BEFORE THE REAL ESTATE AGENTS DISCIPLINARY TRIBUNAL. GILLIES REALTY LIMITED Appellant. THE REAL ESTATE AGENTS AUTHORITY (CAC 410) First Respondent

Transcription

1 BEFORE THE REAL ESTATE AGENTS DISCIPLINARY TRIBUNAL [2018] NZREADT 4 READT 031/17 IN THE MATTER OF BETWEEN AND AND AND An appeal under section 111 of the Real Estate Agents Act 2008 GILLIES REALTY LIMITED Appellant THE REAL ESTATE AGENTS AUTHORITY (CAC 410) First Respondent STEVEN ANDREWS Second Respondent BRENDAN DE MARTIN Third Respondent Hearing: Tribunal: Appearances: 14 February 2018, at Wellington Hon P J Andrews, Chairperson Ms N Dangen, Member Ms C Sandelin, Member Mr M Anderson, on behalf of the Appellant Ms E FitzHerbert, on behalf of the First Respondent Mr S Andrews, Second Respondent No appearance by or on behalf of the Third Respondent Date of Decision: 16 March 2018 DECISION OF THE TRIBUNAL

2 Introduction [1] The appellant, Gillies Realty Ltd ( the Agency ) has appealed under s 111 of the Real Estate Agents Act 2008 ( the Act ) against the decision of Complaints Assessment Committee 410 ( the Committee ), dated 8 June 2017 in which the Committee made a finding of unsatisfactory conduct against the Agency, ( the substantive decision ). 1 The Agency has also appealed against the Committee s decision dated 21 August 2017, in which the Committee ordered it to pay a fine of $1,000 ( the penalty decision ). 2 [2] The Committee s decisions followed its investigation of a complaint made against the second respondent, Mr Andrews, by the third respondent, Mr de Martin, who was the purchaser of a property at Upper Hutt, Wellington ( the property ). Mr Andrews was the listing and selling agent for the property and was at the time engaged by the Agency. [3] In the course of its investigation of the complaint against Mr Andrews, the Committee decided, pursuant to s 78(b) of the Act, to inquire into allegations contained in the complaint about the Agency. [4] The Committee found that both Mr Andrews and the Agency had engaged in unsatisfactory conduct. The Committee ordered both Mr Andrews and the Agency to pay fines of $1,000. Background facts [5] The vendors listed the property with Mr Andrews on 31 May [6] Mr de Martin telephoned Mr Andrews after seeing the property advertised on TradeMe, and visited the property on 30 June Mr Andrews gave Mr de Martin a brochure for the property ( the brochure ), which stated the floor area of the house 1 Re Steven Andrews & Gillies Realty Ltd, Complaint No C16763, Decision finding of unsatisfactory conduct, 8 June Re Steven Andrews & Gillies Realty Ltd, Complaint No C16763, Decision on Orders, 21 August 2017.

3 to be 120 m 2. Mr Andrews orally confirmed this at the viewing. Mr Andrews also advised Mr de Martin that eight large trees were not on the property, but on a neighbouring property, and were the responsibility of the neighbour. [7] Mr de Martin made an unconditional offer for the property on 2 July This was accepted by the vendors. [8] The floor area of the house was in fact 115 m 2. The brochure was the only document that misstated the floor area. It appears to have been accepted that the error was a genuine mistake, which occurred when the brochure was being printed by an outside contractor. The correct area was stated on all other written material available to prospective purchasers, including the TradeMe advertisement and the Agency s own brochure. Mr de Martin contacted Mr Andrews, and Mr Andrews confirmed that the correct floor area was 115 m 2. [9] The trees were in fact within the boundary of the property, and were therefore Mr de Martin s responsibility. [10] Mr de Martin subsequently complained to the Authority that Mr Andrews had misled him as to the floor area of the house, and as to the location of the boundary. The Committee s substantive decision [11] The committee upheld Mr de Martin s complaint against Mr Andrews, concerning the misstatement of the floor area of the house in the brochure. It did not uphold his complaint concerning the location of the boundary. [12] Regarding the issue of the brochure, the Committee found that Mr Andrews had breached rr 5.1, 6.2, 6.3, 6.4, and 9.1 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 ( the Rules ). The Committee said: 3 The need for accurate information is fundamental to a sound real estate transaction. [Mr Andrews] provided inaccurate information about the dwelling [Mr de Martin] was looking to buy, in both a printed brochure and then verbally when asked about it. 3 Substantive decision, at paragraphs 3.1 and 3.2.

