Ransfield - Complaint No C42694 [2021] NZREAA 92 (9 December 2021)

Last Updated: 21 November 2022

Before the Complaints Assessment Committee

Complaint No: C42694

In the matter of Part 4 of the Real Estate Agents Act 2008

and

Licensee: Neil Ransfield (10008389)

Agency: Agency (XXXXXXXX)

Decision to take no further action in the matter of the Agency and

Decision finding of unsatisfactory conduct in the matter of Neil Ransfield

9 December 2021

Members of Complaints Assessment Committee: CAC2106 Chairperson: Maria McElwee

Deputy Chairperson: Amanda Elliott Panel Member: Susanne Guhl

V20201201

Complaints Assessment Committee

Decision to take no further action

Decision finding unsatisfactory conduct - asking for submissions on orders

1. The Complaint

1.1. On 3 June 2021 the Real Estate Agents Authority (the Authority) received a complaint against Neil Ransfield (the Licensee) from the Complainant (the Complainant).
1.2. On 26 July 2021 the Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 79(2)(e) of the Real Estate Agents Act 2008 (the Act).

1.3. The Committee considered the complaint also raises issues about the Agency (the Agency) and decided to inquire into those issues under section 78(b) of the Act.

1.4. The Licensee is a licensed Salesperson under the Act and at the time of conduct was engaged by the Agency.

1.5. The Agency is a licensed Agent Company under the Act.
1.6. The complaint relates to a property situated at the Property (the Property).

1.7. The details of the complaint are that the Licensee did not identify that the Record of Title (the Title) noted that part of the land had been vested in the council (the Council) for roading purposes.

1.8. In particular, the Complainant advised that:

1. On 10 February 2021 she listed the Property with the Agency. She was selling

the Property as the executor of her mother’s estate.

2. The Licensee was the listing agent.

100. When she initially spoke to the Licensee about listing the Property, he told her that the land area of the Property was 873m2, then when she met him to list the Property he advised her that the land area was 976m2.
     

4. The land area quoted on the listing agreement is 976m2.
5. The Property was marketed as having 976m2. Advertising for the Property stated “Subdivide or renovate” and said that the placement of the dwelling “makes it ideal for possible subdivision (subject to council approval)”. The marketing was aimed at developers, so the land size was important.
   
6. On 10 March 2021 she entered into an agreement for sale and purchase (the ASP) to sell the Property to a developer (the Purchaser) for $680,000.00.
   
7. On 19 March 2021 the Purchaser’s lawyer emailed the Complainant and her lawyer seeking a reduction in the purchase price because the size of the Property in the advertising had been misrepresented.

8. The Title records the land area of the Property as 976 m2 more or less. A gazette notice (the Gazette Notice) was registered against the Title in 1968 which vested 101.72m2 of the land in Council. This affected what the Purchaser could do with the land.
   
9. On 25 March 2021 the Complainant was forced to settle the sale of the Property at a purchase price of $665,000.00 ($15,000.00 less than the agreed price).
   
10. She sought losses of $17,000.00 from the Agency ($15,000.00 + $2000.00 for additional legal fees). The Agency declined to make any payment to her.
    

1.9. The Complainant requested a remedy, being:

1. A determination as to whether the Licensee has discharged his professional obligations.
   
2. A determination as to what, if any, liability the Licensee has for the loss suffered by the Complainant as a result of the error.

100. Compensation – a contribution towards legal costs incurred.
     

1.10. The Licensee and the Agency responded to the complaint against them.

1.11. In particular, the Licensee said:

1. He created a comparative market analysis (CMA) for the Property on 5 February 2021. Information sourced from Core Logic Property Guru (Property Guru) recorded the land area as being 873m2.
2. Based on the information from Property Guru the Property was appraised at between

$550,000.00 and $600,000.00.

100. He believed that the Complainant was pleased with the assessment and, some time was spent discussing the Property.

4. The Complainant told him that her mother had considered subdividing the Property but after investigating what was involved, she had concluded that it was too difficult.
   
5. He checked with Council and was advised that the Property could be subdivided subject to normal conditions. The zoning guidelines allow for possible subdivision for properties with a minimum net site area of 400m2.
   
