Fowler - Complaint No C32734 [2021] NZREAA 4 (26 January 2021)

Last Updated: 22 May 2021

Before the Complaints Assessment Committee
In the matter of	Complaint No: C32734 Part 4 of the Real Estate Agents Act 2008
and
Licensee :	Andrew Fowler (10037355)

Decision on Orders

26 January 2021

Members of Complaints Assessment Committee: CAC1904 Chairperson: Gayatri Jaduram

Deputy Chairperson: Craig Edwards Panel Member: Jim Lindsay

Complaints Assessment Committee

Decision on orders

Background

1.1. On 16 October 2020 the Complaints Assessment Committee (the Committee) found Andrew Fowler (the Licensee) guilty of unsatisfactory conduct under section 89(2)(b) of the Real Estate Agents Act 2008 (the Act).

1.2. The Complainant and the Licensee were given the opportunity to make submissions to the Committee on orders.

Orders

2.1. Having made a finding of unsatisfactory conduct against the Licensee, the Committee decided to make the following orders under section 93 of the Act:

1. order the Licensee to pay to the Real Estate Authority a fine of $1,500 within 21 days of the date of this decision.
   

General principles

3.1. In determining whether to impose one or more of the orders available under section 93 of the Act, the Committee has had regard to the following general principles relevant to professional disciplinary cases.

Promoting and protecting the interests of consumers and the public

3.2. Section 3(1) of the Act sets out the purpose of the legislation. The purpose of the Act is "to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work."

3.3. One of the ways in which the Act achieves this purpose is by providing accountability through an independent, transparent and effective disciplinary process (section 3(2) of the Act).

3.4. In the leading case on the principles relevant to professional disciplinary cases, Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1, the Supreme Court affirmed that consumer protection was a central focus of professional disciplinary cases (see at [70], [113], [128] and [145]).

Maintaining professional standards

3.5. The other central focus of professional disciplinary cases is maintaining professional standards. As already noted, section 3(1) of the Act refers to the purpose of “[promoting] public confidence in the performance of real estate agency work", and section 3(2) refers to raising industry standards and providing accountability through the disciplinary process. In Z v Dental Complaints Assessment Committee the Supreme Court confirmed that maintenance of professional standards is a fundamental purpose of professional disciplinary proceedings.

3.6. The need to maintain proper professional standards means that it is necessary to:

1. make sure that no person who is unfit because of his or her conduct is allowed to practice in the profession in question;
   
2. protect both the public and the profession itself against persons unfit to practice; and

100. enable the profession or calling, as a body, to ensure that the conduct of members conforms to the standards generally expected of them.
     

3.7. Specific and general deterrence has an important role to play in ensuring maintenance of professional standards. The penalty imposed should be sufficient to deter the licensee from engaging in the same or similar conduct in the future. It should also be sufficient to deter

other members of the profession from engaging in similar conduct, even if the Committee is satisfied that the licensee is unlikely to repeat the conduct themselves.

Other relevant factors

3.8. Although the Supreme Court in Z v Dental Complaints Assessment Committee placed particular emphasis on the purposes of consumer protection and maintenance of professional standards, the High Court has recognised other relevant factors which are

consistent with these purposes. In TSM v Professional Conduct Committee [2015] NZHC 3063, the High Court summarised these other factors as follows (at [16]):

1. Punishment of the professional;
   
2. Rehabilitating and reintegrating the professional into the profession, if the professional is capable of that;
   

100. The penalty must be comparable with the penalty imposed on others in similar circumstances;
     

4. The penalty must be based on assessment of the offending behavior against the spectrum of penalties available, with the maximum penalties being reserved for the worst offences;
   
5. The penalty must involve imposition of the least restrictive penalty that can be reasonably imposed in the circumstances; and
   
6. The penalty imposed must be fair, reasonable and proportionate in the circumstances.
   

3.9. The Committee accepts that a penalty in a professional disciplinary case is primarily about maintaining standards and protecting the public, not punishment, as may be the case in

criminal proceedings. However, if the Committee decides to impose one or more of the

penalties available under section 93 of the Act to meet the purposes summarised above, the penalty will likely be regarded as having a punitive effect from the licensee’s perspective. As the TSM decision makes clear, this is permissible and is consistent with the overall objectives of professional discipline.

Discussion

4.1. The Complainant in this case had concerns about the Licensee’s conduct which related to an altercation at the Property, belonging to the estate of her late partner, where she resided. She also had concerns about a visit to the Property by the Licensee’s brother who gave her a false name. The Committee did not find the Licensee’s conduct breached the Act in relation to those incidents. The Committee did however find the Licensee breached Rule 9.6 by marketing the Property, by erecting a sign, without an agency agreement.

