Complaint No C51263 [2024] NZREAA 37 (3 July 2024)

Last Updated: 9 December 2024

BEFORE THE COMPLAINTS ASSESSMENT COMMITTEE

Committee: CAC2302

Complaint: C51263

A complaint under section 74 of the Real Estate Agents Act 2008 by Complainant 1 and Complainant 2

against Licensee 1 [XXXXXXXX]

and Licensee 2 [XXXXXXXX]

DECISION OF THE COMMITTEE

Dated 3 July 2024

COMPLAINTS ASSESSMENT COMMITTEE

Chairperson: Arti Chand Deputy Chairperson: Andrew Dickson Panel Member: Maree Gendall

V202309

HOW THE COMPLAINT AROSE

1. The complainants, Complainant 1 and Complainant 2, were interested in purchasing the property (the Property).
   
2. The licensee, Licensee 1 was the listing agent. Licensee 2 was the agency’s eligible officer and,

Licensee 1 supervisor.

3. Before The Complainants offer for the Property was finalised Licensee 1 inadvertently disclosed the details of their offer to another interested buyer.
   
4. The Complainants say that the disclosure of their personal information and the terms of their offer disadvantaged them during the multi offer.
   
5. A complaint was made to Licensee 2. The Complainants say that neither Licensee 1 nor Licensee 2 took their complaint seriously and failed to address their concerns.
   

THE COMPLAINT

6. Against this background, The Complainants complain that:
   
   1. When they made their first offer on the Property, Licensee 1 did not explain the process for presenting offers and delayed sending their offer to the vendors of the Property.
      
   2. Licensee 1 provided a copy of their first offer to other interested buyers which breached their privacy and also meant they were disadvantaged as other interested buyers knew what their offer was.
      
   100. Licensee 1 did not take the privacy breach seriously.
        
   4. Licensee 2 did not take the privacy breach seriously, failed to address their concerns and believed that the Authority would find no justification in pursuing their complaint.
      

THE ISSUES

7. On 25 September 2023 Complaints Assessment Committee CAC2201 considered the complaint and decided to inquire into it under section 79(2)(e) of the Real Estate Agents Act 2008 (the Act).
   
8. On 21 March 2024 the complaint was transferred to Complaints Assessment Committee CAC2302 (the Committee), and the Committee confirmed the decision to inquire made by CAC2201.
   
9. The Committee identified the following issues:
   
   1. Whether Licensee 1 had complied with her professional obligations during the offer process for the Property, in particular whether she appropriately handled The Complainants offer and their complaint.
      
   2. Whether Licensee 2 had complied with his professional obligations. In particular:

1. Whether he dealt appropriately with The Complainants complaint; and
   2. Whether he properly supervised and managed Licensee 1.
      
   
   

CONSIDERATION OF THE ISSUES

Issue One: Did Licensee 1 comply with her professional obligations during the offer process for the Property, in particular did she appropriately handle The Complainants offer and their complaint?

Did Licensee 1 explain the process for presenting offers and did Licensee 1 delay sending The Complainants offer to the vendors of the Property?

10. The Complainants say that when they expressed interest in making an offer for the Property on Saturday 17 December 2022, they were not advised of the second/multi offer or that there would be other offers. The Complainants also allege that Licensee 1 deliberately delayed sending their offer to the vendors.
    
11. The Committee has considered this aspect of the complaint in the context of Licensee 1’s obligations under rule 5.1 (a licensee must exercise skill, care, competence and diligence) and rule 6.2 (a licensee must act in good faith and deal fairly).
    
12. The evidence indicates that when Licensee 1 received the details of The Complainants offer, she initially advised that she would put together an offer that evening but later advised that because she was away she would put the offer together the next day (18 December 2022) after her open homes. In response to the text messages from Licensee 1, Complainant 1 replied, “no problem cheers”.
    
13. On 18 December 2022 before their offer had been submitted to the vendors The Complainants were advised by Licensee 1 that another offer had been received and that their offer would be considered in accordance with the agency’s multi offer protocol.
    
14. The Committee acknowledges that The Complainants would have been disappointed to find themselves in a multi offer situation particularly given that they were also advised that the details of their offer had been accidentally disclosed to the other interested buyer.
    
15. However, as the second offer was not made until after the open home on Sunday 18 December 2022 this was not information known to Licensee 1 when she was in communication with The Complainants the previous day. Nor is there any evidence that Licensee 1 gave any indication to The Complainants that their offer would be considered exclusively by the vendors. The Committee observes that Licensee 1 was acting for the vendors and her duty to her vendors was to generate interest in the Property with a view to receiving offers.
    
16. The Committee is also satisfied that there is no evidence that Licensee 1 deliberately delayed sending The Complainants offer to the vendors.

17. Due to personal commitments on the Saturday evening and professional commitments the following morning (Licensee 1 had four open homes including an open home at the Property) Licensee 1 was unable to finalise The Complainants offer until early on the Sunday afternoon.
    