4 By publishing information that included the incorrect sizing of the dwelling, [Mr Andrews] had misled [Mr de Martin] and not acted with the required skill and care. The Committee accepts that all other written material available to prospective purchasers carried the correct information. The incorrect information was subsequently corrected by [Mr Andrews], although it is not clear when exactly this happened, but before that occurred [Mr Andrews] exacerbated the error in the brochure by verbally reaffirming its accuracy. The lack of attention to detail in failing to ensure that the printed brochure promoting the property for sale was accurate was unacceptable. [13] The Committee found that the Agency had breached rr 5.1 (which provides that a licensee must exercise skill, care, competence, and diligence at all times) and 6.4 (which provides (as relevant) that a licensee must not mislead a customer or client). The Committee said: 4 An agency has to ensure, through its policies and procedures, that all advertising and promotional material issued in its name is accurate. The Agency submitted that it was the responsibility of [Mr Andrews] to ensure the accuracy of the brochure. That may have been correct, but overriding and ultimate responsibility for the accuracy of the brochure rested with the Agency, given that it was its brochure, not [Mr Andrews ]. It was the Agency which was selling the property, [Mr Andrews] was working on its behalf. The fact the Agency tightened up its processes after it became aware of the inaccuracy of the brochure underscores its responsibility for the contents of the brochure. The Agency was critical of the performance of [Mr Andrews], who it subsequently dismissed, but even if those criticisms are justified the Agency s duty of care to the public to issue accurate marketing material is unaltered. The Committee s penalty decision [14] The Committee imposed fines of $1,000 on both Mr Andrews and the Agency. The Committee said: 5 Although there was a failure on the part of [Mr Andrews] and the Agency to provide correct information, the correct information was also supplied to [Mr de Martin] and the error rectified. The online information for the property was correct. There was no evidence that anyone other than [Mr de Martin] was misled in a similar way. The Committee agrees with the Agency that the primary responsibility for the incorrect information lay with [Mr Andrews] rather than it. The maximum fine that can be imposed on the Agency is $20,000, whereas the maximum fine that can be imposed on [Mr Andrews] is $10,000. Fines imposed should reflect the maximum possible. Therefore, by imposing the same level of fine on [Mr Andrews] and the Agency the Committee is taking account of the lesser culpability of the Agency. The level of fines also reflects the Committee s view 4 At paragraph Penalty decision, at paragraphs 3.1 and 3.2.

5 that the failings of [Mr Andrews] and the Agency in this case fall towards the lower end of the scale of seriousness. [15] The Committee noted that Mr Andrews had apologised to Mr de Martin in his submissions, so declined to order him to make a formal apology. Issues for determination [16] The Tribunal is required to determine whether: [a] the Committee had jurisdiction to consider and make findings about the Agency s conduct in relation to a property transaction; [b] the Committee was wrong to find on the facts that the Agency had responsibility for the incorrect brochure; and [c] the Committee was wrong to impose a fine of $1,000 on the Agency. Jurisdiction Submissions [17] Mr Anderson submitted for the Agency that the Committee exceeded its jurisdiction under s 78(b) of the Act by adding the Agency. He submitted, first, that the Agency was not the licensee in the context of the complaint, and secondly, that the Agency was not the subject of the complaint. [18] Mr Anderson submitted that Mr de Martin s complaint was that Mr Andrews misled him about the floor area of the house, and about the location of, and responsibility for, the trees, and was personal to Mr Andrews. He submitted that in order for the Committee to have jurisdiction to inquire into and investigate the Agency, there must first be an allegation in the complaint about the Agency. He submitted that there was no such allegation in Mr de Martin s complaint, other than a suggestion that the Agency may have arranged for boundary pegs on the property to be tampered with after his complaint. He submitted that as the Committee rejected that allegation, that should have been the end of the matter as far as the Agency is concerned.

