Complaint No C35996 [2021] NZREAA 22 (16 April 2021)

Last Updated: 31 December 2021

Before the Complaints Assessment Committee
In the matter of	Complaint No: C35996 Part 4 of the Real Estate Agents Act 2008
and
The Licensee: The Agency:	The Licensee (XXXXXXXX) The Agency (XXXXXXXX)

Decision to take no further action

16 April 2021

Members of Complaints Assessment Committee: CAC2102 Chairperson: Rachael Schmidt-McCleave

Deputy Chairperson: Noel Cooper Panel Member: Jim Lindsay

V20201203

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 24 March 2020 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 situated at the Property.

1.4. The details of the complaint concern the information allegedly given, or not given, by the Licensee to the Complainant’s son about an insurance pay-out for the Property, the woodburner at the Property, instructions regarding a Solicitor’s Approval clause in the Sale and Purchase Agreement.

1.5. In particular, the Complainant said:

1. The Purchaser signed up for the Property on the basis, told to him by the Licensee, that he had approximately $40,000 from an insurance cash settlement to spend on the

interior of the house when in reality there was only $19,319 available.

2. The Licensee had told the Purchaser that part of the insurance pay-out was for damage to the driveway, a patio, and paths but the money could be used at the Purchaser’s

discretion.

100. On arrival at the Property with his son, the Purchaser, the Licensee told the

Complainant, when the Complainant queried the insurance pay-out, that a $40,000 insurance cash pay-out came with the Property. When the Complainant asked for a breakdown, the Licensee told him “In round figures there is $19,000 from EQC for

cosmetic earthquake damage in the house and $20,000 from a private insurer, I think it is Insurer G, for damaged paths, driveway and patio”. When the Complainant clarified

that was actually $39,000, the Licensee confirmed “Ah yes, in round figures it is

$39,000”. He then confirmed to the Complainant that there was no requirement for the settlement on driveway, paths and patio to be spent on replacement of those

items.

4. The Licensee made a verbal representation to the Complainant and the Complainant’s wife that the fireplace was compliant for another 3 years. The Complainant has since discovered the fireplace is not compliant and will need to be replaced at a cost of around $5,000.
   
5. Prior to leaving the Property after the inspection, the Complainant said to the Licensee “[I] trust the contract will contain the normal protections for a purchaser including the purchaser obtaining finance suitable to the purchaser and the purchaser’s solicitor’s approval of contents of documents”. The Licensee confirmed they would be in there.
   
6. Later that day, when the Complainant read a copy of the signed Agreement, he was furious because the insurance pay-out situation was a massive departure from what the Licensee had told them and there was no Solicitor’s Approval clause, and he was astonished because the Purchaser had signed it.

1.6. The Licensee responded to the complaint against them.

1.7. In particular, the Licensee said:

1. He told the Purchaser there was an EQC cash settlement to be transferred upon

settlement to the sum of $19,319.13 and that there was a quote for the driveway and paths to be repaired to the sum of $20,809.25. He advised the Purchaser that, if the quote for the driveway and paths is cash settled together with the EQC settlement, that would be almost $40,000 to be transferred with the Property. He told the Purchaser

that if the driveway and paths is not a cash settlement, they would be repaired, so he would have a brand-new driveway and paths.

2. He met with the Purchaser and the Complainant on 15 February 2020, at which time

the Complainant asked him about the EQC cash settlement and the driveway quote. He pointed out to the Complainant that the amounts were two separate claims, one for EQC and the other an insurance claim which was a quote.

100. He strongly denies he was asked about the fireplace and said it had three years left on the consent. The fireplace was not discussed prior to the Agreement being entered into or in the conditional period.
     

4. The Building Report clearly states in its recommendations that the fireplace requires testing to ensure it is working correctly and is safe to use.
   
5. After the viewing on 15 February, the Complainant advised the Purchaser wished to make an offer. The Complainant asked the Licensee what clauses would be in the contract. The Licensee advised the Complainant there would be clauses for finance, Builders Report, LIM and all EQC insurance clauses. The Licensee states that it was never brought to his attention that the Complainant required a “solicitor’s approval clause”.
   

