Complaint No C34877 [2021] NZREAA 70 (17 September 2021)

Last Updated: 21 November 2022

Before the Complaints Assessment Committee
In the matter of	Complaint No: C34877 Part 4 of the Real Estate Agents Act 2008
and
Licensee 1:	Licensee 1 (XXXXXXXX)
Licensee 2:	Licensee 2 (XXXXXXXX)

Decision to take no further action

17 September 2021

Members of Complaints Assessment Committee: CAC2108 Chairperson: Andrew Hayes

Deputy Chairperson: Denise Evans Panel Member: Ian Keightley

V20201203

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 6 March 2020 the Real Estate Agents Authority (the Authority) accepted a complaint against Licensee 1 and Licensee 2 by the Complainant.

1.2. Licensee 1 is a licensed Agent under the Real Estate Agents Act 2008 (the Act). Licensee 2 is a licensed salesperson under the Act. The complaint relates to a property situated at the Property. At the time they worked at Agency 1 (the Agency).

1.3. The detail of the complaint is that the Licensees did not inform the Complainant a strip of land at the back of the Property belonged to the neighbour.

1.4. The issues of concern are:

1. Whether the Licensees knew the boundary was not where the fence represented it to be.
   
2. If they did not know this, then whether the Licensees should have discovered the boundary was not where it appeared to be and disclosed that to the Complainant.
   

100. Whether the Licensees were required to inform the Complainant that the strip of land at the back of the Property belonged to the neighbour.
     

4. Whether the Licensees did inform the Complainant, to a satisfactory degree, that the strip of land at the back of the property belonged to the neighbour.
   

1.5. In particular, the Complainant said:

1. The Licensees did not make her aware that the fence did not indicate where the boundary was. She was misled by the Licensees, and this led to her selling the Property at a loss.
   
2. The following is her recollection of events:
   
   1. In February 2017 she saw the Property advertised and contacted Licensee 2 and asked a few questions about it.
      
   2. She first viewed the Property at an open home. Licensee 1 was there. That was the first and last time she met Licensee 1.
      
   3. Licensee 1 told her then that the downstairs kitchen was unconsented but that was the only issue with the Property.
      
   4. She saw the Property a second time on 4 February 2017. That viewing was with the Assistant, Licensee 1’s personal assistant. Neither Licensee 1 or 2 were present. There was no discussion on that date as to the boundary or fence line. The Assistant told her she would send further information to her. The Assistant never sent her an email.

5. When she viewed the Property, she received an A4 property marketing booklet with property information in it. The booklet she obtained did not contain the Property certificate of title. The booklet submitted by the Licensees has been altered. It is missing the rental assessment report which has been replaced by the certificate of title.
   6. The certificate of title included a plan of the property. That plan clearly displayed the Property’s unusual back boundary. It clearly identified that the strip of land at the back of the Property did not belong to the Property, but to the neighbour.
      
   7. The LIM report nor the certificate of title was never present during her viewings of the Property. She was to be sent that by the Assistant after her second viewing. She did not receive that from the Assistant.
      
   
   

8. There is insufficient evidence to show anything was sent to her by the Assistant.
   
   9. At no time did anyone point out any boundary line or boundary pegs or that some paved area and garden shed (within the strip) were in the neighbour’s property.
      
   10. The only time she saw Licensee 2 was when he visited her home to arrange for the sale and purchase agreement to be signed by her.
       
   11. At that time, she was asked if she would like to keep the garden sheds on the Property. She asked to keep one of the sheds. This shed was positioned mostly on the strip of land belonging to her neighbour and had to be removed.
       
100. Her neighbour sold the property at Property 2 in early 2018. Shortly after, the Commercial site that backs onto the Property redeveloped their scrubland into a warehouse and parking. When this work was completed, the new owner of the neighbouring property told her “they would like their land back”.
     

4. This caused her confusion as she was unaware of any issues with the boundary and the Licensees had led her to believe this was part of the Property.
   
5. The Complainant engaged a registered surveyor to establish where the correct boundaries were. They discovered the boundary wasn’t where the fence indicated it to be. The garden shed they kept from the previous owner had to be moved as did her pool.
   

