Pugh - Complaint No C41007 [2022] NZREAA 47 (24 November 2022)

Last Updated: 25 April 2023

Before the Complaints Assessment Committee
In the matter of	Complaint No: C41007 Part 4 of the Real Estate Agents Act 2008
and
Licensee:	Andrew Pugh (20057878)
The Agency:	By The lake Realty Limited t/a Century 21 Premier (10018783)

Decision on Orders

24 November 2022

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 23 May 2022 the Complaints Assessment Committee (the Committee) found Andrew Pugh (the Licensee) and By The Lake Realty Limited t/a Century 21 Premier (the Agency) guilty of unsatisfactory conduct under section 89(2)(b) of the Real Estate Agents Act 2008 (the Act).

1.2. The Complainant, the Licensee and the Agency were given the opportunity to make submissions to the Committee on orders.

1.3. The Complainant has indicated that he is happy with the outcome of the complaint but has not made any submissions.

1.4. Submissions were received from the Licensee.

1.5. No submissions were received from the Agency.

Orders

2.1. Having made findings of unsatisfactory conduct against the Licensee and the Agency, the Committee decided to make the following orders under section 93 of the Act:

The Licensee

1. an order censuring the Licensee;
   
2. an order that the Licensee undergo training or education by completing the Real Estate Authority’s (the Authority) Unit Standard 26148 “Demonstrate Knowledge and Use of

Inspection and Appraisal for Real Estate Property” within three months of the date of this decision; and

100. an order that the Licensee to pay to the Authority a fine of $5,000.00 within 21 days of the date of this decision.
     

The Agency

4. an order censuring the Agency; and
   
5. an order the Agency to pay to the Authority a fine of $3,500.00 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

Submissions

4.1. The Licensee

4.2. On 13 June 2022 and 1 July 2022, the Licensee was contacted by the Authority and given an opportunity to make submissions. No submissions were received.

4.3. On 25 October 2022 the Licensee was contacted by the Authority and advised that one of the factors that would be taken into account by the Committee when making its orders decision was the Licensee’s previous disciplinary history. The Licensee was given a further opportunity to make submissions.

4.4. On 1 November 2022 the Licensee responded to the Authority and said:

1. The process has taken 20 months and, has taken a toll on his health. He has been in contact with the Chief Executive Officer of the Authority to voice his concern and frustration at the time taken to process the complaint.
   
2. All information requested from him has been supplied in a timely fashion.
   

100. The Committee’s unsatisfactory conduct finding was made on 23 May 2022 and there have been further delays. The law of natural justice calls for a timely and fair response taking into account whether any party was disadvantaged due to his actions.
     

4. The Property was a difficult property to market. It could not be developed because of its location and zoning.
   
5. He is dismayed that no written response was sought from the Complainant’s family, the family lawyer or the Complainant’s doctor.
   
6. The earlier complaint against him1 has already been dealt with, the Committee made a ruling and, he complied with that ruling promptly. That sale was early on in his career and, if the complaint was made today he would deal with it differently. That particular experience has taught him never to solely rely on work-based email addresses and

especially any address ending in .govt.nz.

7. He will make no further comment unless requested to.
   

1 C27064

The Licensee Findings

4.5. In its substantive decision the Committee made the following unsatisfactory conduct findings against the Licensee:

1. The CMA did not meet the requirements of rules 10.2 and 10.3 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules);
   
2. The Licensee failed to provide a CMA when the Second Agency Agreement and the

Extension Agreement were entered into in breach of rules 10.2 and 10.3 of the Rules; and

100. The Licensee presented offers for the Property without an agency agreement in breach of rule 9.6 of the Rules
     

4.6. Compliance with rules 10.2, 10.3 and 9.6 of the Rules is essential to ensure that the

consumer protection provisions of the Act are met. In this case, the Licensee initially provided his vendor client with a CMA that did not meet the requirements of rules 10.2 and 10.3, he

then failed to provide the vendor with a CMA on two separate occasions when he was

required to provide a CMA and, offered the Property for sale on multiple occasions without having a listing agreement in place resulting in the Property being sold without a listing agreement.

4.7. These are serious breaches and the Committee has therefore assessed the Licensee’s conduct to be unsatisfactory conduct at the mid to high range of unsatisfactory conduct.

4.8. The Committee notes the Licensee’s concerns that no written response was sought from

other parties involved in the transaction during the investigation of the complaint. However, the Committee does not consider that this impacted on the outcome of the complaint. This is because the Licensee’s evidence as to his dealings with the Complainant’s family and the

lawyer acting for the vendors was accepted by the Committee and, the complaints made by the Complainant concerning these aspects of the transaction were not upheld by the Committee.

4.9. The Committee also observes that the Complainant’s health issues and reluctance to sell did not override the Licensees obligations under the Rules or the Act to provide a CMA that complied with rules 10.2 and 10.3 of the Rules and nor did it override his obligation to comply with rule 9.6 of the Rules.

Orders

4.10. An unsatisfactory conduct finding at this level warrants a censure and the Committee therefore orders a censure under section 93(1)(a) of the Act.