4.2. In her submission on orders the Complainant restated her claim that the Licensee had put his foot in the door to prevent her closing it. The Committee determined that it is more likely

than not that such conduct did not occur and does not revisit this matter under penalty. She also expressed her appreciation for the investigation and felt she had had a voice in this

matter.

4.3. The Licensee says the breach is at the lowest end of the scale because of the unique

circumstances that led to the for-sale sign being erected and that multiple mitigating factors should be taken into account in determining penalty.

4.4. The Licensee says that the following mitigating factors should be taken into account:

• (a) This is the first finding against him by a Complaints Assessment Committee in his 10 year real estate career.
  
• (b) Marketing, by erecting of a sign, was only undertaken under the written instruction of the vendor of the Property and was not in flagrant disregard for the Rules.
  
• (c) The breach did not affect the Complainant whose distress in this matter was a result of the difficult personal circumstances she encountered with the potential sale of the house she occupied.
  
• (d) The Licensee had a genuine and well-founded belief that the Vendor was within their rights to instruct a sign be erected.
  
• (e) There was no risk of harm to the Complainant due to the breach. Any risk of harm to the Vendor was reduced by the Vendor’s lawyer being involved in all correspondence.
  

4.5. Taking these factors into account the Licensee submits that:

• (a) A fine would be inappropriate in this instance as no commission was earned in this case and would unduly focus the penalty on punishment, rather than maintenance of professional standards.
  
• (b) Requiring education is unnecessary in the circumstances with the case having served as sufficient education in relation to the need for an agency agreement to be signed even when written instructions are received from the Vendor.
  
• (c) An apology would appropriately reflect the severity of the breach and he offers an apology to the Complainant which is attached to his submission.
  
• (d) Censure or reprimand is unnecessary in this instance given the low severity of the breach and no impact on the Vendor, his personal reflection throughout this process and the apology offered to the Complainant.
  

4.6. The Committee has considered the following matters carefully in determining the appropriate penalty.

4.7. The Committee has determined that the breach is at the lower end of the scale of severity. The Licensee had the consent of the Vendor to erect a sign and the failure to obtain a signed agency agreement before doing so is technical in nature though not minor or insignificant. The distress the Complainant felt in relation to the sign being placed on the Property would not have been less if the Licensee had first obtained a signed agency agreement. It was the possibility of the sale of the Property and the conflict this brought that appears to have been most distressing for the Complainant. Likewise, the Vendor was not adversely impacted by

the breach and it had been their wish that the Licensee “put up a sale sign outside the house as soon as possible to catch the Christmas visitors”.

4.8. The Committee has also taken into account the lack of previous disciplinary history, the

Licensee’s acceptance of wrong doing in this case and offer of an apology to the Complainant as mitigating factors in determining penalty.

4.9. The Committee has also considered carefully that the primary purpose of penalty under the Act is to maintain professional standards and protect the public. It is necessary that penalty in this case is consistent with these objectives and supports the deterrence of other licensees from breaching Rule 9.6. Should the Committee have applied no penalty other than the

apology offered by the Licensee, as submitted by the Licensee, this would risk encouraging

the breach of Rule 9.6 in similar circumstances. The Committee is mindful of this and the fact that the erection of a sign, or other marketing, without an agency agreement in place (but

where the client’s instructions to do so are first obtained) is to be taken seriously. Indeed,

licensees should expect that it will be taken seriously, and this is consistent with other similar cases.

4.10. In determining penalty and the level of fine applied in this case the Committee has also considered Z v Dental Complaints Assessment Committee and the need for penalty to be comparable with penalty imposed on others in similar circumstances. In this regard the Committee notes the following cases:

• (a) In complaint C17705, the licensees engaged in unsatisfactory conduct and breached Rule 9.6 by showing a property after the agency agreement had expired and also

breached Rules 5.1 and 6.2, altered an email and failed to deal appropriately with keys.

The Tribunal upheld penalty on appeal and found that licensees must ensure that a current authority is in effect at all times when a licensee is taking steps to sell a

property. Both licensees in that case received a censure and Licensee A was ordered to pay a $2,000 fine. This Committee considers a lesser penalty is appropriate than that

imposed in this case because the conduct relates only to a breach of Rule 9.6 and the mitigating factors noted above.

(b) In complaint C25876, Licensee B engaged in unsatisfactory conduct when he failed to provide a market appraisal or hold a signed agency agreement before offering the property to a potential buyer and procuring an offer. The Committee in that case noted that “Having an Agency Agreement in place prior to commencing the marketing of a property is a cornerstone of the Act”. Licensee B was censured and ordered to refund

$3,500 of commission and pay a $1,500 fine. The circumstances are similar to this

current case although additional breaches, including the lack of a market appraisal and failure to advise the complainant in that case to seek legal advice, suggest a lower

penalty is appropriate in the current matter.

