Complaint No C47641 [2023] NZREAA 66 (11 September 2023)

Last Updated: 9 April 2024

BEFORE THE COMPLAINTS ASSESSMENT COMMITTEE

Committee: CAC2201

Complaint: C47641

A complaint under section 74 of the Real Estate Agents Act 2008 by The Complainant

against The Licensee [XXXXXXXX]

AND

An inquiry under s 78 (b)

Into The Licensee

DECISION OF THE COMMITTEE

Dated 11 September 2023

COMPLAINTS ASSESSMENT COMMITTEE

Chairperson: Gayatri Jaduram

Deputy Chairperson: Noel Cooper

Panel Member: Patrick Waite

V202307

HOW THE COMPLAINT AROSE

[1] The complainant, The Complainant has explained that he is experienced property trader who has attended many auctions.

[2] The Complainant says that he was not initially interested in the property (the Property) but subsequently became interested because the licensee, The Licensee told him that The

Auction Bidder would be bidding at the auction.

[3] The Complainant describes The Auction Bidder as a mentor and a guru. He says that The Auction Bidder is considered a “god” amongst the property investors who follow him.

[4] Having been outbid by The Auction Bidder on numerous occasions The Complainant was hopeful that he would successfully outbid The Auction Bidder at the auction for the Property.
[5] The Complainant says that he was very pleased when he won the auction ahead of The Auction Bidder but, some months later The Auction Bidder told him that he had stopped bidding for the Property well before The Complainant’s successful bid.

[6] The Complainant then contacted The Licensee and his manager. Their response to his complaint led him to believe that he had been misled during the auction process.

THE COMPLAINT

[7] Against this background, The Complainant complains that:

1. He did not instruct The Licensee to make a bid of $1,199,000.00 for the Property and The Licensee made the bid without his instruction or knowledge.
   
2. The Licensee falsely told him that the bid had been made by The Auction Bidder.
   

100. The Licensee entered his personal name on the agreement for sale and purchase (ASP) rather than his company’s name.
     

4. The Licensee induced him into making the $1,200,000.00 winning bid by falsely

representing that the bid of $1,199,000.00 was made by The Auction Bidder, breaching section 9 of the Fair-Trading Act 1986.

5. The Licensee did not follow his instructions to bid only against The Auction Bidder.
   

THE ISSUES

[8] On 30 September 2022 the Complaints Assessment Committee CAC2106 considered the complaint and decided to inquire into it under section 79(2)(e) of the Real Estate Agents Act 2008 (the Act).

[9] On 30th September 2022 the complaint was transferred to this Complaints Assessment Committee CAC2201 (the Committee) and the Committee confirmed the decision to inquire made by CAC2106 and its decision not to enquire in relation to Mr Gao’s concern that The Licensee entered The Complainant’s personal name on the ASP rather than his company’s name for the reasons given by CAC2106.

[10] The following issues were identified:

1. Did The Licensee make a $1,199,000.00 bid for the Property without The Complainant’s instruction or knowledge?
   
2. Did The Licensee provide false information by telling the Complainant that the bid of

$1,199,000.00 had been made by The Auction Bidder and, in so doing, induce The Complainant into making the winning bid of $1,200,000.00?

100. Did The Licensee fail to follow The Complainant’s instructions to bid only against The Auction Bidder?
     

4. Did The Licensee act in good faith and deal fairly by disclosing the identity of The Auction Bidder to The Complainant? (This issue was added by CAC2106 under s78(b) of the Act).
   

CONSIDERATION OF THE ISSUES

[11] The Committee has considered the following issues:

[12] Did The Licensee make a $1,199,000.00 bid for the Property without The Complainant’s instruction or knowledge?

[13] The Complainant says that The Licensee made a bid of $1,199,000.00 (which was $8,000.00 higher than the previous bid) without his instruction or knowledge. He says that he would not have made a bid at this level when he knew that the reserve price for the auction had been met. Further, The Licensee was instructed that he (The Complainant) only wanted to bid $1,000.00 more than The Auction Bidder’s final bid to secure the Property.

[14] The Licensee confirms that he was on the phone with The Complainant throughout the auction and, says all of the bids (including the bid of $1,199,000.00) were made on The Complainant’s instructions.

[15] The Licensee has explained that because he was on speaker phone The Complainant would have heard him make the bid on his behalf and, he would have also been able to see the bid because he understood that The Complainant was viewing the auction online.