2. What we decided

2.1. On 11 August 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. The Committee considered the complaint also raised issues about supervision of the Licensee by the Agency. Therefore, the Committee decided to inquire into these issues under section 78(b) of the Act.

2.3. On 10 February 2021 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

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

2.5. 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 and competence), 5.2 (sound knowledge), 6.2 (good faith), 6.3

(disrepute), 6.4 (mislead) and 8.3 (supervision).

3. Our reasons for the decision

3.1. The standard of proof for the Committee is the balance of probabilities.

3.2. The Committee concluded that the evidence demonstrated that, although the Licensee’s practice demonstrated a certain looseness and he needs to take better care in future as to

the information he is giving and language he is using, the claims were competing statements, which, applying the balance of probabilities burden of proof, the Committee was unable to reconcile without use of the documents themselves.

The pay-out

3.3. It is unclear exactly what the Licensee told the Complainant and his family on 15 February. The Committee accepts that it is entirely possible he made the loose statements alleged as to the nature of the pay-out, and the Committee reminds the Licensee of the need to be precise when making statements about a property.

3.4. However, the documentation later provided did clarify the situation. The Purchaser confirmed that when he queried the Licensee at the time of signing the Agreement about the amount to be paid out, he was shown the EQC letter and the quote from Company X. Both documents

clearly show the break down amounts.

3.5. Therefore, the Committee accepts that the Purchaser did have the full information about the pay-out before he signed the Agreement, and there has therefore not been a breach of the

rules by the Licensee. The Committee has determined to take no further action on this aspect of the complaint but reminds the Licensee to be meticulous when answering questions about a Property, even when he may not have the documentation immediately to hand.

The woodburner

3.6. Once again, the Committee is being asked to reconcile two conflicting statements about whether the woodburner was discussed on 15 February. The Committee is not able to reconcile those two conflicting versions of events.

3.7. However, the Building Report obtained in the conditional period clearly states, at page 22 of the report, that “I recommend a fire tech inspects the fireplace to ensure it is working

correctly and is safe to use.”.

3.8. Further, in Schedule 3 of the Agreement, which lists the items with operational function

included in the sale, there is no reference to the woodburner. This reflects the handwritten note in the Real Estate Agency Agreement with the Vendor that “log burner not consented”.

3.9. The Committee has therefore decided to take no further action on this aspect of the complaint.

Solicitor’s approval clause

3.10. Again, the Committee cannot reconcile the statements of the Complainant and his family that the Licensee said “yeah yeah, the [solicitor’s approval clause] would be in there” upon leaving the Property on 15 February, and the Licensee’s adamant recollection that he was not aware a solicitor’s approval clause was needed.

3.11. The Committee accepts it is possible that the Licensee assumed the Complainant wanted the usual finance, builder’s report and LIM clauses, but did not hear the request for a solicitor’s approval clause. Again, the Committee reminds the Licensee of the need to be meticulous

when taking instructions for the preparation of the Agreement.

3.12. The Committee is left to determine this part of the complaint by the Agreement itself and the timing of events. Although the Purchaser had signed the Agreement on 16 February, there was a full 24-hour period where the Complainant and Purchaser had a copy of the Agreement before the Vendors signed it. In that time period, he did have the opportunity to raise with

the Licensee the lack of a solicitor’s approval clause. However, it wasn’t raised until the Agreement was signed by all the parties.

3.13. The Committee has therefore determined to take no further action on this aspect of the complaint.

Supervision

3.14. The Committee has considered carefully the information provided on supervision by Mr A, the Managing Director of the Agency.

3.15. The Committee was satisfied that the Agency’s supervision practices meet the requirements of rule 8.3 and has determined to take no further action on this aspect of 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), the Licensee, Agency 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

Rachael Schmidt-McCleave Chairperson

Noel Cooper

Deputy Chairperson

Jim Lindsay Member

Date: 16 April 2021

Appendix:

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 6.2: A licensee must act in good faith and deal fairly with all parties engaged in a transaction. Rule 6.3: A licensee must not engage in any conduct likely to bring the industry into disrepute.

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.

Rule 8.3: An agent who is operating as a business must ensure that all salespersons employed or engaged by the agent are properly supervised and managed.