Complaint No C47639 [2023] NZREAA 65 (5 September 2023)

Last Updated: 9 April 2024

Before the Complaints Assessment Committee
In the matter of	Complaint No: C47639 Part 4 of the Real Estate Agents Act 2008
and
Licensee 1:	Licensee 1 (XXXXXXXX)

Decision to take no further action

5 September 2023

Members of Complaints Assessment Committee: CAC2301 Chairperson: William Acton

Deputy Chairperson: Amanda Elliott Panel Member: Susanne Guhl

V202211

The Complaint

1. On 17 May 2022 the Real Estate Agents Authority (the Authority) received a complaint

against Licensee 1 (the Licensee) from Complainant 1 and Complainant 2 (the Complainants).

2. The Licensee is a licensed Salesperson under the Real Estate Agents Act 2008 (the Act).
   
3. The complaint relates to the prospective sale of a commercial property at The Property (the Property).
   
4. On 2 August 2022 the Complaints Assessment Committee 2108 (CAC2108) considered the complaint and decided to inquire into it under section 79(2)(e) of the Act. On 16 March 2023 CAC2108 held a hearing on the papers and considered all the information gathered during

the inquiry. On 08 May 2023, the complaint was transferred to Complaints Assessment Committee 2301 (the Committee). They confirmed the decision to inquire made by CAC2108.

Background to the Complaint

5. The Licensee was the selling agent along with two other licensees.
   
6. The Property went to Auction but failed to sell and negotiations began via the Licensee with the highest bidder’s CEO Individual 1, on behalf of Organisation 1 (the Trust).
   
7. The Vendor/Complainants, understood from what the Licensee had both said and emailed, that an “unconditional” agreement had been reached with the purchasers for a purchase price of $1,650,000, and that they accepted the deletion of a clause in the Agreement for Sale and Purchase (ASP) that required the Vendors to obtain a code of compliance (CCC) for two unconsented works.
   
8. It was on this basis; the Complainants signed their acceptance to the offer and initialed the deletion of clause 22. They returned the completed ASP to their lawyer, as instructed by the Licensee.
   
9. The Licensee then presented the ASP to the Trust with clause 22 crossed out and initialed by the Complainants and asked them to execute it in the same way.
   
10. However, the Trust elected not to accept the deletion and did not initial the deletion of the clause to signify acceptance.
    
11. Consequently, the Complainants were advised by their Lawyer that without the purchasers initialing their acceptance of the deletions, the ASP was not unconditional.
    
12. The Complainants, on receipt of this advice, withdrew the Property from sale and the agreement did not proceed.
    

Against this background the Complainants claim:

13. That the Licensee failed to follow their instructions which was to present to the purchasers their offer with the clause relating to the CCC deleted in the ASP.
    
14. That the Licensee advised the Complainants on several occasions in writing that the offer received on their Property was unconditional when it was not.

In particular, the Complainants said:

15. They had negotiated, with the Licensee, for the Trust to buy the Property for $1,650,000 with the condition that the CCC clause was removed.
    
16. The Licensee emailed the Complainants twice advising that he had negotiated with the Purchaser to keep the agreement “unconditional.”
    
17. They had also been copied into an email from the Licensee to the Purchaser, attaching the ASP signed and initialed by them. The Licensee wrote: “To fully execute this, I need you to please initial page 17 – the crossed-out condition with respect to the CCC...”
    
18. When they were later told by their solicitor that the sale was conditional, they decided to withdraw the Property from the market “as they felt the whole deal had turned into a mess

due to the Purchaser wanting to keep the pressure on for CCC when they were told from the Licensee that they had an unconditional contract.”

19. Due to their belief that the sale was unconditional, they spent considerable time and money pursuing another property and starting the process of making changes to that property,

which incurred fees.

The Licensee responded to the complaint:

20. The Vendors/Complainants had insisted that the Licensee was part of the listing team for the Property as they did not want to deal with a particular salesperson from Agency 1.
    
21. Another licensee, Individual 2, was part of the selling team and she did most of the negotiating of the offers and counter-offers, up until she went overseas.
    
22. The highest bid at the auction, was from Organisation 1 (The Trust) who had expressed

interest in the Property prior to the auction and knew that there was some work not covered by a CCC, but still placed their unconditional bid.

23. Immediately after the auction, negotiations continued with the Trust making a $1,600,000 offer conditional on the vendors being issued a CCC as per clause 22 of ASP. The

Complainants countersigned this offer at $1,800,000, with clauses 22 and 23 remaining in the agreement.

24. On the morning of 22 February 2022, the Licensee spoke with Individual 2 and understood from that conversation that the Trust had come back to her, and it had agreed to increase its offer to $1,650,000 and unconditional.
    
25. As Individual 2 was travelling overseas the next day, the Licensee took over the negotiations from that point. He emailed the Vendors/Complainants to let them know that the Trust would go to $1,650,000 unconditional and asked for their instructions.
    
26. He also spoke with the Vendors/Complainants on the phone and asked them to countersign the agreement at $1,650,000, based on his genuine understanding of the offer’s status.
    
27. In accordance with the Complainant’s instructions, upon receiving the signed and initialed offer from the Complainants, he forwarded the ASP to the purchasers and asked them to fully execute it including the deletion of clause 22.
    
28. It was not until 3 March 2022 when the Vendors emailed him the completed ASP, that he saw that the Trust had not initialed the deletion of clause 22.