[16] The Committee has reviewed the video of the auction. A voice can be heard saying “another 8” and the auctioneer then confirmed that the phone bid had been made. The Licensee says that this was his bid on behalf of The Complainant.

[17] The Complainant says that he was not watching the auction online and was focused solely on the phone call with The Licensee. He says that he could not always hear everything that was said.

[18] The Complainant has also provided affidavit evidence. Her recollection is that she

understood that the bid of $1,199,000.00 had been made by The Auction Bidder. However, she also says that that this bid was placed by The Licensee who then increased the bid by a further $1000.00 on her husband’s instructions.

[19] Rule 5.1 requires a licensee to exercise skill, care, competence and diligence at all times

when carrying out real estate agency work. Rule 6.2 requires a licensee to act in good faith and deal fairly with all parties engaged in a transaction. If the Committee is to make an unsatisfactory conduct finding against The Licensee we must be satisfied that is more likely than not that The Licensee made this bid without The Complainant’s authority in breach of rules 5.1 and 6.2.

[20] Auctions are stressful and auction participants are often required to make split second

decisions. In this case the bid of $1,199,000.00 was made 7 seconds after the previous bid. The Complainant admits that he could not always hear or remember what The Licensee was saying and says that he was unsure at the time whether the previous bid (of $1,191,000.00) was his or The Auction Bidder’s bid.

[21] Whilst The Complainant says that is aim was to outbid The Auction Bidder’s final bid by

$1,000.00 it is clear from the bidding transcript that The Complainant made a number of bids throughout the auction in varying increments. The Complainant also told the Real Estate

Authority’s investigator that he was a bit “crazy” at the time because he was bidding against The Auction Bidder and he “needed to bid him down no matter what” and “knock him out of the water”.

[22] In this context the Committee is not persuaded on the evidence available that The Licensee, at this crucial stage of the auction, made a bid while he was on the phone to The

Complainant without The Complainant’s authority.

[23] The Committee therefore finds this aspect of the complaint not proven and has determined to take no further action pursuant to section 89(2)(c) of the Act.

[24] Did The Licensee provide false information by telling the Complainant that the bid of $1,199,000.00 had been made by The Auction Bidder and, in so doing, induce The Complainant into making the winning bid of $1,200,000.00?

[25] The Complainant says that The Licensee advised him that the bid of $1,199,000.00 had been made by The Auction Bidder. The Complainant then placed a further bid of $1,000.00 which was the final bid. He says that if he knew that he was leading the auction he would not have bid against himself.

[26] In support, The Complainant has provided an affidavit from his wife in which she confirms that her understanding was that the bid of $1,199,000.00 was The Auction Bidder’s bid.

[27] The Licensee says that he made the bid on the instructions of The Complainant and denies having told The Complainant that the bid was from The Auction Bidder.

[28] The video footage of the auction shows the auctioneer at the bid of $1,199,000.00 saying “Going phone bidder, going, last chance The Auction Bidder in or out” before The

Complainant increased his bid to $1,200,000.00.

[29] It is therefore clear to the Committee that the auction attendees and those watching the auction online would have known that the bid had not been made by The Auction Bidder.

[30] Whilst online viewers were able to see the bids made and, the identification number of the bidder there is no evidence that this information was available to The Licensee. The Licensee has explained that he was in the auction room during the auction. The Auction Bidder was

bidding online and, he did not know which of the online bidders had placed bids as this

information was not shown on the screen facing the audience in the auction room. He says that this is why he gave The Complainant The Auction Bidder’s identification number and told The Complainant to monitor the bidders on his screen.

[31] The Complainant says that he was concentrating on the phone call with The Licensee rather than watching his computer screen (he says he was having difficulty seeing the screen). He also says that The Licensee did not tell him at the time that he could not see the identity of the online bidders. He says that if he had known this, he would not have asked The Licensee to bid for him.

[32] The Complainant also says that The Licensee knew that he could not see the online bidders and, in support refers to a text message exchange that took place prior to the auction. The Committee does not agree that this exchange establishes that The Complainant could not

identify the online bidders. In those messages The Licensee correctly advised The Complainant that the reason why he could not see the online bidders was because the

auction had not started but he would be able to see the online bidders once bids were made.

