Ministry of Justice

Costs / purchaser brought compensation claim against licensees arising from real estate transaction / claim dismissed after expert valuation evidence established purchaser had suffered no loss / licensees applied for costs of $18,085 for legal costs and valuation report / Real Estate Agents Act 2008, s110A / HELD / purchaser was entitled to commence claim and there was no evidence he knew he had suffered no loss before receipt of the licensees’ expert evidence / from that point purchaser knew or ought reasonably to have known he had no prospect of success / purchaser did not engage with settlement offers and continued proceedings unnecessarily / conduct met criteria in s110A / licensees entitled to reasonable contribution only, not indemnity costs / no uplift warranted / Tribunal noted access-to-justice considerations and the prevalence of unrepresented compensation claimants / scale costs adopted as starting point / purchaser ordered to pay licensees costs of $5,300

Misconduct / salesperson facilitated acquisition of property by company controlled by spouse while acting in transaction for vendor / failure to disclose conflict of interest and related-party interest in property acquisition / Real Estate Agents Act 2008, s73c, s134, s135, s137 / Professional Rules 2012, r6.1, r6.2, r6.3, r6.4 / HELD / defendant and spouse held beneficial interest in purchasing company / defendant knowingly failed to comply with REA Form 2 requirements and valuation obligations / failure to disclose relationship with purchaser's director deprived vendor of opportunity to make informed decisions about transaction / conduct constituted wilful contravention of s134 and s135 / defendant placed purchaser's interests ahead of vendor's interests by facilitating building inspection, supporting purchaser's efforts to obtain price reduction, and providing evidence adverse to vendor in subsequent dispute proceedings / breach of fiduciary obligations owed to vendor client / misconduct under s73c established / Charge 1 and Charge 3 proved / penalty decision to follow

Penalty / misconduct / licensee failed to explain risk of weathertightness of cladding / Real Estate Agents Act 2008, s3, s110 / Professional Rules 2012, r5.1, r6.4, r10.7 / licensee censured, to provide apology, and fined $8,000 / compensation / loss on re-sale closely connected, but reduced by 25% for disclosure of weathertightness issue on re-sale and short timeframe between purchase and re-sale / expenses relating to property, weathertightness report, alternative accommodation, and expenses relating to resale, allowed but only when supported by evidence / general damages for emotional harm not allowed / discretionary reduction for contributory negligence (15%) and non-disclosure of risk of chance rather than actual weathertightness (15%) / compensation of $34,192.42 and costs of $13,228.60 awarded

Application for review / Registrar’s determination not to pursue a supplementary complaint as it was not sufficiently serious to warrant further action / applicant applied to review Registrar’s decision / application for non-party discovery / Real Estate Agents Act 2008, s 74(3)(a), s 112 / HELD / Registrar not required to conduct investigation on a complaint and has no power to require non-parties to produce documents / incumbent on complainant to put before Registrar sufficient and credible evidence to support allegations to justify referral to a Committee / insufficient evidence to support applicant’s suspicion licensees played role in prompting an IRD audit in an act of retaliation / not the role of the Tribunal on an application for review to obtain evidence that may support a complaint / application for non-party discovery dismissed

Penalty / unsatisfactory conduct / commercial property marketed with incorrect boundary and overstated carparking area / Tribunal previously found licensee breached rr 5.1 and 6.4 by failing to disclose boundary discrepancies and material information affecting use of carparks / Real Estate Agents Act 2008, s72, s110, s110A / Professional Conduct and Client Care Rules 2012, r5.1, r6.4 / HELD / conduct at upper end of unsatisfactory conduct / licensee aware of risk boundary depiction was incorrect but failed to investigate or correct marketing material / censure, training and apology warranted / fine of $7,500 imposed / compensation determined according to losses closely connected to unsatisfactory conduct / purchaser entitled to recover surveying, valuation and expert costs incurred investigating boundary issue / legal costs relating to dispute with vendor insufficiently connected and declined / claim for diminution in value and lost carpark leasing potential not proven on evidence / purchaser awarded compensation of $15,344.19 / costs of $11,700 awarded, reduced from usual starting point to reflect failure to prove misconduct charges

Appeal / residential property with direct-fixed monolithic cladding / purchasers alleged inadequate disclosure of weathertightness risks / Committee found licensee guilty of unsatisfactory conduct for inadequate disclosure / Real Estate Agents Act 2008, s89, s93, s111 / Professional Conduct and Client Care Rules 2012, r6.4, r10.7 / HELD / licensee’s knowledge of monolithic cladding engaged disclosure obligations / licensee required to ensure purchasers were informed of significant potential weathertightness risks and able to seek expert advice / forwarding moisture report without explanation or guidance insufficient / reasonably competent licensee should have highlighted relevant risks, explained implications of direct-fixed cladding and recommended a building inspection / Committee entitled to rely on contemporaneous and circumstantial evidence despite dispute as to conversations between parties / finding of unsatisfactory conduct upheld / compensation referral under s93(1)(ha) improper as provision not in force at time of relevant conduct and could not be applied retrospectively / compensation referral dismissed