1.6. The Complainant requested a remedy, being:

1. Compensation for the difference between what was “offered” and what was actually legally for sale - $164,500 plus GST (includes loss of value as per the surveyor’s report; emptying and removing the pool; sold at a loss; real estate fees; relocating shed and renovating costs).
   

1.7. The Licensees responded to the complaint against them.

1.8. In particular, the Licensees said:

1. The Complainant was involved in real estate. She had had worked at Agency 2 as a

property manager.

2. They knew that the Property’s boundary was not where the fence represented it to be as they had previously sold the Property and been made aware of that at that time. They had also reviewed the LIM report before marketing the Property. Such was also obvious from looking at the certificate of title of the Property which clearly displayed an obvious doglegged boundary at the rear of the Property where the fence was straight.
   

100. They accept that it was appropriate to advise all prospective purchasers, including the Complainant, of the correct and accurate boundary line to ensure it was not misrepresented to them all by the positioning of the fence.
     

4. They had anticipated the positioning of the fence and the paved area may cause confusion for prospective purchasers, which is precisely why they discussed the correct boundary line with them during viewings.
   
5. The positioning of the strip of land at the back of the Property had apparently had no effect on the total area of the Property. That is because when the Property was sold by the Complainant it was advertised as being of the same area of land as when sold to the Complainant.
   
6. They informed the Complainant that the strip of land at the back of the Property belonged to the neighbour at a meeting between the Complainant and Licensee 2 at the Property on 4 February 2017.
   
7. The following is their recollection of events:
   
   1. The Complainant contacted them expressing interest in the Property.
      
   2. On 26 January 2017 she undertook her first inspection of the property. That was with the Assistant. The Assistant was at that time a licensed agent. At that inspection the following information was available and provided which all showed the dogleg:
      
      • the LIM report,
      • the full certificate of title including the lot plan,
      • and additional council site plan, and
      • a lot plan showing the Property’s boundary line, taken from the Council GIS system
        
      • A property marketing booklet that included the full Certificate of title.
      • The property marketing booklet provided by the Complainant had pages missing, specifically the lot plan in the certificate of tittle. The agency’s system’s records show that that the marketing booklet had not been altered since it was created. The Agency’s records confirmed the same.
        
      • These documents were also publicly available at the Agency’s website.
   3. After that first meeting the Agency’s diary records show the date of that first meeting and that an email was sent to the Complainant by the Assistant under

Licensee 1’s name. The records entry is as follows:

“Came through with partner and kids, emailed property information through 26/1 an email was sent”

4. On 4 February 2017 Licensee 1 conducted an open home at the Property. She met with the Complainant that day (the kitchen table meeting). That was the Complainant’s second visit to the Property.
   
5. Person 1, her companion, accompanied her. Licensee 1 says she has a vivid recollection of the kitchen table meeting. During that meeting Licensee 1 says she had a:
   

“thorough discussion with the Complainant and her partner about the boundary line for the property. In particular, we [Licensee 1] explained to the Complainant that the strip of land at the back of the property did in fact belong to the neighbouring property. We [Licensee 1] did this by examining the hard copy of the LIM report and enclosed plans of the property, while sitting at the kitchen table. Together we [Licensee 1] carefully reviewed the LIM report and pointed out the actual boundary line to the Complainant, to ensure that she was not mislead by the positioning of the fence”

and

“We looked through the property and ended up upstairs, looking at the commercial land next door. This provoked a discussion on the boundary line of the property. We then opened the LIM report on the kitchen table; which has 16 different maps in it, all showing the boundary line of the property and delineation between the commercial land and the property.”

and

“Both the Assistant and I were very aware of the anomalies regarding the boundary line and the nearby fencing. I was at pains to point this out to the Complainant. I did this for all buyers not just the Complainant”.

6. The Agency’s diary record of the second meeting records the date of that meeting stating as follows:
   

“4/2 Came through for a 2nd visit 8/2 [the Complainant] says she is very interested”

7. Licensee 1 is confident that the meeting occurred on that day as those records cannot be edited by Licensees once information is entered into the system.
   