6 [19] At the hearing, Mr Anderson submitted that the jurisdiction under s 78(b) does not allow the Committee to go on a fishing expedition. [20] Ms FitzHerbert submitted for the Authority that s 78(b) makes it clear that the Committee may inquire into and investigate allegations on its own initiative, and that the section confers a broad power to inquire and investigate without there being a formal complaint. She submitted that if the Agency s narrow reading of the power to investigate allegations about a licensee (that is (in this case), that the power is confined to a particular allegation against the Agency) were to be accepted, then there is little point in the power being given. [21] Ms FitzHerbert also submitted that the Agency s narrow reading of s 78(b) does not reflect the purposes and disciplinary procedure under the Act, in which the focus is on public confidence and maintaining standards in the real estate industry. She submitted that in this case, the Committee became aware of an issue and properly, on its own initiative, investigated it. She noted that the Committee sought information from the parties, including the Agency, and the Agency was given the opportunity to be heard both at the stage of the Committee s investigation, and as to penalty. Discussion [22] The Tribunal was advised that there is no Tribunal or other authority on this point. That may in itself be telling as to it having been accepted that the Committee s power to inquire and investigate on its own initiative has not been questioned. [23] We note, in passing, that in the section of the complaint form headed Details of the real estate agent(s) or agency you are complaining about, Mr de Martin named both Mr Andrews and the Agency. However, it is appropriate that we consider the submissions of the parties. [24] We reject the Agency s submission that the Committee did not have jurisdiction under s 78(b) to inquire into and investigate its conduct.

7 [25] First, we reject Mr Anderson s submission that the Agency was not the licensee in the context of the complaint. On any reading of s 78(b), that submission is plainly incorrect, as the jurisdiction is not confined to the licensee who is the subject of the complaint. The section gives the Committee jurisdiction: on its own initiative, to inquire into and investigate allegations about any licensee. (emphasis added) [26] Secondly, we accept the Authority s submission that the Committee s power under s 78(b) is not limited to where there is a specific allegation against a licensee. The interpretation put forward by the Agency is not consistent with s 3 of the Act, which provides: (1) The purpose of this Act is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work. (2) The Act achieves its purpose by (a) Regulating agents, branch managers, and salespersons: (b) Raising industry standards: (c) Providing accountability through a disciplinary process that is independent, transparent, and effective. [27] The word allegation is not defined in the Act. However, s 78 distinguishes between the Committee s function (in s 78(a)) to inquire into and investigate complaints made, and its power (in s 78(b)) to inquire into and investigate allegations about any licensee. This makes it clear that the s 78(b) power is not limited to there having been a specific complaint or allegation made against the licensee in respect of whom the Committee acts on its own initiative. [28] Further, if the Committee is to carry out its functions under the Act, and to further the purposes of the Act, it must have a broad power to inquire into and investigate matters which arise in the course of its inquiry and investigation of a complaint, and which are of concern to the Committee. In this case, s 78(b) gave the Committee the power to inquire into and investigate the Agency, in relation to the allegations made against Mr Andrews. [29] It is not correct to say that to interpret s 78(b) as giving the Committee a broad power to inquire and investigate is to give the Committee licence to inquire into and

