Cheng - Complaint No C40274 [2023] NZREAA 29 (26 June 2023)

Last Updated: 7 February 2024

Before the Complaints Assessment Committee

Complaint No: C40274

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

and

Licensee 1: Jing (Amy) Chen (20114130)

Licensee 2: Dequn (Gloria) Zeng (10039354)

The Agency: Barfoot & Thompson Limited t/a Barfoot &

Thompson Greenlane (10018521)

Decision on Orders

26 June 2023

Members of Complaints Assessment Committee: CAC2108

Chairperson:

Deputy Chairperson:

Panel Member:
Andrew Hayes

Denise Evans

Ian Keightley

V202211
Complaints Assessment Committee

Decision on orders

1. Background

1.1. On 15 December 2022 the Complaints Assessment Committee (the Committee) found Jing

Chen (Licensee 1) and Dequn Zhu (Licensee 2) and Barfoot & Thompson Ltd t/a Barfoot &

Thompson Greenlane (the Agency) guilty of unsatisfactory conduct under section 89(2)(b) of

the Real Estate Agents Act 2008 (the Act) in relation to non-disclosure of a building report

concerning the sale of a property and the Agency’s adequacy of the Agency’s supervision of

Licensee 2.

1.2. The adequacy of the supervision of Licensee 1 by the Agency has been referred to the Real

Estate Agents Disciplinary Tribunal to consider whether it meets the threshold for misconduct

and is therefore subject of a separate decision to lay charges.

1.3. The Complainant and the licensees/Agency were given the opportunity to make submissions

to the Committee on orders.

2. Orders

2.1. Having made a finding of unsatisfactory conduct against the Licensees and the Agency, the

Committee decided to make the following orders under section 93 of the Act:

a) make an order censuring both the Licensees and the Agency.

b) order fines be paid to the Real Estate Authority by Wednesday, 26 July 2023, as set out

below:

I. Licensee 1 a fine of $1,000.00

II. Licensee 2 a fine of $3,000.00

III. The Agency a fine of $7,000.00

3. 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]).

CAC Decision on Orders
C40274
Page 2 of 12
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:
a) make sure that no person who is unfit because of his or her conduct is allowed to practice
in the profession in question;
b) protect both the public and the profession itself against persons unfit to practice; and
c) 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]):
a) Punishment of the professional;
b) Rehabilitating and reintegrating the professional into the profession if the professional
is capable of that;
c) The penalty must be comparable with the penalty imposed on others in similar
circumstances;
d) 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;
e) The penalty must involve imposition of the least restrictive penalty that can be
reasonably imposed in the circumstances; and
f) 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