6. The Complainant did not tell him that a section at the front of the Property had been taken by Council to widen the road.
   
7. A copy of the Title was obtained before the agency agreement was signed. He noted that the land area was recorded as 976m2. The Title was “part cancelled” and, was subject to two interests, the Gazette Notice and a mortgage.
   
8. The Property was to be sold by deadline sale with a deadline date of 10 March 2021.
9. He discussed the Gazette Notice on the Title with his manager because he had never come across a part cancelled title. His manager told him to ask the Complainants lawyer whether there was anything he needed to know.
   
10. On 1 March 2021 he sent a draft ASP and a copy of the Title to the

Complainant’s lawyer with an accompanying email asking her to check the ASP.

11. The lawyer replied commenting on specific clauses in the ASP but made no comment about the Title.

50. He believed that he could proceed based on a land area of 976m2. He acknowledges that he could have questioned the lawyer more but did not believe that it was his role to question the lawyer given that he had already asked for clarification about the Title.
    

13. The marketing and advertising for the Property was not misleading. The difference between a land area of 976m2 and 873m2 did not make the Property any less subdivisible (subject to Council requirements) and, he had nothing to gain by advertising the Property with the larger land area.
    
14. Neither he nor the Agency were asked or involved in the negotiations to reduce the purchase price. He believes that if they had been involved, they could have discussed with the Purchaser and, the original purchase price would have been retained.
    

1.12 The Agency via its compliance manager said:

1. The advertising for the Property was not misleading.
2. Licensee 1 initially identified the Property as having a land area of 873 m2 based on the information held by Property Guru and the Property was potentially subdivisible. Increasing the land area to 976m2 did not make the section any more or less subdividable and, there was no intention to deceive.
   

100. The branch manager (the Branch Manager) has rigorous and robust procedures for checking titles.
     

4. All draft ASPs are run past the Branch Manager for checking and approval. The Branch Manager noted that the Title to the Property was part cancelled and asked Licensee 1 to obtain clarification from the Complainant’s lawyer as to the correct land area.
   
5. The Agency and Licensee 1 acted with care, competence and diligence.
6. They understand that the Purchaser has or, is in the process of completing a subdivision of the Property.
   

2. What we decided

2.1. On 3 November 2021 the Committee held a hearing on the papers and considered all the information that had been gathered during the inquiry.

2.2. The Committee found the Licensee has engaged in unsatisfactory conduct under section 89(2)(b) of the Act. The decision was also made with reference to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules), namely rules 5.1 and 6.4.

2.3. The Committee decided to take no further action on the complaint against the Agency.
2.4. This decision was made under section 89(2)(c) of the Act. This decision was also made with reference to the Rules namely rules 5.1 and 6.4.

2.5. The Committee concluded that the misleading advertising by the Licensee was not

attributable to the Agency’s failure to have appropriate procedures and policies in place.

3. Our reasons for the decision

3.1. On the complaint against the Licensee the Committee found that, under section 72 of the Act, the Licensee is guilty of unsatisfactory conduct and that the Licensees actions fall short of the standard a reasonable member of the public is entitled to expect from a reasonably competent licensee and contravenes a provision of the Act and rules made under the Act.

3.2. The Committee concluded:

1. In the absence of any comment from the Complainant’s lawyer it was reasonable

for the Licensee to assume that the legal description in the ASP was correct.

2. The Licensee’s advertising of the Property was misleading in breach of rules 5.1 and 6.4.
   

Title

3.3. Rule 5.1 requires a licensee to exercise skill, care, competence and diligence at all times when carrying out real estate agency work.

3.4. The Complainant says that the Licensee did not identify that part of the land in the Title had vested in Council.
3.5. The Licensee’s evidence confirms he did identify that the Title was part cancelled and was

also aware of the Gazette Notice.

3.6. The Gazette Notice vested part of the land (101.72m2) in the Council for roading purposes. When land is transferred in this way a notation is made on the record of title stating that the title is “part-cancelled”. Unless a new record of title is issued notwithstanding this notation the recorded land area in a part cancelled title remains unchanged.