(c) The Committee in complaint C24277, found that Licensee C marketed the property without an agency agreement signed by both owners and applied undue and unfair pressure on the complainant who was dealing with a relationship breakdown. The

licensee was ordered to pay a fine of $1,500 and undergo training. Although an agency agreement was signed it was only by one of the owners and it was necessary for both to have signed before marketing. Mitigating factors include that the licensee kept the complainant informed of matters relating to the sale campaign and had no prior

disciplinary history. Although this case also found a breach of Rule 9.2 (undue

pressure) this Committee considers the breach and mitigating factors are comparable on balance and consistent with the penalty imposed in this case.

4.11. The Committee does not believe the conduct warrants a censure of the Licensee. The Committee’s view is that sanctions should be applied in cases where a more serious breach has occurred. In this case the Committee does not believe the level of unsatisfactory conduct

meets the threshold required and that such censure should be reserved for cases where breaches are at the higher end of the scale of severity.

4.12. The Committee has also considered whether additional training is required in this case and does not believe it is. The Committee is concerned, however, that in his submission the

Licensee claims to have had a “...genuine and well-founded belief that the Vendor was within their rights to instruct a sign be erected.” Clearly the Vendor may have held this belief but the Licensee should have known he was not able to follow these instructions without breaching

the Rules. Notwithstanding this, the Committee is satisfied that the Licensee is, through this investigation and complaint process, now well aware of the requirement to have a signed agency agreement in place prior to marketing and has acknowledged this. For these reasons the Committee does not order additional training.

4.13. The Licensee has offered the Complainant an apology which is freely given and included in their submission on orders. The Committee therefore does not order that this apology be made but orders that this be made available to the Complainant should the Complainant wish to see it.

4.14. Finally, the Committee considered the matter of a fine and for the reasons stated above

determines that a fine is appropriate in this case and orders the Licensee to pay the Authority a fine of $1,500. In the circumstances of this case the level of the fine is at the lower end of

the scale of fine able to be imposed (maximum of $10,000 for a Licensee) but still at a significant level to support the objectives noted above.

Publication

5.1. The Committee directs publication of its decision. The decision will be published without the names or identifying details of the Complainant (including the address of the Property), and any third parties. The decision will state the name of the Licensee and the Agency for which they work or worked for at the time of the conduct.

5.2. 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 standards and that is in the public interest.

Your right to appeal

6.1. 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 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.

6.2. 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/.

Provisions of the Act and Rules referred to

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

Signed

Gayatri Jaduram Chairperson

Craig Edwards

Deputy Chairperson

Jim Lindsay Member

Date: 26 January 2021

Appendix: Provisions of the Act and Rules referred to

The Real Estate Agents Act 2008 provides:

3 Purpose of Act

(1) The purpose of this Act is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the

performance of real estate agency work.

(2) The Act achieves its purpose by—

• (a) regulating agents, branch managers, and salespersons:
• (b) raising industry standards:
• (c) providing accountability through a disciplinary process that is independent, transparent, and effective.
  

72 Unsatisfactory conduct

For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the licensee

carries out real estate agency work that—

(a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or
(b) contravenes a provision of this Act or of any regulations or rules made under this Act; or
(c) is incompetent or negligent; or
(d) would reasonably be regarded by agents of good standing as being unacceptable.

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.

93 Power of Committee to make orders

(1) If a Committee makes a determination under Section 89(2)(b), the Committee may do 1 or more of the following:

• (a) make an order censuring or reprimanding the licensee;

• (b) order that all or some of the terms of an agreed settlement between the

licensee and the complainant are to have effect, by consent, as all or part of a final determination of the complaint;

(c) order that the licensee apologise to the complainant;
(d) order that the licensee undergo training or education;
(e) order the licensee to reduce, cancel, or refund fees charged for work where that work is the subject of the complaint;
(f) order the licensee:

• (i) to rectify, at his or her or its own expense, any error or omission; or
• (ii) where it is not practicable to rectify the error or omission, to take steps to provide, at his or her or its own expense, relief, in whole or in part, from the consequences of the error or omission;

(g) order the licensee to pay to the Authority a fine not exceeding $10,000 in the case of an individual or $20,000 in the case of a company;
(h) order the licensee, or the agent for whom the person complained about works, to make his or her business available for inspection or take advice in relation to management from persons specified in the order;

(ha) if the Committee is satisfied that the unsatisfactory conduct involves more than a minor or technical breach of this Act or of any regulations or rules made under this Act, make an order referring the matter to the Disciplinary Tribunal for the Tribunal to consider whether to make a compensation order under section 110(5);

(i) order the licensee to pay the complainant any costs or expenses incurred in respect of the inquiry, investigation, or hearing by the Committee.
(2) An order under this section may be made on and subject to any terms and conditions that the Committee thinks fit.

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

Rule 9.2 A licensee must not engage in any conduct that would put a prospective client, client, or customer under undue or unfair pressure.

Rule 9.6 Unless authorised 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