29. He then emailed Individual 1, asking her to initial the deletion. She replied advising that the Trust did require a CCC, and it did not agree to the deletion of clause 22. She also apologised for “mistakenly jumping the gun” and paying the deposit on the 28 February.
    
30. The Licensee accepts he did advise the Complainants that the offer from the purchaser was unconditional and accepts that the purchaser’s later clarification meant that the offer was conditional.
    
31. The Licensee says he could not have been reasonably expected to have known this at the time, because it was contrary to his understanding of his conversation with Individual 2.
    
32. The Licensee had also understood that both parties had signed the agreement for

$1,650,000 with clause 22 deleted. It was not until later that he learned otherwise.

33. The Licensee did not delete clause 22 from the agreement and understands that the Vendors did this themselves understanding they had an unconditional agreement.
    
34. After Individual 1 let him know that the Trust still required the CCC, he tried to work with the Complainants to obtain one, organising for a planner to visit the Property with their lawyer's consent.
    
35. The Licensee says that agreement was not cancelled, as it was never binding.
    
36. The Complainants then withdrew the property from the market and the Trust also advised they no longer wished to continue with the purchase.
    

The consideration of the issues:

37. We, the Committee, must consider the following issues.
    
    • (a) Was the conduct of the Licensee unsatisfactory in that the Licensee failed to follow the Complainants’ instructions which was to present to the purchasers their

counteroffer/offer with the clause relating to the CCC deleted in the Agreement for Sale and Purchase?

(b) Was the conduct of the Licensee unsatisfactory in that he advised the Complainants on several occasions in writing that the offer received on their Property was

unconditional, when it was not?

The Relevant Legislation:

38. Section 72 Real Estate Agents Act 2008 provides that:
    

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.

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

Rule 6.4 A licensee must not mislead a customer or client, nor provide false information that should by law or in fairness be provided to a customer or client.

Issue 1: Was the conduct of the Licensee unsatisfactory in that the

Licensee failed to follow the Complainants’ instructions which was to present to the purchasers their counteroffer/offer with the clause relating to the CCC deleted in the Agreement for Sale and Purchase?

39. After carefully considering all the evidence from both the Complainants and the Licensee, we accept that the Licensee did follow the Complainants’ instructions and presented their

signed and initialed counteroffer to the purchaser.

40. The Committee accepts that email correspondence of 3 March, between the Licensee and Individual 1 (of which the Complainants received a copy) unequivocally shows that the

Licensee, after receiving the Complainants’ signed ASP, emailed that ASP to the Trust with clause 22 deleted. The Licensee wrote “To fully execute I need you to initial pg. 17 of the crossed-out condition with respect to the CCC”. The correspondence demonstrates that the Licensee took steps that were consistent with the Complainants' instructions. Accordingly, the Committee finds that the Licensee's conduct was not unsatisfactory conduct as defined in s 72 of the Act, and therefore determines to take no further action on this aspect of the complaint, pursuant to s 89(2)(c) of the Act.

Issue 2: Was the conduct of the Licensee unsatisfactory in that he

advised the Complainants on several occasions in writing that the offer received on their Property was unconditional, when it was not?

41. The Licensee accepts that he advised the Complainants both orally and in an email that they had an unconditional agreement with the Trust. The Licensee accepts that this was incorrect and has explained why this was his reasonable genuine belief at the time.
    
42. The Committee must determine whether this mistake by the Licensee was so egregious as to be considered unsatisfactory and in breach of the professional rules that he works under.
    
43. There is no dispute that the Licensee gave incorrect advice to the Complainants that the agreement was unconditional following a conversation with his colleague Individual 2, who it is accepted, led the negotiations for the sale of the Property before she departed overseas.
    
44. However, the Committee accepts that the Licensee had no reason to doubt what he believed Individual 2 had said, given the Trust had already bid on an unconditional basis at the

auction, and had paid the deposit. Having considered the evidence and the explanation, the Committee accepts that it was the Licensee's genuine belief that there was an unconditional agreement for the Property.

45. It is unfortunate that the reason for this this misunderstanding regarding the status of the

agreement has been unable to be ascertained due to the continuing absence of Individual 2.

46. Having carefully considered all the evidence received, the Committee finds that the Licensee advised the Complainants that the offer was unconditional, which was incorrect. However, based on information available before the Committee, we accept that it was not

unreasonable or in breach of any duty for the Licensee to act on the information he had and therefore the Committee determines to take no further action on this issue of the complaint, pursuant to s 89(2)(c) of the Act.

What we decided

47. We find that the Licensee's conduct was not unsatisfactory conduct as defined in s 72 of the Act. The Committee has therefore decided under s 89(2)(c) to take no further action in

regard to this complaint. The decision was also made with reference to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, namely 5.1 (Standards of

professional competence), 6.4 (Standard of professional conduct), 9.1 (Client and customer care).

Publication

48. The Committee directs publication of its decision. This decision will be published without the names or identifying details of the Complainant (including the address of the Property), the Licensee and any third parties.
    
49. 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.

50. 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.
    

Your right to appeal

51. 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.
    
52. 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

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

Signed

William Acton Chairperson

Amanda Elliott

Deputy Chairperson

Susanne Guhl Member

Date: 5 September 2023

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.

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

Rule 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.

Rule 9.1 A licensee must act in the best interests of a client and act in accordance with the client’s instructions unless to do so would be contrary to law.