3.7. The Licensee prepared a draft ASP to be provided to prospective purchasers as part of the deadline sale process. The legal description in the draft ASP prepared by the Licensee recorded the land area of the Property as 976m2 which was the land area recorded in the Title. The Licensee has explained that he was unfamiliar with part cancelled titles and, when he sent the draft ASP to the Complainant’s lawyer for review, he included a copy of the Title and expected that if there were any issues this would have been addressed by the Complainant’s lawyer. The Licensee says that as no comment was made by the Complainants lawyer regarding the Title, he assumed that the legal description of the Property was correct.
3.8. The Committee finds no breach of rule 5.1. The Committee accepts that in the absence of any comment by the Complainant’s lawyer it was reasonable for the Licensee to assume that the legal description in the ASP was correct.

3.9. However, for the reasons discussed below the Licensee could have done more to investigate the practical effects of the Gazette Notice and its impact on the useable area of the Property to ensure that prospective purchasers were not misled and should not have assumed that the gross area of the Property could be used in the advertising for the Property without qualification.

Was the advertising for the Property misleading?

3.10. Rule 5.1 has been stated in paragraph 3.2.

3.11. Under rule 6.4 a licensee must not mislead a customer, provide false information or withhold information that should in law or fairness be provided.

3.12. The advertisement for the Property was headed “Sub-divide or Renovate”. The text of the advertisement stated that the placement of the dwelling “at the front of its 976m2 section makes it ideal for possible subdivision (subject to Council approval)”.

3.13. The Purchaser sought a reduction in the purchase price because of the representations contained in the advertising on the basis that the land area was actually 101.72m2 less than the 976m2 that had been represented.

3.14. The Licensee says that the difference between a land area of 976m2 and 873m2 did not make the Property any less subdivisible (subject to Council requirements) and, he had nothing to gain by advertising the Property with the larger land area.
3.15. Whilst the Property may have been subdividable at 873m2 from the perspective of a prospective purchaser/developer there is, in the Committee’s view, a significant difference between a land area of 976m2 and 873m2.

3.16. The Committee accepts that the Licensee identified that the Title was unusual (he says that in his 20 years in the industry he had never come across a part cancelled title).

3.17. The Licensee says that the Complainant did not tell him that part of the Property had been taken for road widening. The Committee considers that after his review of the Title this was a matter that the Licensee should have addressed with the Complainant and her lawyer and, if questions still remained then queries should have been made at Council. These enquiries could have been made when the Licensee sought information from Council as to whether the Property could be subdivided.

3.18. The Real Estate Agents Disciplinary Tribunal (the Tribunal) has said that if a licensee does not understand the implications of or meaning of restrictions on a title then the licensee should seek clarification from the vendor (or if appropriate their lawyer) about anything unusual on the title. The Tribunal has also said that a licensee should discuss the title with the vendor so that any marketing of the property does reflect this information.1
3.19. The Licensee has said that in hindsight, he realises that he should have questioned the Complainant’s lawyer more when he received no comment from her about the Title. The Committee agrees.
3.20. The Branch Manager says that the Licensee was asked to obtain clarification and

confirmation from the Complainant’s lawyer about the correct land area of the Property.

The Committee does not consider that the Licensee acted on these instructions as the

Licensee’s covering email to the Complainant’s lawyer attached a copy of the Title but did not directly address any queries or concerns that he had about the Title. Given the discrepancies between the land area recorded on the Title and the Property Guru records this was a matter that the Licensee should have proactively addressed before commencing the marketing of the Property.

3.21. In making our determination the Committee has considered the Tribunal’s unsatisfactory conduct findings in two recent cases that both concerned complaints about misleading advertising, Feng & Li v REAA & Wu2and QH v REAA and KH & SE3
3.22. The Feng case concerned advertising that described a property as having two carparks

1 M v REAA and Lewin [2013] NZREADT 63 at [13]- [16]

2 [2021] NZREADT 15

3 [2021] NZREADT 52

included in the title (the second carpark was not part of the title and, there were limitations on the use of both carparks). The Tribunal said that the advertising read on its own “conveyed the information that the freehold ownership of the property included two carparks”4 and was therefore incorrect. The Tribunal considered that the advertising would only have been acceptable if it had included qualifying statements as to the ownership and use of the carparks.

