Ripley - Complaint No C37612 [2021] NZREAA 59 (9 September 2021)

Last Updated: 28 April 2022

Before the Complaints Assessment Committee
In the matter of	Complaint No: C37612 Part 4 of the Real Estate Agents Act 2008
and
Licensee:	Ayliss Ripley (20013792)

Decision on Orders

9 September 2021

Members of Complaints Assessment Committee: CAC2106 Chairperson: Maria McElwee

Deputy Chairperson: Amanda Elliott Panel Member: Susanne Guhl

Complaints Assessment Committee

Decision on orders

Background

1.1. On 18 May 2021 the Complaints Assessment Committee (the Committee) found Ayliss Ripley (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 order under section 93 of the Act:

1. an order that the Licensee pay to the Real Estate Authority a fine of $750.00 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 McCaig v A 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 McCaig decision makes clear, this is permissible and is consistent with the overall

objectives of professional discipline.

Discussion

Complainants’ submissions

4.1. The Complainants say:

1. The re-cladding and associated cost have caused them a lot of stress.
   
2. They acknowledge that when they purchased the Property, they assumed

responsibility for carrying out some minor work to the cladding but the work undertaken by them in 2020 to re-clad and rectify structural issues at the Property cost them $36,124.62.

100. They seek an order under section 93(1)(f) of the Act and ask that the Licensee pay

them $25,000.00 which they consider to be reasonable relief for the cost of the re- cladding work not identified prior to the purchase of the Property.

4. They believe that the complaints process has served a purpose and hope that it will have resulted in the Licensee learning from the experience.
   
5. They trust the Committee to make any professional recommendations deemed necessary.
   

Licensee’s submissions

4.2. The Licensee through her lawyer says:

1. Her conduct was not deliberate and, was not done carelessly or, with an intention to mislead. She had no reason to believe that the information the Vendor had given her was not correct particularly as the Vendor had been involved in the initial

construction of the house.

2. She did advise the Complainants to verify the type of cladding as part of their property inspection.
   

100. She did advise the Complainants that parts of the cladding would need to be replaced and this was confirmed in the Complainants’ Building Report.
     

4. It would be unreasonable and disproportionate to expect her to bear the burden of covering the cost of replacement cladding in circumstances where the Complainants knew prior to purchase that this was an expense that they would incur if they

decided to purchase the Property.

5. The Complainants’ claims for rectification and/or compensation cannot be sustained and should be dismissed.
   
6. This disciplinary process has served as a lesson to her, and she is committed to

ensuring that she is vigilant in the future to ensure that she adheres to the general principles relating to the provision of information.

7. She understands and takes very seriously her obligations under the Act and the Rules and will ensure to the best of her ability that she adheres to them moving forward.
   
8. She offers her sincere apologies to the Complainants.
   
9. She appreciates that no breach should be trivialised and submits that her

unsatisfactory conduct sits at the lower end of the scale. In the circumstances it is appropriate that no penalty orders are made (other than publication) but she acknowledges that the Committee may impose a small fine and/or require her to undergo further training.

Our reasons

4.3. In its substantive decision the Committee found that the Licensee’s description of the

cladding in the marketing materials for the Property was misleading because it incorrectly stated that the cladding was cedar.

4.4. Under section 93(1) of the Act the Committee has the power to make various orders. Such orders include the power to: censure or reprimand a licensee; require the licensee to

apologise, undergo training or pay a fine; order a reduction or cancellation or refund of fees

charged; order a licensee to rectify their error or omission or provide relief from the consequences of the conduct; order a licensee to reimburse a complainants’ costs or expenses incurred in respect of the inquiry, investigation or hearing or; make a referral to the Real Estate Agents Disciplinary Tribunal (the Tribunal) for a compensation order.

4.5. The Complainants seek an order under section 93(1)(f) of the Act and ask that the Licensee pay them $25,000.00 as “reasonable relief” for the additional re-cladding costs incurred by them.

4.6. Under sections 93(1)(f)(i) and (ii) of the Act the Committee may order the Licensee to rectify at her expense any error or omission or, where that is not practicable, to take steps at the

Licensee’s expense to provide relief from the consequences of the error or omission.

4.7. The power to order rectification or relief does have a compensatory element to it. That compensatory element, however, does not give the Committee the 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 or rectification may be appropriate.

4.8. The error made by the Licensee in describing the Property as having cedar cladding in the advertising and marketing materials for the Property cannot be rectified. For this reason, no order for rectification can be made under section 93(1)(f)(i) of the Act.

