Thomson - Complaint No C37443 [2021] NZREAA 55 (26 August 2021)

Last Updated: 28 April 2022

Before the Complaints Assessment Committee
In the matter of	Complaint No: C37443 Part 4 of the Real Estate Agents Act 2008
and
Licensee:	John Thomson (10054025)

Decision on Orders

26 August 2021

Members of Complaints Assessment Committee: CAC2106 Chairperson: Maria McElwee

Deputy Chairperson: Amanda Elliott Panel Member: Susanne Guhl

Complaints Assessment Committee

Decision on orders

1. Background

1.1. On 26 May 2021 the Complaints Assessment Committee (the Committee) found John Thomson (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.

2. 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. an order that the Licensee pay to the Real Estate Authority (the Authority) a fine of

$1000.00 within 21 working days of the date of this decision.

3. 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.

4. Discussion

4.1. The Committee in its substantive decision made the following findings.

1. The Licensee did identify water penetration in the downstairs games room at the Property however, the Licensee withheld that information from the Complainant and failed to disclose to the Complainant that remedial works had been carried (in breach of rules 5.1, 6.2 and 6.4).
   
2. The Licensee did discover that the downstairs bedroom was unconsented however, the Licensee withheld that information and failed to disclose to the Complainant what he knew about the status of the room or that the Vendors

would be lodging plans with Council (in breach of rules 5.1, 6.2 and 6.4).

100. Advertising the Property as a two-bedroom property was misleading and a breach of rule 6.4.
     

4.2. The Complainant says he incurred legal and building inspection fees on a property that was falsely advertised and seeks reimbursement of his legal fees ($309.00) and building

inspection costs ($547.00).

4.3. The Licensee in his submissions says:

1. He never intended to cause the Complainant any grief, loss or hardship. He believes that he had discussed a range of options available to the

Complainant while visiting the Property on numerous occasions and had tried to assist him wherever possible.

2. The Vendors refused to reimburse the Complainant’s legal fees and building inspection costs when a request was put forward to them.
   

100. He did go to extensive lengths to ensure compliance including, seeking professional advice and insisting that the Vendor’s lodge plans with Council. He also says that he read the Council File in its entirety and found no fault with the Property.
     

4. He accepts the Committee’s judgment however he believes the Committee’s description of events was not accurate and that the Committee omitted

critical evidence that demonstrated his thoroughness.

5. He has been a licensee for 36 years and he has never been the subject of a prior sustained investigation.
   
6. In the 6 months prior to the conduct complained of, he had his own health issues and, was also caring for his father who died two weeks before the COVID-19 lockdown.
   
7. The COVID-19 lockdown and his own health issues have had a considerable negative impact on his business.
   
8. He is benevolent, philanthropic, a generous supporter of several community organisations and is held in high regard in his community.
   
9. He would be prepared to reimburse the Complainant for the costs sought and considers that the Complainant’s modest claim is indicative of the Complainant’s perception of the severity of the alleged transgression.
   
10. He considers payment to the Complainant to be a satisfactory penalty but is aware that the Committee might impose a small fine.
    

4.4. The findings made concern withholding information from the Complainant and misleading advertising both of which are fundamental licensee obligations having regard to the consumer protection focus of the Act and the importance of maintaining professional standards.

4.5. However, the Committee acknowledges that the Licensee did research the Council File, sought independent advice and had extensive discussions with the Vendors regarding the work carried out by them at the Property. The Committee also acknowledges that the

Licensee believed that the waterproofing works carried out by the Vendors had remedied any water penetration issues and, relied on the Vendors advice that plans would be lodged with Council for the downstairs bedroom. For these reasons, the Committee assesses the

Licensee’s conduct as low-level unsatisfactory conduct.

4.6. Having assessed the Licensee’s conduct as low-level unsatisfactory conduct, the Committee does not consider that the conduct warrants a censure. The Committee’s view is that a

censure should be applied in cases where a more serious breach has occurred. However, the Committee does consider that a fine is appropriate to serve as a deterrent and a reminder to the Licensee of the importance of maintaining professional standards

4.7. Under section 93(g) of the Act the Committee may order an individual licensee to pay to the Authority a fine not exceeding $10,000.00. The Committee orders a fine of $1000.00. The Committee considers that the findings made could warrant a higher fine than $1,000.00 however, in setting the fine at this level the Committee considers the lack of prior disciplinary findings, the Licensees stated lack of intention and acceptance of the Committee’s findings to be mitigating factors.

4.8. The Licensee says that he will reimburse the Complainant for his legal fees and the building inspection costs.

4.9. Under section 93(1)(i) of the Act the Committee has the power to order the Licensee to pay to the Complainant any costs or expenses incurred in respect of the inquiry investigation or hearing by the Committee. Neither the Complainant’s legal fees or the costs of the

Complainant’s building inspection are costs incurred in respect of the inquiry, investigation or hearing by the Committee and accordingly, the Committee is unable to order reimbursement of these costs under section 93(1)(i) of the Act.

4.10. Under section 93(f) (ii) of the Act the Committee may order a licensee to take steps to provide relief at the licensee’s expense from the consequences of the licensee’s error or omission.

4.11. The power to order relief does have a compensatory element to it. That compensatory

element, however, does not include a power to order a licensee to make payments in the nature of compensatory damages.1 If there is a direct causal connection between an error or omission and a cost/loss then a monetary award for relief may be appropriate.

4.12. If the Committee is to consider ordering the Licensee to provide relief from his error or

omission, the costs claimed by the Complainant must be a consequence of the conduct of the Licensee that gave rise to the unsatisfactory conduct finding. The Committee must also consider whether there have been intervening events or decisions made which would mean

the relief sought can no longer be considered a consequence of the unsatisfactory conduct finding. This approach was confirmed in Quin v Real Estate Agents Authority2 and more

recently in Edwards v Bridge & Real Estate Agents Authority3.

4.13. The evidence shows that after the Complainant had obtained the building inspection report and discovered that the Property could not be legally described as a two-bedroom property,

1 Quin v Real Estate Agents Authority [2012] NZHC 3557

2 Supra

3 [2019] NZHC 2286

he continued to express interest in negotiating albeit on amended terms. For this reason, the Committee does not consider that the causal connection between the costs incurred by the Complainant in entering into a conditional agreement and carrying out due diligence on the Property and the Licensee’s conduct can be established.

4.14. The Committee therefore makes no orders for reimbursement of the costs claimed by the Complainant. However, should the Licensee wish to make reimbursement to the Complainant as indicated in his submissions the Committee leaves it to him to do so.

4.15. The Committee also notes that section 93(1)(ha) of the Act provides that if the Committee is satisfied that the unsatisfactory conduct involves more than a minor or technical breach of

the Act, the Committee can make an order referring the matter to the Real Estate Agents Disciplinary Tribunal (the Tribunal) for the Tribunal to consider whether to make a compensation order under section 110(5) of the Act.

4.16. The Committee has assessed the Licensee’s conduct to be low level unsatisfactory conduct. As the conduct does not involve more than a minor or technical breach of the Act, the Committee makes no orders under section 93(1)(ha) of the Act.

5. 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.

6. 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/.

7. Provisions of the Act and Rules referred to

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

Signed

Maria McElwee Chairperson

Amanda Elliott

Deputy Chairperson

Susanne Guhl Member

Date: 26 August 2021

Appendix: Provisions of the Act 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 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.