Appeal / purchaser of residential property later discovered third bedroom consented as sunroom and not third bedroom as advertised / misleading marketing / Committee found licensee ought to have been on notice upon viewing property that further enquiry required / Real Estate Agents 2008, s111 / Professional Conduct and Client Care Rules 2012, rr 5.1, 6.2, 6.4 / HELD / licensee still bound by misleading information even if they did not expressly repeat or pass it on / however, no red flag to prompt a reasonably competent licensee to question status of the third bedroom / first LIM unlike 2024 LIM obtained later did not have a plan showing two bedrooms and a sunroom / valuer had accepted third bedroom without question / enquiry into status of third room prompted not by later agent’s inspection but 2024 LIM / no unsatisfactory conduct / Committee’s decision reversed / appeal allowed.

Compensation referral / unsatisfactory conduct / licensees found liable for unsatisfactory conduct in failing to disclose risk of asbestos and the inability to use the driveway to access rear of property (without neighbours’ permission), misleading advertisement and failure to provide supervision / Real Estate Agents Act 2008, s50, s110/ Professional Rules 2012, r5, r6, r10 / Fair Trading Act 1986, s43 / HELD / principles developed for award of loss or damage under FTA relevant to discretion to award compensation / broad and pragmatic approach taken to determine causal connection between losses claimed and contravening conduct / purchase of caravan, and health, personal circumstances and loss of enjoyment of property not closely connected to licensees’ unsatisfactory conduct / no evidence as to loss of value of the property / price paid for driveway over which purchasers have no legal right unclear / claim for compensation dismissed

Appeal / appellant alleged licensee failed to disclose water ingress issues, that downstairs living room and bedroom consented for rumpus room only, and that marketing of property was misleading about number of bedrooms and lounges / Committee undertook own initiative inquiry into adequacy of supervision of junior licensees / Committee found licensees guilty of unsatisfactory conduct, though subsequently recalled decision due to factual misunderstanding / Committee determined to take no further action / Real Estate Agents 2008, s892c, s111 / Professional Conduct and Client Care Rules 2012, r5.1, r6, r10.7 / HELD / no “red flags” to put licensees on notice of water ingress, or actual knowledge / any evidence downstairs bedroom not habitable not apparent until after settlement, and no actual knowledge at time of property sale / agency’s policies and procedures relating to supervision of licensees adequate / Committee’s decision confirmed / appeal dismissed  

Application to review Registrar’s determination not to pursue complaint as it only disclosed inconsequential matters / Real Estate Agents Act 2008, s50, s51, s72, s73, s74, s112 / HELD / licensee’s property management was not real estate agency work and therefore could not be assessed as unsatisfactory conduct, only misconduct / misconduct requires conduct reasonably regarded by agents of good standing or reasonable members of the public as disgraceful / no credible evidence indicative of misconduct / licensee’s employment with the agency was separate from her property management work / no error of fact or law / application dismissed / Registrar’s decision confirmed

Application to accept late appeal / Real Estate Agents Act 2008, s111 / HELD / appeal filed 33 days late / long delay / delayed filing due to desire to progress proceedings in Disputes Tribunal / no exceptional circumstances prevented the appeal from being made in time / appeal not accepted

Application to review Registrar’s determination not to pursue complaint as it only disclosed inconsequential matters / Real Estate Agents Act 2008, s74, s112 / Kacem v Bashir [2010] NZSC 112 / HELD / licensee unaware of unconsented work / not liable for statement about property unless knowingly, recklessly or carelessly makes misstatement / not reckless or careless in advertising property as having rooms it physically had / no reason to question vendor’s representation there was no unconsented work / unconsented work not substandard and consistent with the era / no evidence of red flag or indicator alerting licensee of need for further enquiry / not required to inspect council records in these circumstances / no material error nor is Registrar’s decision plainly wrong / application dismissed / Registrar’s decision confirmed

Application for leave to adduce new evidence / Real Estate Agents Act 2008 s105, s111 / application opposed by agent / vendor sought to produce email and Sale and Purchase Agreement for more favourable offer / supports assertion agent’s error had material impact / HELD / evidence cogent and credible, but could have been provided to Committee with reasonable diligence / leeway afforded to elderly vendor, not legally represented / vendor raised other offer during complaint to Authority, who did not request evidence of offer / no express consideration of other offer by Committee / in interests of justice to admit evidence / application successful