8 investigate any matter at all, whether or not it arises in the course of the Committee s inquiry and investigation into a complaint (as it was put for the Agency, to have the power to go on a fishing expedition ). The Committee s jurisdiction only arises in the course of an inquiry and investigation that is already in the hands of the Committee. [30] We find that the Committee had jurisdiction to inquire into and investigate the Agency s conduct in respect of the allegations made against Mr Andrews. Was the Committee wrong to find that the Agency should bear responsibility for the error in the brochure, and that it was guilty of unsatisfactory conduct? Submissions [31] Mr Anderson first submitted that the Committee erred in finding that the Agency was guilty of unsatisfactory conduct. In particular, he submitted that the Committee had not commented on, and made no finding as to, the statements and submissions put forward by Mr Gillies in the Agency s response to the Committee. He referred to Mr Gillies statements that: [Mr Andrews]...prepared [the brochure] as part of his individual effort [The brochure] was not a document that was submitted to us, nor was it a part of our standard procedure It is unclear to [the Agency] why and how Mr Andrews entered 120 m 2 on his own promotional brochure [The Agency] had no reason to believe or suspect that [Mr Andrews] would alter the house area description from the area contained within our records when compiling his own brochure. [32] Mr Anderson also referred to an from Mr Andrews to Mr Gillies in which Mr Andrews said: It is my understanding that the information on any marketing material on the websites comes directly from Property Suite and is entered by the admin team. It clearly states on PS that the floor area is 115 m 2. This information cannot be incorrectly transferred to the websites The only place it was incorrect was on the brochures, and as stated this was discussed with [Mr de Martin] [33] Mr Anderson submitted that the combined effect of Mr Gillies statements and the from Mr Andrews is that the Agency s internal processes are such that their authorised advertising material correctly described the floor area, and the incorrect

9 statement in the brochure only arose when Mr Andrews prepared the brochure himself without submitting it to the Agency for checking and review. [34] He submitted that the Committee had not dealt with Mr Gillies statement that the brochure was not part of the Agency s standard procedures, and was wrong to find that the brochure (prepared without the Agency s knowledge or oversight, and without being submitted for checking) was the Agency s document, and that responsibility for it lay with the Agency rather than Mr Andrews. [35] Secondly, Mr Anderson submitted that the Committee was wrong in law to hold the Agency liable for Mr Andrews actions carried out without its knowledge. He referred to the judgment of his Honour Justice Tipping in Cashfield House Limited v Sinclair, 6 in which his Honour considered a principal s liability for actions of contractors. In reliance on that judgment, Mr Anderson submitted that the Agency cannot be placed in a position where it is required to review any material provided by any of its agents to any prospective purchaser. [36] Ms FitzHerbert referred to the Committee s findings that: 7 because the brochure was issued in the name of the Agency, the Agency had responsibility, albeit not sole responsibility, for its contents and that: 8 the overriding and ultimate responsibility for the accuracy of the brochure rested with the Agency, given that it was its brochure, not [Mr Andrews ]. It was the Agency which was selling the property, [Mr Andrews] was working on its behalf. the Agency s duty of care to the public to issue accurate marketing material is unaltered. [37] She submitted that while it did not expressly state whether it accepted or rejected the Agency s statements and submissions, it was clear that the Committee did not agree that the Agency had no responsibility for the contents of the brochure. 6 Cashfield House Ltd v Sinclair HC Christchurch CP 398/93, 13 December Substantive decision, at paragraph Substantive decision, at paragraph 3.3.

10 [38] Ms FitzHerbert further referred to the Agency s submission that its policies and procedures worked correctly, and submitted that this was at odds with the Agency s letter to Mr de Martin, in which it stated that the inaccuracy is unacceptable, and as a result we will be changing our internal policies around outside suppliers of products and standards of proofing. [39] With respect to the Agency s submission that the Committee s decision was wrong in law, Ms Fitzherbert submitted that there are difficulties in relying, in disciplinary matters, on assessments of vicarious liability as between principals and contractors in tort cases. She submitted that this is a disciplinary case, not a negligence case, and the policies and purposes of the disciplinary regime (focussing on maintaining standards and protecting public confidence in the industry) are quite different from those in negligence cases. [40] She also submitted that the Committee was clear in its reasons for finding that the Agency had a duty to ensure that correct material was provided to the public, and that its approach correctly reflected the purposes of the disciplinary regime. [41] Ms Fitzherbert further submitted that the Tribunal should reject the Agency s submission that it was placed in a position where it was held responsible for a document prepared without its knowledge, and that it had no involvement in or knowledge of it. She submitted that the Committee had before it information that the Agency was, at the very least, aware that a brochure was being printed, in that the printing of the brochure was ordered by the Agency s administrator. She referred to the changes the Agency was said to have made with respect to brochures as a result of this incident, in support of this submission. Discussion (a) Was the Committee wrong in law? [42] We address this issue first, as the Agency s submissions on it can be dealt with quite shortly. The judgment of his Honour Justice Tipping is not relevant to this case. It is in the civil jurisdiction of the High Court, on a case brought in tort, in which the

