Capital Commercial (2013) Ltd - Complaint No 37769 [2021] NZREAA 82 (9 November 2021)

Last Updated: 21 November 2022

Before the Complaints Assessment Committee
In the matter of	Complaint No: 37769 Part 4 of the Real Estate Agents Act 2008
and
The Agency:	Capital Commercial (2013) Limited (20010910)

Decision on Orders

9 November 2021

Members of Complaints Assessment Committee: CAC2107 Chairperson: Gayatri Jaduram

Deputy Chairperson: Patrick Waite

Panel Member: Anthony Hutchinson

V20210811

Complaints Assessment Committee

Decision on orders

Background

1.1. On 30 July 2021 the Complaints Assessment Committee (the Committee) found Capital Commercial (2013) Limited t/a Bayleys Capital Commercial (the Agency) guilty of

unsatisfactory conduct under section 89(2) (b) of the Real Estate Agents Act 2008 (the Act).

1.2. The Agency was given the opportunity to make submissions to the Committee on orders.

Orders

2.1. The Committee decided to fine the Agency $2,000.00 under section 93 of the Act.

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

4.1. At paragraph 3.12 of its 30 July 2021 unsatisfactory conduct decision the Committee summarised the position as follows:

The Auditor identified four occasions it believed the Agency paid money out before the required 10 working day period. The Agency disputes this, and believes it is a difference in interpreting when 10 working days begins and ends. The Agency says the 10 working days is counted from the date of receipt of the money.

4.2. The Committee found that the Agency on four occasions breached section 123(1) of the Act by paying out the money one day earlier than was allowed. The Committee determined that the Agency has engaged in unsatisfactory conduct under section 89(2)(b) of the Act for paying out the money one day earlier than was allowed.

4.3. In its submissions dated 9 August 2021, the Agency says:

The Agency has taken very seriously the decision for Complaint No C37769.

It does not believe that any financial penalty should be awarded against the company for the following reasons.

When the issues were raised by the auditor, immediate action was taken to rectify any anomaly that had been uncovered.

1/ Independent advice was immediately sought from Auditor B who carries out the audits for Bayleys The Agency is the biggest franchisee of Bayleys Realty Group.

Auditor B was quite clear that the original legislation was drafted at a time when electronic banking was not used.

Auditor B’s comments were that the acts requirements were open to interpretation and that he had never had an issue with Bayleys Real Estate Limited who use the same software for deposit release system as the Agency.

2/ The Agency responded to the complaint in a timely manner.

3/ The decision was then made to alter the system by one extra day to ensure that a payment does not go out on the 10th day but now goes out a day later.

4.4. Compliance with the Act’s objectives to protect the interests of consumers, promote public confidence, and maintain professional standards is important. These objectives can be

achieved by making one or more of the orders listed in section 93 of the Act. The orders can include a censure or reprimand, or a fine. The Committee has considered whether any of the orders under section 93 are required to meet those objectives.

4.5. In REAA (CAC 403) v Optimize Realty Limited (TA Harcourts Whangarei) [2019] NZREADT 23 at

[30] the Tribunal said:

...the view of the Tribunal is that the Licensee has shown some appreciation of its obligations to comply with the trust account and related Regulations, and to adopt systems that will prevent

recurrences. It has not, for example, demonstrated a lack of concerns about ensuring that in future there is compliance. These are matters that we take into account when considering the adequacy of

the penalty which the CAC ...has sought in this case. [emphasis added]

4.6. In Rozana Cachay Real Estate Limited v REAA (CAC 1901) [2020] NZREADT 40 at [12] the Tribunal said:

...The provisions of the Act and Regulations regarding the handling of monies held on trust are vital components of the consumer-protection focus of the Act. Failure to comply with those provisions was

required to be marked in the imposition of penalty... [emphasis added]

4.7. The Agency has taken on board the Committee’s finding and has altered its system to ensure compliance with the 10 working day period. The Agency had thought that under section 123 of the Act the 10 working day period started from the day the Agency received money in

respect of a transaction. The Agency has no previous disciplinary history and, in the circumstances the Committee has assessed the Agency’s conduct to be low level unsatisfactory conduct.

4.8. After considering the comments made by the Tribunal (above) the Committee considers that the penalty should be a fine of $2,000.00, which is at the lower level of what the Committee can order under section 93(1)(g) of the Act.

4.9. Accordingly, the Agency is to pay the Real Estate Agents Authority a fine of $2,000.00 pursuant to section 93(1)(g) of the Act.

Publication

5.1. The Committee directs publication of its decision. The decision will state the name of the Agency.

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

Patrick Waite

Deputy Chairperson

Anthony Hutchinson Member

Date: 9 November 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.

123 Money to be held by agent for 10 working days

(1) When an agent receives any money in respect of any transaction in his or her capacity as an agent, he or she must not pay that money to any person for a period of 10 working days after the date on which he or she received it.

(2) Despite subsection (1), a court order or an authority signed by all the parties to the transaction may require the agent to pay the money before the expiry of the period specified in that subsection.

• (3) If at any time while holding any money on behalf of any party to the transaction, the agent receives written notice of any requisitions or objections in respect of the title to any land affected by the transaction, the agent must not at any time pay that

money to any person except in accordance with a court order or an authority signed by all the parties to the transaction.

The Interpretation Act 1999:

Section 35(2):

A period of time described as beginning from or after a specified day, act, or event does not include that day or the day of the act or event.