Complaint No C41515 [2021] NZREAA 90 (6 December 2021)

Last Updated: 21 November 2022

Before the Complaints Assessment Committee
In the matter of	Complaint No: C41512 Part 4 of the Real Estate Agents Act 2008
and
Licensee:	xxxxxxxx (xxxxxxxx)

Decision to take no further action

6 December 2021

Members of Complaints Assessment Committee: CAC2102 Chairperson: Rachael Schmidt-McCleave

Deputy Chairperson: Noel Cooper Panel Member: Jim Lindsay

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 19 May 2021 the Real Estate Agents Authority (the Authority) received a complaint against the Licensee from Complainant 1 and Complainant 2collectively the Complainants.

1.2. The Licensee is a licensed Salesperson under the Real Estate Agents Act 2008 (the Act).

1.3. The complaint relates to a residential property (the Property).

1.4. The details of the complaint are that the Complainants, who are related as father (Complainant 1) and son (Complainant 2), were interested in buying a section in a new subdivision due to the views from the top of the section, but they did not like the lower

position of the designated building platform. The Complainants claim that the Licensee said it would be easy to get the building platform changed. As a result of that assurance, they did not include a due diligence clause in the Sale and Purchase Agreement. The Complainants

believe they were misled by the Licensee as subsequently they were advised that the

covenants were very restrictive, and it was unlikely that the Council resource process would allow the designated building platform to be changed.

1.5. In particular, the Complainants said:

1. They double-checked with the Licensee and asked him if it was possible to build at the top of the section where the views were outstanding. The Licensee confirmed that it was possible to build there, and it would be easy to get the building platform changed as this had happened on Lots 3, 4 and 5.
   
2. They trusted the Licensee, who Complainant 1 had met on several occasions especially in relation to Lot 2 in the same subdivision (the Subdivision) in August 2020.
   

100. Complainant 1 questioned him again about the rules pertaining to the building

platforms and the Licensee said that they had now all changed, and the precedent had been set with the other blocks.

4. After receiving this positive response from the Licensee, Complainant 2 made an unconditional offer to purchase the Property for $500,000.
   
5. The Licensee asked if they wanted to include a due diligence clause in the Sale and Purchase Agreement, but the Complainants said that would not be necessary as the only requirement was that the building platform could be changed, and they felt their offer would be better if there were no conditions attached to it.
   
6. The Licensee again confirmed that the Complainants could change the building platform and build on top of the section where the views were fantastic.
   
7. If the Licensee had shown any doubt, the Complainants would have certainly included a due diligence clause. The Complainants relied on the statement from the Licensee,

trusting his honesty and vast experience with the Subdivision. However, the information they received from the Licensee was inaccurate.

1.6. The Complainants requested a remedy, being:

1. An apology from the Licensee and Agency.
   
   2. Financial compensation.
      

1.7. The Licensee responded to the complaint against them.

1.8. In particular, the Licensee said:

1. In August 2020 Complainant 1 was provided, with extensive material on Lots 2 & 5 of the Subdivision, including copies of the Title Plan which showed all building platforms and covenants for all lots on the Subdivision.
   
2. Licensee 1 met Complainant 2 for the first time on 16 September 2020, when he viewed the Property and signed an offer to purchase it. The Licensee did not know

about the family connection between Complainant 1 and Complainant 2 at that stage as Complainant 1 was not present at the time.

100. On that date the Licensee provided Complainant 2 with a Property Report for the Property which included the Title (also showing the location of the building platform), the proposed design controls and details of the covenants.
     

4. The Licensee showed Complainant 2 where the designated building platform would be marked out in a week.
   
5. The Licensee told Complainant 2 that if an owner wanted to change the building platform, they would need to obtain resource consent from the Council.
   
6. The Licensee denies telling Complainant 2 that it was possible to build at the top of the site, or that it would be easy to get the building platform changed.
   
7. The Licensee is certain about this because the top of the site is a planted area and is protected by a covenant.
   
8. The Licensee informed Complainant 2 that a due diligence clause was standard on sections contract and would allow him time to consider the building controls, covenants and the designated building platform in more detail.
   
9. Despite this advice, Complainant 2 chose not to include a due diligence clause, and he signed an offer which was accepted.
   

2. What we decided

2.1. On 28 June 2021 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. On 3 November 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 Rule 5.1 (Skill/Competence) and Rule 6.4 (not Mislead).

3. Our reasons for the decision

3.1. The Committee concluded that there is insufficient evidence to support the complaint that

the Licensee did not meet the professional standards of competence, in particular Rule 5.1, and to support the allegation that the Licensee had not provided the Complainants with clear documentation showing the covenants and building platform position.

3.2. There is also insufficient evidence to support the complaint that the Licensee did not meet the professional standards of competence, in particular Rule 6.4, and misled the

Complainants with regards to the building platform position or that it could be easily moved.

3.3. The Committee notes that there is no agreement between the Complainants and the

Licensee on when the Licensee knew of the family relationship between the Complainants. The Committee, however, does not believe it makes a material difference to the content of the complaint or the professional conduct of the Licensee.

Proper disclosure of Covenants

3.4. Complainant 1 had previously investigated and received documentation about the

Subdivision, and Lots 2, 5 and 8, including copies of the Title Plan which showed all building platforms and covenants for all of the lots on the Subdivision.

3.5. The Vendor, Mark Rowbotham, provided a statement saying that he had corresponded with Complainant 1 and covered a number of topics including Kaipara District’s Spatial Plan and its possible effects on sections within the Subdivision.

3.6. With reference to the Property, the Licensee did not initially know of the connection between the Complainants and initially dealt with Complainant 2. The Licensee provided a Property

Report for the Property which included the Title (also showing the location of the building platform), the proposed design controls and details of the covenants. The Licensee showed Complainant 2 where the designated building platform would be marked out in a week.

3.7. The Committee therefore concludes that there should be no further action in relation to this part of the complaint.

Misleading Representation

3.8. The Complainants believe that the Licensee confirmed that they could easily get the building platform changed in the Property as this had happened on Lots 3, 4 and 5. Complainant 1 states he questioned the Licensee about the rules pertaining to the building platforms and believes the Licensee said that they had now all changed, and the precedent had been set

with the other blocks.

3.9. Complainant 1 also asked the Vendor whether it would be possible to shift the building

platform from the consented position. The Vendor advised him it might be possible, but he would need to follow a due process at the Council which included getting a landscape

architect to give his opinion.

3.10. The Complainants were advised to include a due diligence clause by the Licensee, but they felt that a clean offer would be more acceptable to the Vendor and relied on their perceived assurances from the Licensee.

3.11. The Licensee denies telling the Complainants that they could easily change the position of the building platform. The Licensee is quite certain about this because the top of the site is a

planted area and is protected by a covenant.

3.12. Other site owners had been able to change a building platform position but only after going through a resource consenting process with the Council.

3.13. The Committee considers there is no clear evidence that the Licensee misled the Complainants.

3.14. The Committee concludes that there should be no further action in relation to this part of the complaint.

4. Publication

4.1. The Committee directs publication of its decision. This decision will be published without the names or identifying details of the Complainants (including the address of the Property), the Licensee 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 Real Estate Agents Disciplinary Tribunal (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 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

Rachael Schmidt-McCleave Chairperson

Noel Cooper

Deputy Chairperson

Jim Lindsay Member

Date: 6 December 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:

Rule 5.1 and Rule 6.4

5.1 A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.

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.