[33] Under rule 6.4 a licensee must not mislead or provide false information. Rule 5.1 (exercise of skill, care, competence and diligence) is also applicable. If the Committee is to make an unsatisfactory conduct finding against The Licensee we must be satisfied that is more likely

than not that The Licensee misled The Complainant as to the identity of the bidder in breach of rules 5.1 and 6.4.

[34] In support of his contention that he was misled, The Complainant says that if he knew that he was leading the auction he would not have bid against himself.

[35] The Licensee says that The Complainant made the further and final $1,000.00 bid as a

bidding technique/ strategy. He says that The Auction Bidder also bid against himself earlier in the auction and he was aware that The Complainant had also used this strategy in a previous auction.

[36] The Committee accepts that this is a strategy sometimes used by bidders at auction. For this reason, the fact that The Complainant made a further bid of $1,000.00 is not, in the

Committee’s view, conclusive evidence that The Complainant was misled into thinking that he had not made the leading bid.

[37] The Licensee’s evidence is that he had made the leading bid on the instructions of The Complainant and, that he could not see who the online bidders were. He also says that he

thought that The Complainant was monitoring the auction online. In these circumstances the Committee has some difficulty in finding that it is more likely than not that The Licensee

misled The Complainant by telling him that the bid had been made by The Auction Bidder given that The Licensee knew that the information as to who had made the bid could easily have been checked from the information that was displayed online.

[38] The Committee has therefore concluded that this aspect of the complaint, on the evidence available is not proven and, has determined to take no further action concerning this aspect of the complaint pursuant to section 89(2)(c) of the Act.

[39] Did The Licensee fail to follow The Complainant’s instructions to bid only against The Auction Bidder?

[40] The Complainant says that he instructed The Licensee to only bid against The Auction Bidder.

His strategy was to outbid The Auction Bidder’s final bid by $1,000.00. After seeing the

auction transcript, he believes that The Licensee placed bids against bidders other than The Auction Bidder contrary to his instructions.

[41] The Licensee says that at no point did The Complainant instruct him to bid only against The Auction Bidder. He says that all of the bids that he made were made on the instructions of The Complainant.

[42] There is no written record of any instructions given to The Licensee except for a text message from The Complainant to The Licensee saying “Maybe you can keep an eye out for me for [The Auction Bidder]”.

[43] The Committee has considered the context in which this text was sent. The text was sent by The Complainant because he could not see the online bidders before the start of the auction.

He was subsequently advised by The Licensee that he would be able to see the online bidders once the auction had started. In these circumstances the Committee is not persuaded that this text corroborates The Complainant’s claim that The Licensee was instructed to follow a particular bidding strategy on behalf of The Complainant.

[44] Further, there is no evidence that The Licensee was controlling or directing the bidding. It was up to The Complainant to determine his own bidding strategy. Whilst The Licensee had assisted The Complainant by giving him The Auction Bidder’s bidding number prior to the auction there is no evidence that The Licensee was to implement a particular bidding

strategy beyond relaying the bids that The Complainant wanted to make to the auctioneer.

[45] The Committee has therefore concluded that this aspect of the complaint, on the evidence available is not proven and, has determined to take no further action concerning this aspect of the complaint pursuant to section 89(2)(c) of the Act.

[46] Did The Licensee act in good faith and deal fairly by disclosing the identity of The Auction Bidder to The Complainant?

[47] Prior to the auction, The Licensee told The Complainant that The Auction Bidder would be bidding at the auction and, he gave The Complainant The Auction Bidder’s bidding number so that The Complainant could follow The Auction Bidder’s bids online.

[48] The Licensee says that he disclosed this information because both The Auction Bidder and The Complainant were property traders and, he was trying to put The Complainant at ease

by disclosing the identity of The Auction Bidder. The Licensee says that it is not his usual practice to disclose the identity of other parties bidding at an auction and, he admits that he did not get consent from The Auction Bidder to disclose his identity.

[49] The Licensee says that his manager spoke to The Auction Bidder after this complaint was made, the bids made at the auction were discussed and, The Auction Bidder did not mention that he was upset about any other matter.

[50] The Committee observes however, that there is no evidence that The Licensee’s disclosure was actually discussed with The Auction Bidder.

[51] The Committee has considered The Licensee’s conduct in the context of rule 5.1 (exercise of skill, car, competence and diligence) and rule 6.2 (a licensee must act in good faith and deal fairly with all parties).