18. As the evidence indicates that Licensee 1 kept The Complainants informed as to when she would be able to finalise the necessary paperwork and as there is no evidence of an unreasonable delay, or a deliberate delay in finalising the offer as alleged by The Complainants the Committee is satisfied that Licensee 1 did meet her professional obligations as regards this aspect of the complaint.
    
19. Further, as the evidence indicates that The Complainants were given written advice as to how the offer process would work (including information about how the multi offer process if a multi offer situation were to arise) the Committee is satisfied that Licensee 1 did explain the process for presenting offers in accordance with her obligations under rules 5.1 and 6.2.
    

Disclosure of offer information to a prospective purchaser

20. When preparing the paperwork for the second offer Licensee 1 accidentally sent the details of The Complainants offer to the other prospective purchaser.
    
21. The Complainants say that Licensee 1 explained that they were not disadvantaged by this as the offers were quite different and The Complainants offer was far from the asking price. They say they were advised to “up their price” and continue with the multi offer process. The Complainants offer was not accepted, and they believe that the disclosure of their offer and personal information put them at a disadvantage in the multi offer.
    
22. Rule 5.1 is also applicable to this aspect of the complaint.1
    
23. Licensee 1 has explained that when she was commencing her second open home, she had another buyer indicate interest in the Property. While attempting to respond to the second buyer’s request at the same time as commencing the open home, she accidentally sent to the other buyer the “Detail for Offer” word document that she had received from The Complainants.
    
24. In disclosing the details of The Complainants offer to another buyer the Committee has concluded that Licensee 1 did fail to exercise skill, care and competence in breach of rule 5.1. It is accepted that Licensee 1’s error was not intentional and, Committee notes her advice that she has changed her protocols to eliminate any risk of repeating the error made. However, even an unintentional error can result in a breach of rule 5.1.
    
25. The Committee then considered whether Licensee 1’s breach of rule 5.1 warrants a disciplinary response as not every error by a licensee reaches the threshold for an unsatisfactory conduct finding2.
    

1Rules 9.16 – 9.18 (Confidentiality) referenced by The Complainants are not applicable because these rules concern duties to a licensee’s client. The vendors were the clients in this transaction.

2 a’Beckett v Real Estate Agents Authority (CAC407) & Yin [2017] NZREADT 30 at [13]

26. In determining whether this breach of rule 5.1 should result in an unsatisfactory conduct finding, the Committee has had regard to the judgement in Vosper v Real Estate Agents Authority 3 in which Heath J said:

“A balance needs to be struck between the competing goals of promoting a consistent and effective disciplinary process and avoidance of the stigma of a finding of unsatisfactory conduct, where the conduct in issue is relatively minor and all other circumstances point to the absence of a need to mark the conduct in that way”.4

27. For the reasons discussed below the Committee is satisfied that the resulting multi offer was carefully managed and professionally dealt with in a way that ensured that the inadvertent disclosure of The Complainants first offer did not compromise The Complainants or disadvantage them during the multi offer. In these circumstances and following the reasoning in Vosper, The Committee has concluded that Licensee 1’s breach of rule 5.1 does not warrant the stigma of an unsatisfactory conduct finding.
    

Did Licensee 1 comply with her professional obligations during the multi offer?

28. Rules 5.1 and 6.2 are also applicable to this aspect of the complaint.
    
29. It was agreed with the vendors that all offers would be presented on the evening of 19 December 2022. Licensee 1 has explained that the extended deadline provided The Complainants with the opportunity to seek legal advice and make an informed decision as to whether they wanted to make another offer for the Property.
    
30. The Committee accepts that The Complainants would have felt under some pressure to “up their offer”. However, the Committee also observes that because there was a multi offer situation this would have likely been the case regardless of whether or not the details of their first offer had been disclosed. This is because all of the parties to the multi offer were advised to make their “final and best offer”.
    
31. There is no evidence that any of the parties who made offers had any information about the price or terms of the offer that The Complainants submitted during the multi offer process. The Committee notes that the second purchaser who had accidentally received The Complainants first offer details had been advised that the offer detail that had been disclosed was an offer made prior to the multi offer situation and, he was advised that he could not rely on that information as the first buyer (The Complainants) had the opportunity to make a further offer for the Property on terms and conditions of their choice.
    
32. Licensee 1 says that there were three offers received for the Property and The Complainants offer was the lowest and the least attractive. Licensee 1 says that while the second purchaser did make the successful offer, the third offer from a prospective purchaser who had no knowledge of the first offer made by The Complainants was also superior to The Complainants offer.
    

3 [2017] NZHC 453

4 Ibid at [82]

33. Having considered the evidence as to how the multi offer was managed the Committee is satisfied that the multi offer was conducted in accordance with the Agency’s protocols and managed in a way that was fair to all parties involved.
    

Licensee 1’s response to The Complainants complaint

34. The Complainants say that Licensee 1 did not take the privacy breach seriously.
    
35. Licensee 1 says that she can completely understand that by virtue of her accidental disclosure of The Complainants first offer to another buyer, combined with the multiple offer scenario, that The Complainants found themselves in an unexpected and challenging situation.
    
36. Licensee 1 says that she sympathised with The Complainants, listened to their concerns, gave them the opportunity to seek advice and treated them fairly throughout the process. She says that in responding to their complaint she did challenge a number of The Complainants representations that she considered were not factually correct.
    