8. The Complainant then carried extensive background investigation, her own due diligence, including consulting with Region Council and building inspectors about the Property.
   
9. On 19 February 2017 Licensee 2 met with the Complainant at her home and drafted an offer for sale and purchase with her. The Complainant’s partner,

Person 1 was present at that meeting

10. On 27 February 2017 the agreement for sale and purchase became unconditional after and extension of time for the building and finance conditions

was sought and obtained by the Complainant’s solicitor.

11. Sometime after that Licensee 2 recalled meeting the Complainant and Person 1 at the Property again. He thinks that was for the for the final inspection or to hand the keys over.
    
12. In March 2018 the Licensees were approached by the Complainant to prepare an appraisal for the Property as she was considering selling it.
    
13. In September 2020 they saw that the Property had been listed for sale with another agency.
    
14. In June 2020 they were advised by the Authority that a complaint had been received by it in relation to this transaction.
    

Investigation with the Assistant

8. The Assistant supplied a note of her meeting with the Complainant. That was followed up with an interview of her by the Authority.
   
9. The Committee takes from those two sources the following:
   

1. She no longer works for the Licensees or the Agency.
   
   2. The Assistant met the Complainant at the Property on 26 January 2017. Her partner and children were also present.
      
   3. At that time, she was a fully licensed agent and assisting her team with admin work.
      
   4. She recalled the meeting in some detail with its date being confirmed by the Agency’s diary records.
      
   5. The property marketing booklet and LIM and Certificate of title were available in multiple locations in the Property when the Complainant arrived.
      
   6. The Complainant took some or all this documentation with her when she left.
      
   7. The Assistant also sent her all the documents that night “.....later on the same night. I sent through all the documents and sent an email.”
      
   8. There was a discussion as to the boundary but not specifically the fence.
      
   9. In relation to the boundary, she advised the Complainant that to truly know where the boundary is, they would need to get a surveyor in to show them the exact spot.
      

2. What we decided

2.1. On 29 August 2020 Complaint’s Assessment Committee 2001 considered the information provided and decided to enquire into it under section 79(2)(e) of the Act. On 22 October 2020 the information was transferred to Complaints Assessment Committee 2105. On 24 June 2021 the information was transferred to Complaints Assessment Committee 2108 (the Committee).

2.2. On 7 July 2021 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 Rules 5.1 (skill and care), 6.2 (good faith), 6.4 (misleading, withholding information)

10.7 (disclosing defects).

3. Our reasons for the decision

3.1. The Committee concluded that the Licensees did inform the Complainant, to a satisfactory degree, that the strip of land at the back of the property belonged to the neighbour.

Disclosure of strip of land belonging to neighbour.

3.2. A reasonably competent agent would be expected to immediately identify that this unusual, doglegged boundary at the rear of the section, as clearly displayed on the certificate of title and other documents, did not correlate with the straight fence line at that location. They would also be under a duty to bring this to the attention of prospective purchasers.

3.3. Failure to do so would be conduct that falls short of the standard a reasonable member of the public is entitled to expect from a reasonably competent licensee and be regarded as agents of good standing as unacceptable. Such would also be breach of their duty to exercise skill, care and competence at all times when carrying out real estate work (r5.1) and other associated Rules.

3.4. The Licensees have rightly immediately acknowledged that they were aware of this anomaly and were under a duty to inform the Complainant and other potential purchasers of that.

3.5. The question here is whether they adequately informed the Complainant of the anomaly. There is conflicting evidence on this issue.

3.6. The Complainant recalls that the anomaly was never bought to her attention, was hidden from her by omissions from the documents she received; the certificate of title, the property marketing report and other documents said to be sent to her were never sent to her, a meeting with Licensee 1 where the anomaly was discussed did not happen and did not happen on the date Licensee 1 said it did.
3.7. The Complainant bears the burden of proving the factual elements of her complaint to the required standard of proof. That standard is the balance of probabilities meaning what is more likely than not. The Complainant’s allegations have not been proved on the information before the Committee. The Committee prefers the recollection of the Licensees as supported by the Agency records and statements of the Assistant. The Complainant’s recollection of the transaction appears to be mistaken. That is understandable given the passage of time.