[52] The Committee does have concerns as to the breach of privacy that took place when The Licensee disclosed The Auction Bidder’s identity but, notes that The Licensee’s conduct has been addressed by his Agency following a recommendation from the Agency’s legal and compliance officer.

[53] The Committee has considered the corrective action since taken and has concluded that in the circumstances the conduct does not warrant the stigma of an unsatisfactory conduct finding.

[54] The Committee has therefore determined to take no further action concerning this aspect of the complaint pursuant to section 89(2)(c) of the Act.

THE OUTCOME

[55] The Committee has made the following findings:

1. No further action will be taken in relation to all aspects the complaint against The Licensee under s89(2)(c) of the Act.

PROVISIONS OF THE ACT AND RULES REFERRED TO

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

PUBLICATION

[57] 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), any third parties and The Licensee.

RIGHT TO APPEAL

[58] 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.

[59] 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.

[60] The Notice of Appeal form, which includes information on filing an appeal and the prescribed fee can be located on the Ministry of Justice’s website:

https://www.justice.govt.nz/tribunals/real-estate-agents/apply/.

Signed

Chairperson:

Gayatri Jaduram

Noel Cooper

Deputy Chairperson:

Panel Member:

Patrick Waite

Date: 11 September 2023

APPENDIX: PROVISIONS OF THE ACT AND RULES REFERRED TO

The Real Estate Agents Act 2008 provides:

78. Functions of Committees

The functions of each Committee are—

(a) to inquire into and investigate complaints made under section 74:
(b) on its own initiative, to inquire into and investigate allegations about any licensee:
(c) to promote, in appropriate cases, the resolution of complaints by negotiation, conciliation, or mediation:
(d) to make final determinations in relation to complaints, inquiries, or investigations:
(e) to lay, and prosecute, charges before the Disciplinary Tribunal:
(f) in appropriate cases, to refer the complaint to another agency:
(g) to inform the complainant and the person complained about of its decision, reasons for the decision, and appeal rights:
(h) to publish its decisions.

79. Procedure on receipt of complaint
    • (1) As soon as practicable after receiving a complaint concerning a licensee, a Committee must consider the complaint and determine whether to inquire into it.
    • (2) The Committee may—
      • (a) determine that the complaint alleges neither unsatisfactory conduct nor misconduct and dismiss it accordingly:
      • (b) determine that the complaint discloses only an inconsequential matter, and for this reason need not be pursued:
      • (c) determine that the complaint is frivolous or vexatious or not made in good faith, and for this reason need not be pursued:
      • (d) determine that the complaint should be referred to another agency, and refer it accordingly:
      • (e) determine to inquire into the complaint.
        

89 Power of Committee to determine complaint or allegation

(1) A Committee may make 1 or more of the determinations described in subsection (2) after both inquiring into a complaint or allegation and conducting a hearing with regard to that complaint or allegation.
(2) The determinations that the Committee may make are as follows:

• (a) a determination that the complaint or allegation be considered by the Disciplinary Tribunal:
• (b) a determination that it has been proved, on the balance of probabilities, that the licensee has engaged in unsatisfactory conduct:
• (c) a determination that the Committee take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

(3) Nothing in this section limits the power of the Committee to make, at any time, a decision under section 80 with regard to a complaint.

111 Appeal to Tribunal against determination by Committee

(1) A person affected by a determination of a Committee may appeal to the Disciplinary Tribunal against the determination within 20 working days after the day on which notice of the relevant decision was given under section 81 or 94, except that no appeal may be made against a determination under section 89(2)(a) that a complaint or an allegation be considered by the Disciplinary Tribunal.

(1A) The Disciplinary Tribunal may accept a late appeal no later than 60 working days after the day on which notice was given to the appellant if it is satisfied that exceptional circumstances prevented the appeal from being made in time.

(2) The appeal is by way of written notice to the Tribunal of the appellant’s

intention to appeal, accompanied by—

(a) a copy of the notice given to the person under section 81 or 94; and (ab) the prescribed fee, if any; and

• (b) any other information that the appellant wishes the Tribunal to consider in relation to the appeal.

(3) The appeal is by way of rehearing.
(4) After considering the appeal, the Tribunal may confirm, reverse, or modify the determination of the Committee.
(5) If the Tribunal reverses or modifies a determination of the Committee, it may exercise any of the powers that the Committee could have exercised.

The Rules from the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 referred to in this decision are:

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

6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.

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.