CAC Decision on Orders C40274 Page 3 of 12
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.
4. Discussion
Complainant ’s submissions
4.1. The Complainant has not made submissions on penalties.
4.2. The complaint lodged by the Complainant does request a remedy of half the cost of the
required repairs to be paid by the Agency or the licensees.
4.3. That is indicated at perhaps being more than $50,000 based on a quote from a builder of
between $80,000 to $90,000 plus GST.
Licensees’ and Agency’s submissions
4.4. The Licensees and Agency made submissions through their lawyer, including:
a) The Committee found the Licensees 1 and 2 failed to exercise skill, care, competence,
and diligence in breach of rule 5.1 of the Conduct and Client Care Rules 2012 (“the
Rules”). The breach was in respect of a building report obtained by the vendor, which
the licensees did not take care to read or understand. They failed to pass material
information from this report to the Complainant in breach of their disclosure obligations.
b) The Committee found the Agency failed to adequately supervise Licensee 2 because it
was relying on her to identify and bring issues to its attention. As such, it did not meet
the required proactive standard of supervision.
Licensee 1 and 2
a) Licensees 1 and 2 conduct is in the moderate range of unsatisfactory conduct, and an
appropriate penalty would be a fine of not more than $700 for Licensee 1 and $1,500
for Licensee 2, as well as orders to undergo further training.
b) Both Licensee 1 and 2 acknowledge that they failed to take adequate care to read and
understand the contents of the building report and failed to seek appropriate advice
from their supervisor.
c) The stigma of an unsatisfactory conduct finding will be sufficient to ensure that Licensee
1 and Licensee 2 take care in future to not repeat their mistake.
Licensee 1
a) Licensee 1:
I. Had only had 6 months of experience.
II. This was the first listing she had full involvement with.
III. Licensee 1 did not read the report due to a fundamental misunderstanding of her
obligations of care and diligence.
IV. Licensee 1 naively did not read the report and only relied on parts of it and some
general verbal representations made by its builder maker.
CAC Decision on Orders C40274 Page 4 of 12
Licensee 2
a) Licensee 2:
I. Licensee 1 relayed to Licensee 2 the builder maker’s comments about the concrete
construction and that there were no issues.
II. Licensee 1 did not send a copy of the building report to Licensee 2.
III. Unfortunately, Licensee 2 relied on Licensee 1 ‘s advice as to what the builder had
said about the property instead of obtaining and reading the building report
herself.
IV. Licensee 2 accepts the Committee’s finding that she should have read and
understood the report and considered its contents.
V. If she had done so, she would have raised the report and its contents with her
supervisor and/or appreciated that disclosure to potential purchasers was
necessary.
VI. However due to Licensee 2’s lack of care in failing to read and understand the
contents of the report, she gave incorrect guidance to Licensee 1 about the need
to disclose the report.
VII. Licensee 2 was concerned that potential purchasers should not be misled by a
good building report and was mindful that the Agency ordinarily encourages
buyers to obtain their own building report to ensure they are satisfied with all
aspects of the property, rather than to rely on the vendor’s inspector.
The Agency
a) The Agency’s conduct is in the lower end range and an appropriate penalty would be a
fine of $2,000.
b) The Agency accepts that it failed to identify an issue with the listing.
c) The supervision failure is not likely to be repeated and does not reflect any inadequacy
in B&T’s systems for oversight of licensees.
d) The Agency fulfils its supervision and management obligations under the Act and the
Rules by having both a branch manager and sales manager in place to provide daily
oversight of salespeople. Processes are in place to manage the oversight of listings from
start to finish, and these processes were followed in this case.
e) Certain circumstance of this listing should be considered as to why it failed to identify a
problem with this listing, including that the licensees did “not mention” the existence of
the building report to the Agency. The Agency had no reason to believe that there was
further information about the listing (the existence of the building report) which had not
been disclosed to it by the licensees. There was no reason to suspect that a building
report was obtained after the listing agreement was signed. Neither licensee had told
the Agency one had been obtained. They had been trained to raise potential issues with
the Agency which would have included the building report. No red flags where raised.
f) The penalty should also reflect that the Agency has a previously unblemished disciplinary
record.
CAC Decision on Orders C40274 Page 5 of 12
Discussion
Fines and censures
4.5. The Committee has taken into account general principles relevant to professional disciplinary
cases as set out above and the submissions as to penalty that have been presented.
Licensee 1 and Licensee 2
4.6. The Committee accepts the Licensees’ conduct falls into the moderate range with an indicative
fine of between $2,000.00 to $6,000.00. It also finds the level of conduct here warrants a
censure.
Licensee 1
4.7. As a qualified real estate agent, Licensee 1 should have read and understood the full building
report. She says she did not read it all or fully understand it, due to her inexperience. At this
point she was under a duty to take all appropriate steps, herself, to ensure she understood it
all fully and/or that her supervisor(s) did. She failed to do so. That is the basis of the finding of
unsatisfactory conduct against her.
4.8. However, Licensee 1’s lack of understanding the building report is explicable she having only
been qualified for 6 months and it being her first full listing. Accordingly, the applicable degree
of her supervision requirements was at the highest end of the scale.
4.9. In that case, she should have bought it the attention of her supervisor(s) and been certain that
its full content was known to them (and her) and did not contain something that may require
disclosure.
4.10. The Committee found in its decision dated 15 December 2022 (the Decision) according to
Licensee 1’s knowledge, arising from the actions of Licensee 2 and the Agency, her supervisor
was/included Licensee 2.
4.11. Licensee 1 did bring the existence of the building report to Licensee 2’s attention. She also sent
Licensee 2 a copy of it on 21 October 2021 via Online Messages (para 1.13 (j) of the Decision)).
The advice from Licensee 2 was not to disclose it. She followed that advice.