4.11. The Committee has also determined that a fine is an appropriate deterrent and a reminder of the need to maintain professional standards.

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

4.13. In setting the level of the fine the Committee has had regard to the Licensee’s disciplinary history.

4.14. On 15 April 2019 Complaints Assessment Committee 521 (CAC521) found the Licensee guilty

of unsatisfactory conduct under section 89(2)(b) of the Act for a failure to provide his vendor client with a written appraisal (CMA) in breach of rules 5.1, 5.2 and 10.2 of the Rules. 2

4.15. The Licensee says that transaction that led to the unsatisfactory conduct finding in A Prior Complaint occurred early on in his career3 and, if that complaint was made today he would deal with it differently.

4.16. In its penalty decision dated 19 June 2019 CAC521 discussed in some detail a licensee’s obligations under rules 10.2 and 10.3.

4.17. CAC521 said that if a licensee is unable to provide a CMA which considers comparable or

similar sales data that does not release a licensee from his or her obligations to their client. In such circumstances the licensee must explain how and why he or she arrived at the appraised amount. The same observations were made by this Committee in its substantive decision

issued on 23 May 2022.

4.18. Given that the decision finding unsatisfactory conduct in A Prior Complaint was made in April 2019, (approximately 18 months prior to the conduct which is the subject of this complaint) the Committee is not persuaded that the findings made and penalty imposed in A Prior Complaint deterred the Licensee from engaging in the same or similar conduct.

4.19. The Committee has found breaches of rules 10.2 and 10.3 of the Rules in its decision issued on 23 May 2022. The Committee considers the Licensees prior breach of rules 5.1, 5.2 and

10.2 to be an aggravating factor.

4.20. The Committee has therefore determined that a fine of $5,000.00 is appropriate in the circumstances.

4.21. Under section 93(1)(d) of the Act the Committee can order the Licensee to undergo training or education.

4.22. The Committee notes that in his submissions to CAC521 the Licensee accepted that he would carry out further training as part of his compulsory professional development in 2019. It is

therefore of some concern to the Committee that further breaches of rules 10.2 and 10.3 of the Rules occurred the following year.

4.23. Given the Licensee’s disciplinary history and the findings made the Committee considers that a training order is warranted. The Committee therefore orders the Licensee to complete the Authority’s Unit Standard 26148 “Demonstrate Knowledge and Use of Inspection and

Appraisal for Real Estate Property” within three months of the date of this decision.

The Agency Findings

4.24. In its substantive decision the Committee found that the Agency failed to ensure that there was a valid agency agreement in place when offers were made for the Property in breach of rule 9.6.

4.25. The requirement to have an agency agreement in place when offers are made and a property is sold is a cornerstone of the real estate industry. In this case, multiple offers were made for the Property on occasions where there was no agency agreement and the Property was sold

2 Complaint C27064

3 The Committee notes that the conduct occurred in October 2017

and a commission was charged by the Agency without an agency agreement. When

processing offers for a property and when charging a commission on the sale of a property an agency must have procedures and systems in place to ensure that there is a valid agency

agreement in place. The Committee has determined that the Agency’s failings in this regard fall within the mid-range of unsatisfactory conduct.

Orders

4.26. An unsatisfactory conduct finding at this level warrants a censure and the Committee therefore orders a censure under section 93(1)(a) of the Act.

4.27. The Committee has also determined that a fine is an appropriate deterrent and a reminder of the need to maintain professional standards.

4.28. Under section 93(1)(g) of the Act the Committee may order the Agency to pay to the Authority a fine not exceeding $20,000.00.

4.29. Having assessed the Agency’s conduct in the mid range of unsatisfactory conduct the Committee considers that a fine of $5,000.00 is an appropriate starting point. Given that the Agency has not made any submissions the Committee has not applied any mitigating factors however, the Committee has determined that the lack of disciplinary history for the Agency does warrant a reduction in the level of the fine.

4.30. The Committee has therefore determined that a fine of $3,500.00 is appropriate given the findings made.

4.31. In summary, the Committee is satisfied that the consumer protection objectives of the Act have been achieved through the complaints process, the resulting determination and its

ultimate publication, and does not consider that any other orders are necessary (as set out in s 93 of the Act).

Publication

5.1. The Committee directs publication of its decision. The decision will be published without the names or identifying details of the Complainant (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 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

Maria McElwee Chairperson

Amanda Elliott

Deputy Chairperson

Susanne Guhl Member

Date: 24 November 2022

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 or its business (including any records, accounts, and assets) 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:

9.6 Unless authorised by a client, through an agency agreement, a licensee must not offer or market any land or business, including by putting details on any website or by placing a sign on the property.

10.2 An appraisal of land or a business must—

• (a) be provided in writing to a client by a licensee; and
• (b) realistically reflect current market conditions; and
• (c) be supported by comparable information on sales of similar land in similar locations or businesses.
  

10.3 Where no directly comparable or semi-comparable sales data exists, a licensee must explain this, in writing, to a client.