37. The Committee accepts that The Complainants did not get the outcome that they wanted when they complained about Licensee 1 to her supervisor, (Licensee 2) however, the Committee is satisfied that Licensee 1 responded to the complaint promptly and professionally.
    
38. Nor is the Committee persuaded that the evidence establishes that Licensee 1 did not take the privacy breach seriously. Once she discovered the error that she had made the evidence indicates that Licensee 1 immediately owned up to the error and took all appropriate steps to mitigate her error and ensure that The Complainants were treated fairly during the process.
    

Conclusion

39. Having found that Licensee 1’s inadvertent disclosure of The Complainants first offer details does not need to be marked by a disciplinary response and having found that Licensee 1 otherwise met her professional obligations under rules 5.1 and 6.2 as regards to the offer process, the multi offer and the handling of The Complainants complaint the Committee has determined to take no further action on these issues pursuant to section 89(2)(c) of the Act.
    

Issue two: Did Licensee 2 deal appropriately with The Complainants complaint and did he properly supervise and manage Licensee 1?

Response to complaint

40. The Complainants say that Licensee 2 also did not take the privacy breach seriously, failed to address their concerns and told them that he believed that the Authority would find no justification in pursuing the complaint.
    
41. Licensee 2 says that both he and Licensee 1 did not hesitate to come forward and advise The Complainants of the error that had been made. He says that they have met their obligations under rule 6.2 and he believes that he dealt with The Complainants complaint appropriately.

42. Licensee 2 says that he had lengthy conversations with The Complainants immediately after he was informed of Licensee 1’s error and tried to find solutions and re-establish a fair playing field for the multi offer including giving The Complainants the time to seek legal advice and submit another offer if they wished to do so. Licensee 2 says that this is evident from the evidence provided by Licensee 1 together with his response to the complaint.
    
43. Licensee 2 says that the Agency’s complaint process was followed and that both he and Licensee 1 apologised to The Complainants on multiple occasions both verbally and in writing. Licensee 2 says that he advised The Complainants that he could not rectify the error that had occurred and, as The Complainants could not advise what they wanted the agency to do to rectify the situation he was unsure about what else could be done so he recommended that The Complainants make a complaint to the Authority if they were not satisfied.
    
44. Licensee 2 has explained that he assumes that The Complainants were seeking financial compensation and, he says that if there had been a genuine monetary loss (which there was not) then neither he nor Licensee 1 would have hesitated to make a payment to “make this right”.
    
45. The correspondence provided in evidence indicates that Licensee 2 did advise The Complainants that they were welcome to make a complaint to the Authority. The correspondence also indicates that Licensee 2 questioned the advice that The Complainants said that they had received from the Authority about the rules that had been breached. However, the correspondence does not corroborate The Complainants allegation that Licensee 2 advised them that a complaint to the Authority would have no merit.
    
46. Overall, the Committee is satisfied that the evidence indicates that Licensee 2 did take The Complainants complaint seriously and we are also satisfied that Licensee 2 dealt with The Complainants concerns promptly, professionally and in accordance with the agency’s complaints process.
    

Supervision and management

47. Section 50 of the Act provides that a salesperson must be properly supervised and managed so that the agency work is carried out under the sufficient direction and control of the supervisor to ensure that the work is performed competently and in compliance with the Act.
    
48. The error made by Licensee 1 was a genuine mistake and there is no evidence that the error was made because she was not properly supervised or managed. Further, the Committee is satisfied that as soon as Licensee 2 became aware of Licensee 1’s error Licensee 2 provided prompt and pro-active supervision and management to ensure that The Complainants concerns were addressed and, to ensure that the multi offer process was managed in accordance with the Agency’s protocols.
    

Conclusion

49. Having found that Licensee 2 dealt appropriately with The Complainants complaint and as the Committee has not found any supervision failings the Committee has determined to take no

further action will be taken concerning this aspect of the complaint under section 89(2)(c) of the Act.

THE OUTCOME

50. The Committee has made the following findings:
    
    1. No further action will be taken in relation to the complaint against Licensee 1 under section 89(2)(c) of the Act.
       
    2. No further action will be taken in relation to the complaint against Licensee 2 under section 89 (2)(c) of the Act.
       

PROVISIONS OF THE ACT AND RULES REFERRED TO

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

PUBLICATION

52. 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

53. 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.
    
54. 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.
    
55. 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: Arti Chand

Deputy Chairperson: Andrew Dickson

Panel Member: Maree Gendall

Date: 3 July 2024

APPENDIX: PROVISIONS OF THE ACT AND RULES REFERRED TO

The Real Estate Agents Act 2008 provides:

50 Salespersons must be supervised

(1) A salesperson must, in carrying out any agency work, be properly supervised and managed by an agent or a branch manager.
(2) In this section properly supervised and managed means that the agency work is carried out under such direction and control of either a branch manager or an agent as is sufficient to ensure—

• (a) that the work is performed competently; and
• (b) that the work complies with the requirements of this Act.
  

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.