants have the burden of proving the allegation to the standard of the balance of probabilities – being that it is more likely than not what they allege occurred (section 89(2)(b) of the Act).

3.5. That burden of proof has not been discharged in this complaint.

3.6. The Committee accepts the Licensee was well aware of the retrofit scheme loan that applied to the Property. It was:

1. Included in the listing agreement for the Property.
   
2. Clearly disclosed in the Property’s marketing brochure under the heading: Features “Insulation-retrofit on rates” and its Listing card under the heading Remarks “Retrofit on rates - passed on. $500 base, 3.95% on $300,000, 2% on balance plus GST”.
   

100. Specifically drawn attention to by the Licensee’s email to Complainant 1 of 12 November 2017 attaching the Agreement with the inserted hand amended clause 23.
     

4. Recorded in the LIM report that the Property was subject to target rate under the Council’s Retrofit Your Home Programme.
   

3.7. If would be unusual for this experienced listing agent Licensee, with such knowledge, not to

specifically draw this to the attention of the Complainants and explain it to them.

No written response to the rider

3.8. Complainant 1 is adamant in his recollection that the meaning of clause 23 was not explained to him or his wife, Complainant 2.

3.9. In support of his recollection, Complainant 1 points to there being no written response to the rider. He says that rider makes it obvious he was confusing the additions to the Agreement for the Property with another transaction.

3.10. The Committee accepts that Complainant 1 appears to have been confusing the two properties. However, the basis for his confusion is unclear. That is because the email he was responding to specifically addresses the agreement for the Property. It is headed “Re: [the Property]” and attaches “the Sale and Purchase Agreement for [the Property]”. The email also specifically draws his attention to the two additional clauses, 21 and 23.

3.11. The Licensee’s response to there being no written reply to the rider is logical and believable. She says that she was unsure as to what Complainant 1 meant by the rider, but it made more sense to discuss the meaning of clause 23 during their imminent face to face meeting, which Complainant 2 would also attend. Her agreement, initials and signature were also required. That course of action was preferable to explaining it to Complainant 1 while he was in the process of travelling back to New Zealand from overseas.

3.12. Given the above, the lack of a written response to the rider, while unfortunate, is not of great weight when assessing the differing recollections of Complainant 1 and the Licensee as to what happened at the meeting of 15 November.

The Meeting of 15 November 2017

3.13. As the Complainants have not provided a separate account of Complainant 2’s recollection of the meeting, the proof of this complaint rests upon Complainant 1’s recollection of the meeting compared to the Licensee’s recollection.

3.14. The Licensee is adamant in her recollection of what was discussed at the meeting of 15 November 2017 with the Complainants. Her evidence is that she:

1. Went over the Agreement and discussed all changes to the Agreement including “clause 23 in particular to ensure [the Complainants] understood the clause was for the purchase of [the Property] and they would incur the loan for the retrofit.”
   
2. Explained that clause 23 “is informing them, as the purchasers they will be liable for the outstanding balance of the loan for the retrofit scheme as per the vendors instructions during Negotiations and this clause was applicable to the purchase of [the Property]”.
   

3.15. Her evidence on this is detailed and has been consistent throughout the complaint and investigation process.

3.16. Given the Vendors requested late insertion of the hand amended clause and Complainant 1’s rider, it would be most unusual for the Licensee not to bring it to their attention and explain its meaning to them both.

3.17. The Licensee’s recollection is further supported by the following:

1. Complainant 1 had already seen and read and commented on clause 23 and

communicated his acceptance of it in writing before the meeting. It was in the forefront of her mind and one would have thought, Complainant 1’s too.

2. The Complainants each signed their initials beside clause 23 and signed the Agreement at the meeting. The clause was amended by hand with the word “settled” crossed out and replaced with “passed” and the word “vendor” replaced by “purchaser”. These handwritten amendments make it more likely that the clause was the subject of discussion.
   

100. She says she gave a copy of the LIM report to them at the meeting and also sent a copy to their solicitor the same day. Complainant 1 says they were never provided with the LIM report. However, the Complainants’ solicitor confirms the Licensee emailed him

the LIM report, as the Licensee stated, on 15 November 2020. That is consistent with the Licensee’s recollection. It is therefore more likely than not that she also supplied it to the Complainants that day, despite Complainant 1’s recollection that she did not.

This brings into question his recollection of what was said regarding clause 23 as well.

3.18. Complainant 1’s recollection is that clause 23 was not explained to him or his wife.

3.19. The Committee does not doubt that is Complainant 1’s honest recollection.

3.20. However, when compared to the Licensee’s evidence, Complainant 1’s statement of events does not accord with his actions of reading the clause by email on 13 November, confirming his acceptance and initialing it at that stage, not raising it at the meeting 2 days later (if not explained) and initialing the clause again and signing the Agreement with his wife at that

time.

3.21. The Committee finds the complaint not proved and accordingly takes no further action on it.

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), 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 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

Andrew Hayes Chairperson

Emily Douglas

Deputy Chairperson

Ian Keightley Member

Date: 15 February 2021

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:

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.

6.4 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.