4.12. Given the supervision structure in place at the Agency it is also understandable that she sought
and followed Licensee 2’s advice.
4.13. Taking that into account, which the Committee considers is a substantial mitigating factor, and
the stigma of an unsatisfactory conduct finding, Licensee 1 is fined $1,000.00. It considers
further training will not add anything further to the lessons she has already learnt from the
complaint.
Licensee 2
4.14. The situation is very different for Licensee 2.
4.15. Licensee 2 was the listing agent and had substantially more experience then Licensee 1. It was
her primary duty to fully read and understand the building report. She knew of it being
commissioned and of its existence. She clearly should have obtained it and read it herself to
satisfy herself what it disclosed.
4.16. It was also inappropriate for Licensee 2, instead of satisfying herself of what the report
CAC Decision on Orders C40274 Page 6 of 12
disclosed, to rely on a scant verbal report from inexperienced agent as to what that agent
thought it said. As Licensee 2 knew Licensee 1 heavily relied on her guidance Licensee 2 should
also have fully questioned Licensee 1 as to whether Licensee 1 had fully read and understood
the building report.
4.17. In these circumstances Licensee 2’s failure to ensure she obtained and read and understood
the building report and any impact it had is more serious. It was wholly inadequate for Licensee
2 to merely rely on a very inexperienced agent’s understanding as to what the maker of the
report had said about the property and Licensee 1’s understanding of it, instead of obtaining
and reading and understanding the building report herself.
4.18. By way of mitigation for Licensee 2 the Committee takes into account:
a) The stigma of an unsatisfactory conduct finding.
b) Her previously unblemished disciplinary record.
4.19. Balancing all applicable factors, the Committee imposes a fine of $3,000.00.
The Agency
4.20. Under section 93(1)(g) the Committee may order a fine against a Licensee if the Licensee is a
company of up to $20,000.00.
4.21. The Committee acknowledges that the unsatisfactory conduct finding, and publication will
have an effect on The Agency. The Committee considers however that a fine serves a deterrent
to the Agency and others in the industry and is still appropriate for the level of unsatisfactory
conduct.
4.22. After taking into consideration the Act’s central objectives of protecting consumers and
promoting public confidence and maintaining professional standards in providing an important
service to consumers, as well as the need for general deterrence, the Committee considers that
a fine of $10,000.00 is an appropriate starting point.
4.23. The Committee appreciates that the Agency accepts it failed to identify an issue with the listing.
It also takes into account as a mitigating factor the Agency previous disciplinary record.
4.24. As set out in the Decision the Agency has a proactive duty to provide supervision tailored to
circumstances of the individual agent (paragraphs 3.21 to 3.22 of the Decision). Here that
includes the supervisory/guidance role it had Licensee 2 provide to Licensee 1. That
necessitates a much higher degree of direct supervision of Licensee 2 by the Agency.
4.25. The Agency has previously effectively said neither Licensee told it of the existence of the
building report, so it was unable to supervise something it was not aware of. That the obligation
to tell it of the building report rested with Licensee 2.
4.26. The Committee does not find this submission a compelling mitigating factor. Importantly the
duty of supervision on the Agency is proactive and not reactive, relying an agent to identify
problems and bring them it is attention is reactive supervision. It also overlooks the “guidance”
position Licensee 2 was actually in, in relation to herself and Licensee 1 and the associated
increased supervision that Licensee 2 required from the Agency. It also overlooks the tailored
requirement to be more directly involved in all aspects of this listing including making direct
enquiries with Licensee 2. Being available to answer Licensee 2’s query’s and rely on her to
bring the building report to the Agency’s attention is insufficient.
CAC Decision on Orders C40274 Page 7 of 12
4.27. The Agency submits that processes were in place to manage oversight of listings from start to
finish and were followed here. Those processes were however proved inadequate in the
circumstances of this complaint. A building report was commissioned which, if there was an
active direct line of supervision in place and/or proactive direct supervision, would more likely
than not been bought to a legitimate supervisor’s attention and acted upon.
4.28. Balancing all applicable factors, the Committee imposes a fine of $7,000.00.
Referral for Compensation
4.29. The Committee has the power to make an order referring a complaint to the Disciplinary
Tribunal if it considers there is a basis for compensation arising from the unsatisfactory conduct
of a licensee.
4.30. It may do so where it is satisfied that the unsatisfactory conduct involves more than a minor or
technical breach and there is a sufficient causal connection between the conduct and
consequences of the conduct. The conduct must have caused or led to the claimed loss.
4.31. The conduct here is the failure to read and understand the report and the Agency’s failure to
identify this by way of sufficiently active supervision of Licensee 2.
4.32. The loss here is potential weather tightness issue to areas of the property relating to the decks.
Those areas where not identified as potentially problematic by the report. There is an
insufficient causal connection between the conduct and the claimed loss to warrant a referral
to the Tribunal.
4.33. The adequacy of supervision of Licensee 1 is a live complaint having been referred to the
Tribunal on misconduct charges. That and any issue as to compensation, are matters for the
Tribunal to address and make any orders it considers appropriate.
5. 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.
6. 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
CAC Decision on Orders C40274 Page 8 of 12
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/.
7. 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

Andrew Hayes
Chairperson

Denise Evans
Deputy Chairperson

Ian Keightley
Member
Date: 26 June 2023

CAC Decision on Orders C40274 Page 9 of 12
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;
CAC Decision on Orders C40274 Page 10 of 12
(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.
CAC Decision on Orders C40274 Page 11 of 12
(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.

CAC Decision on Orders C40274 Page 12 of 12