3.8. The Committee has come to this finding due to the below reasons:

1. The Complainant recalled the first time she saw the Property, she was with Licensee 1, being the only time she saw her. That Licensee 1 told her nothing about the fence line or the boundary, only that there were consent issues with the basement. It is more

likely than not that the initial meeting to view the property was held on 26 January 2017 by the Assistant. Not with Licensee 1 as the Complainant recalled. This is confirmed by the Agency diary record that details that date. Also, by the Assistant’s clear statements confirming the same. The Assistant is no longer in the employ of Agency 2 and not the subject of this investigation. Her evidence is to that degree independent and credible. She admits that she did discuss the boundary (advising it should be checked) with the Complainant. She also freely admits that she did not discuss the fence line in relation to the boundary. That is an honest admission, not particularly in the Licensees’ favour, that strengthens her credibility further.

2. Similarly, the Assistant is clear that the Complainant took the property information documents (or some of them) when she left. Also, that she sent all the property documents to the Complainant by email that night. That is confirmed by the Agency diary records. The Complainant says she was never sent that email. It is more likely than not that the Assistant did email the documents, including the plans clearly showing the doglegged boundary.
   

100. The Complainant says that the property marketing booklet did not contain the Property certificate of title (or at least the plan being part of the title document). It is highly unlikely that the full certificate of title would not be included in the property marketing booklet. Especially so when the Licensees where aware of the anomaly and the need to disclose it. The Licensees submitted copy included the full certificate of title. It is also highly unlikely that the property marketing booklet would be manipulated by the Licensees well after the transaction was completed. This is confirmed by the Licensee’s evidence from the Agency that this booklet had not been altered since its creation.
     

4. As to the second meeting it is more likely than not that this was with Licensee 1 and not the Assistant. The above evidence supports that. Further Licensee 2’s recollection as to the date and content of that meeting is clear (“vivid”), detailed and also confirmed by the Agency’s diary record as to the date.
   
5. The Complainant’s confusion as to the sequence of these two meetings brings into serious doubt her recollection of what was said by Licensee 1 at the 2nd kitchen table meeting on 4 February 2017: - that the only an issue discussed with Licensee 1 was the basements consent issues “but other than that there were no issues with the property”.
   
6. Given the Licensee’s knowledge of the anomaly, the need to disclose it to all and its obviousness in the property marketing booklet, it is unlikely that they would not protect themselves by directly bringing it to the Complainant’s attention. Licensee 1 is adamant she did so. In that regard Licensee 1’s recollection of what was discussed at the kitchen table meeting is expected, logical and believable. That second viewing was the natural and appropriate time and opportunity to discuss the anomaly.
   
7. It is also difficult to accept that given the acknowledged consent issues, the Complainant's enquiries with Council and building inspector, her solicitor’s review of the transaction and successful requesting an extension of time to go unconditional, that at least the full certificate of title (showing the dogleg) would not have come to the Complainant’s or her advisors’ attention.
   
8. If it had been undisclosed by the Licensees, then it is reasonable to expect an immediate complaint would have arisen from the Complainant’s lawyer.
   
9. The Committee notes the Complainant’s lack of provision of collaborating evidence

from her partner, Person 1.

3.9. The Committee finds the disclosure Licensee 1 says was made at the kitchen table meeting as detailed by her in her evidence was made and was sufficient to advise that Complainant of the anomaly and that the strip of land at the back of the Property belonged to the neighbour.

3.10. It has therefore decided to take no further action on the complaint as the conduct alleged in the complaint is not proven on the evidence available.

3.11. The Committee does note that best practice would have been to record in writing what that advice was and when it was given.

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 Licensees, the 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

Andrew Hayes Chairperson

Denise Evans

Deputy Chairperson

Ian Keightley Member

Date: 17 September 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.

10.7 A licensee is not required to discover hidden or underlying defects in

land but must disclose known defects to a customer. Where it would appear likely to a reasonably competent licensee that land may be subject to hidden or underlying defects, a licensee must either—

(a) obtain confirmation from the client, supported by evidence or expert advice, that the land in question is not subject to defect; or
(b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.