Complaint No C50572 [2024] NZREAA 30 (27 May 2024)

Last Updated: 9 December 2024

BEFORE THE COMPLAINTS ASSESSMENT COMMITTEE

Committee: CAC2204

Complaint: C50572

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

against Licensee 1 (XXXXXXXX)

and Licensee 2 (XXXXXXXX)

DECISION OF THE COMMITTEE

Dated 27 May 2024

COMPLAINTS ASSESSMENT COMMITTEE

Chairperson: Denise Evans

Deputy Chairperson: Belinda Moss

Panel Member: Julian Twiss

V202309

HOW THE COMPLAINT AROSE

1. This complaint is about the purchase by The Complainants (the Complainants”) of a farm at The Property.
   
2. Licensee 1 (Licensee 1) and Licensee 2 (Licensee 2) are both Licensed Salespersons under the Real Estate Agents Act 2008 (the Act). They were the listing agents for the property. Licensee 2 was also the selling agent.
   
3. The property was advertised by the Licensees as having 110 hectares of native bush when it was actually 174.73 hectares.

THE COMPLAINT

4. Against this background, the Complainants complains that:
   
   1. Advertising and Marketing for the Property recorded a total of 421.7ha, 311ha grass with the balance 110ha in native bush.
      
   2. Following the farm sale in a meeting with the farm owner, the owner gave him a map which clearly showed a significant portion more of bush than had been previously disclosed, 174.73ha instead of the disclosed 110ha.
      
   100. When he asked the farm owner and the Licensees, they both confirmed the Licensees had a copy of this map and failed to disclose the correct information
        
   4. The Licensees initially denied having the map however eventually admitted they did have it and they have been trying to attack the owner who is an elderly man about the error they have clearly made
      
   5. He paid a price that reflected the disclosed 311ha of grass and 110ha of bush, the price would have been significantly less if he had not been misled and knew that there was actually 174.73ha of bush effecting the price by approx. $300,000.
      
   6. That information in respect of the fertilizer history and stocking rates was not made available.
      

THE ISSUES

5. The Committee identified the following issues:
   
   1. Whether either Licensee 1 or Licensee 2 are in breach of their professional obligations in respect of the advertising and any representation about the amount of bush on the farm
      
   2. Whether either Licensee 1 or Licensee 2 are in breach of their professional obligations in respect of refusing the Complainants access to information from the Vendor in respect of fertilizer history and or stocking rates

CONSIDERATION OF THE ISSUES

Breach of obligations in respect of advertising and any representation about the amount of bush on the farm

6. The professional obligations on both Licensee 1 and Licensee 2 are set out in Rules 5.1 (skill, care), 6.4 (not to mislead), of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012.
   
7. Both Licensee 1 and Licensee 2 accept that the advertising and representation of the amount of bush on the farm was incorrect. They say that they relied on information given to them by the Vendor including a map of the farm property. They say they provided all the information to the Complainants.
   
8. They also say that they were very careful to include Further Terms of Sale into the Complainants offer which confirmed an acknowledgement from the Complainants
   

“had the opportunity to undertake their own due diligence, as well as ensuring they had the opportunity to seek any necessary legal and technical advice and had been given sufficient time to do so.”

9. The Licensees say they were provided with a scan of an aerial map of the property so they were able to navigate around the various sites of the property when showing it to potential purchasers. As it was not very clear they did not include it in the information memorandum.
   
10. The Complainant’s offer was accepted on the 3rd of October 2022.
    
11. On the 12th of October 2022, the Complainants advised that they had been given a map of the property by the Vendor and expressed a concern that the marketing of the property had misrepresented the area of grass in comparison to the bush.
    
12. At the request of the Complainants, Licensee 2 asked the Vendor to consider a price reduction, which the Vendor refused. On the 13th of October, the Licensees met the Complainants to discuss their concerns and explained that they had not received a clear map from the Vendor at the time the property was listed for sale.
    