4.9. If the Committee is to consider ordering the Licensee to provide relief from her error or

omission under section 93(1)(f)(ii) of the Act, the payment sought by the Complainants 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 any intervening events or decisions made which would mean the relief sought can no longer be 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.

4.10. The Licensee’s conduct that led to the unsatisfactory conduct finding was her failure to

correctly identify the cladding in the advertising and marketing material for the Property. The consequence of this error was that the cladding at the Property differed from what was

advertised. The Complainants purchased the Property with the knowledge that some re- cladding was required. The Complainants say their decision to re-clad the whole of the Property was due to warping concerns when they discovered the cladding was pine rather than cedar.

4.11. The Complainants’ decision to re-clad the whole of the Property is not a consequence of the unsatisfactory conduct finding and accordingly, the Committee makes no order for relief under section 93(1)(f)(ii) of the Act.

4.12. Both relief and compensation seek to restore the position of a complainant who has suffered loss or harm. Awards of relief look to rectify or remedy loss through a tangible step or action taken to address the loss suffered. In comparison, compensation acts to restore the position of a complainant who has suffered loss through a monetary payment. In seeking a

contribution towards the costs that they have incurred the Committee is of the view that the Complainants are actually seeking compensation rather than rectification or relief.

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

2 Supra

3 [2019] NZHC 2286

4.13. The Committee does not have the power to award compensatory damages. However, section 93(1)(ha) of the Act (which came into force on 29 October 2019 and, does not have

retrospective effect4) 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 Tribunal for the Tribunal to consider whether to make a compensation order under section 110(5) of the Act.

4.14. The conduct resulting in the unsatisfactory conduct finding occurred prior to this section coming into force and for this reason the Committee is unable to consider an order under section 93(1)(ha). The Tribunal has indicated that compensation referrals can only be made in respect of conduct occurring after 29 October 2019, being the date that section 93(1)(ha) of

the Act came into force.5

4.15. The Committee accepts that the Licensee’s conduct was unintentional and, that she relied on information given to her by the Vendor that she had no reason to believe was incorrect. In

the circumstances the Committee has assessed the Licensee’s conduct to be low level unsatisfactory conduct.

4.16. Under section 93(1)(a) of the Act the Committee can make an order censuring or reprimanding the Licensee. Having assessed the Licensee’s conduct as low-level

unsatisfactory conduct the Committee does not consider that a censure is warranted. The Committee’s view is that a censure should be applied in cases where a more serious breach has occurred.

4.17. Under section 93(1)(g) of the Act the Committee may order an individual licensee to pay to the Authority a fine not exceeding $10,000.00.

4.18. The finding made against the Licensee concerns misleading advertising which is a fundamental obligation having regard to the consumer protection focus of the Act and the

importance of maintaining professional standards. For this reason, the Committee considers that a fine is appropriate to serve as a deterrent and a reminder to the Licensee of the

importance of maintaining professional standards.

4.19. The Committee orders a fine of $750.00. In setting the fine at this level the Committee considers the lack of prior disciplinary findings, the Licensee’s stated lack of intent, her stated remorse and response to this complaint to be mitigating factors.

4.20. The Committee has also considered whether any of the other orders under section 93 are required to meet the Act’s objectives of protecting the interests of consumers, promoting public confidence or maintaining professional standards.

4.21. Under section 93(1)(c) of the Act, the Committee can order the licensee to apologise to the Complainants. Given that the Licensee has in her submissions apologised to the Complainants the Committee considers that an ordered apology has limited value and accordingly makes no order under section 93(1)(c) of the Act.

4.22. Under section 93(1)(d) of the Act the Committee can order the licensee to undergo further training. The Committee considers that the Licensee’s conduct that gave rise to the

unsatisfactory conduct finding is better addressed by changes within the Licensee’s own

4 Interpretation Act 1999, section 7.

5 Clough v REAA (CAC520) and Bunn & Christiansen [2020] NZREADT 2 (although considering another new compensation provision section 110(4)(b))

practices to ensure that the same situation does not arise again.

4.23. In this regard the Committee notes the Licensee’s advice that the disciplinary process has served as a lesson to her and that she has taken on board the importance of obtaining

independent verification of the features of a property and, the disclosures that should be made where independent verification is not possible. The Committee also notes that the

Licensee has discussed the complaint and the issues arising with her colleagues in an effort to make sure that similar conduct is not repeated.

4.24. The Committee is therefore satisfied that the complaints process has already served a purpose and has resulted in the above changes being made by both the Licensee and the Agency and does not consider that an order for further training is necessary.

Publication

5.1. The Committee directs publication of its decision. The decision will be published without the names or identifying details of the Complainants (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 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: 9 September 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.