3.23. The Tribunal went on to say that “it is a serious matter to cause, contribute to or fail to dispel uncertainty and doubt about the extent of the property that is being offered for sale. Where that occurs, there has been a fundamental failure on the part of the licensee to comply with his/her ethical obligations”.5
3.24. The QH case also concerned a complaint about misleading advertising but in this case the Tribunal found that before the complainant’s agreement for sale and purchase had become unconditional the complainant was no longer mislead as to the true state of the property.
3.25. In this complaint the land area in the advertising for the Property considered on its own without qualification was misleading because it gave the overall impression that 976m2 was available for possible subdivision when the reality was that there was only 873m2 of land that could potentially be subdivided. Had the Licensee made enquiries as to the practical effect of the Gazette Notice it would have been apparent that care would be needed with the advertising to ensure that there was no misunderstanding as to the available area of land available for development. This could have been achieved by including qualifying statements in the advertising which would have clarified the useable area of the Property.

3.26. Whilst the Committee accepts that there was no intention to mislead, even if a misstatement is innocent or inadvertent any incorrect information provided by a licensee will nevertheless constitute a breach of rule 6.4 and may amount to unsatisfactory conduct.6
3.27. The Committee also observes that there is no evidence of subsequent statements or actions that would dispel any misleading effect of the advertising so that the misleading nature of the advertising ceased to be operative as was the case in the QH decision.7
3.28. The Committee therefore finds the Licensees conduct in failing to investigate the how the Gazette Notice impacted on the useable land area coupled with the failure to qualify the advertising for the Property to be unsatisfactory and in breach of rules 5.1 and 6.4.

The Agency

3.29. The Committee’s inquiry into the Agency concerned the procedures that the Agency has

in place to ensure that advertising for a property is accurate.

3.30. The Agency has provided evidence as to the policies and procedures that it has in place for checking titles and agreements for sale and purchase together with an excerpt from its Best Practice Guide.
3.31. The Committee has found that the advertising for the Property was misleading in breach of rule 6.4. The Licensee was told by the Branch Manager to obtain clarification from the Complainant’s lawyer as to the land area of the Property and the Branch Manager believed that this had occurred. Whilst the Agency does have a responsibility to ensure that

4 Supra at [18]

5 Supra at [59]

6 McCarthy v Real Estate Agents Authority [2014] NZREADT 94

7 QH v REAA and KH & SE [2021] NZREADT 52

advertising and marketing material issued in its name is accurate in the circumstances the Committee is not persuaded that the misleading advertising by the Licensee was

attributable to the Agency’s failure to have appropriate procedures and policies in place.

3.32. The Committee takes no further action against the Agency.

4. Request for submissions on orders – the Licensee

4.1. The Complainant is to file submissions (if any) on what orders should be made within ten working days from the date of notice of this decision. These submissions, if any, will then be provided to the Licensee, with a timeframe for filing final submissions.
4.2. The Committee requires the Case Administrator to obtain a record of any previous disciplinary decision in respect of the Licensee and, if any such decision exists, provide it to the Committee.

5. What happens next

5.1. The Committee will conduct a separate hearing on the papers to consider all submissions and issue a decision on orders, if any, for the Licensee under section 93 of the Act.

6. Your right to appeal

6.1. A person affected by this decision in respect of the Licensee may appeal to the Real Estate Agents Disciplinary Tribunal within 20 working days after the day the Committee gives notice of its decision on orders, if any.

6.2. If you are affected by the Committee’s decision in respect of the Agency your right to appeal to the Real Estate Agents Disciplinary Tribunal (the Tribunal) 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.

6.3. 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. Publication

7.1. The Committee has deferred making any decision on publication of this decision until it decides what orders, if any, should be made.

8. Provisions of the Act and Rules referred to

8.1. The provisions of the Act and the Rules referred to in this decision are set out in the Appendix.

Signed

Maria McElwee Chairperson

Amanda Elliott Deputy Chairperson

Susanne Guhl Member

Date: 9 December 2021

Appendix: Provisions of the Act and Rules referred to

The Real Estate Agents Act 2008 provides:

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:

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.