13. The Disciplinary Tribunal in its decision Bellis v Real Estate Agents Authority (CAC1907) 1set out the general principles as to Licensees providing information to prospective purchasers including when that advice is based on information provided by Vendors.
    
14. The principles are
    
    1. Licensees must make every effort to know what they are selling
       
    2. Licensees must have an active role in conveying information and if asked about a particular aspect of a property, licensees are obliged to make proper enquires, or to
       

1 Beilis v Real Estate Agents Authority (CAC 1907) [2020] NZREADT 41,

advise the prospective purchaser they do not know the answer and that the prospective purchaser should obtain appropriate advice.

100. An innocent misrepresentation will constitute a breach of rule 6.4 and may amount to unsatisfactory conduct
     

4. Prior to making any positive representation Licensees should at least have taken some precautions to check the veracity of the information.
   
5. Licensees cannot simply pass on information from a Vendor and if they do the licensee must make it clear that the licensee is not the source of the information and that it has not been verified.
   
6. Licensees should also recommend that the prospective purchaser seek professional advice.
   

15. The Committee has reviewed the information provided by the Investigator and is satisfied that at the time the licensees prepared the advertisement of the property, they relied on the information which they had been given by the Vendor. There is no evidence to suggest that their reliance on this information was unreasonable nor was there anything to suggest an obvious mismatch between the effective area when visually inspecting the property.
    
16. It is clear that the information was incorrect and therefore the advertising and representation of the area of bush on the property was incorrect. The Committee is satisfied that there has been a technical breach of Rule 6.4 of the Rules.
    
17. The evidence provided to the Committee included that the Licensees met with the Vendors on several occasions before the property was listed. The information contained in the listing agreement was thoroughly prepared.
    
18. The Committee is satisfied they complied with their professional obligations under Rule 5.1 in respect of making reasonable enquiries of the Vendor before advertising the property. The Committee notes that it would have been preferable if the advertisement referred to the area of bush being approximate, which may have avoided any difficulty.
    
19. In any event the Committee is satisfied that the Complainants were interested in the property having enquired about the same when the signs were being erected at the gate and did not rely on the information contained in the advertisement.
    
20. The Committee is satisfied that there were a number of discussions between the

Complainants and the Licensee’s about various matters relating to the property.

21. The Complainants were advised to get any necessary legal and technical advice and in signing the Agreement for sale and purchase they acknowledged that they had been given sufficient time to do so.
    
22. The Committee has determined therefore that the breach of Rule 6.4 amounts to a technical breach and does not warrant disciplinary action and therefore has decided to take no further action in respect to this aspect of the complaint.

Breach of obligation in respect of fertilizer history and stocking rates

23. The Complainants say that Licensees 1 and 2 are in breach of a professional obligation because they refused to provide information about the fertilizer history and socking rates of the property.
    
24. The Licensees say that they requested the information from the Vendor who advised that as the block had been run as part of a larger property, the Vendor did not have information on the fertilizer history or the stocking rates. They confirm that they told the Complainants that the information did not exist
    
25. The Committee accepts the evidence of the Licensee that the information sought by the Complainant did not exist and concludes therefore that the Licensees cannot be in breach of any professional obligation in relation to the provision of information where that information does not exist.
    
26. The Committee has decided having considered the Licensee’s conduct against the requirements of Rule 6.4 not to take any further action in respect of this aspect of the Complaint.
    

THE OUTCOME

27. The Committee has made the following findings:
    
    1. No further action will be taken in relation to the complaint against either Licensee 1 or Licensee 2 under s89(2)(c) of the Real Estate Agents Act 2008 (Act).
       

PROVISIONS OF THE ACT AND RULES REFERRED TO

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

PUBLICATION

29. 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

30. 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.
    
31. 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.

32. 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: Denise Evans

Deputy Chairperson: Belinda Moss

Panel Member: Julian Twiss

Date: 27 May 2024

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:

Rules 5.1 ad 6.4