11 issues were as to negligence and vicarious liability. It bears no relationship to a matter which is within a professional disciplinary regime which, in the present case, is concerned with furthering the purposes set out in s 3 of the Act. Leaving aside for the moment the Agency s submission that the Committee made an error of fact, it was clearly open to the Committee to consider whether the Agency bore some responsibility for the brochure. (b) Did the Committee make an error of fact in finding that the Agency should bear some responsibility for the error in the brochure? [43] We are not persuaded that the Committee failed to take Mr Gillies statements and submissions in the Agency s response to the Committee into account. It set out a summary of the Agency s position, at paragraph 1.12 of the substantive decision. It was not suggested in the submissions for the Agency that this summary was inaccurate. [44] It is clear from its decision that the Committee was well aware of Mr Gillies statements and submissions on behalf of the Agency. It accepted (at paragraphs 3.1 and 3.2 of the decision) that Mr Andrews had supplied incorrect information in the brochure and orally to Mr de Martin, that all other written material available to Mr de Martin was correct as to the floor area of the house, and that Mr Andrews lack of attention to detail in failing to ensure that the printed brochure was correct was unacceptable. [45] However, it is also clear from paragraph 3.4 of the decision that the Committee rejected Mr Gillies statements and submissions as to why the Agency should not be held responsible for the incorrect information. In particular, the Committee found that notwithstanding that it was Mr Andrews responsibility to ensure the brochure s accuracy, overriding and ultimate responsibility lay with the Agency. [46] The Committee s reasons for making this finding were that it was the Agency s brochure, and that it was the Agency that was selling the house, in which process Mr Andrews was working on its behalf. The Committee s reasoning is supported by the fact that the Agency s name and logo were at the top of the brochure, the brochure was sent out for printing by the Agency s office administrator, and that the agreement for

12 sale and purchase recorded that the sale was by the Agency, and that the salesperson was Mr Andrews. [47] A further reason given by the Committee was that even if the Agency s criticisms of Mr Andrews (made clear in Mr Gillies statements) were justified, the Agency s duty of care to the public to issue accurate marketing material was unaltered. [48] There can be no doubt that in making its finding, the Committee rejected Mr Gillies statements and arguments that the Agency should not be held to have ultimate responsibility for the inaccurate brochure. [49] Mr Anderson referred at the hearing to the Tribunal s decision in Hutt City Ltd v Real Estate Agents Authority (CAC 20002), 9 and to the judgment of her Honour Justice Thomas in Barfoot & Thompson Ltd v Real Estate Agents Authority (CAC 20007). 10 [50] We do not find her Honour s judgment in Barfoot & Thompson to be of assistance in this case. The circumstances of that case are not analogous; it concerned a salesperson s failure to disclose (after discussion with a director of the agency concerned) that the vendor of a property had committed suicide at the property. The issue before her Honour was whether the agency had complied with s 50 of the Act, which required it to properly supervise and manage a salesperson. In allowing the agency s appeal against the Tribunal s decision, her Honour found that the company had in fact properly supervised and managed the salesperson. [51] The circumstances which were considered by the Tribunal in Hutt City more closely resemble the present case, but again are not directly analogous. That case, also, concerned an alleged breach by the Agency of its supervision obligations under s 50. The Tribunal observed that strict compliance with the requirements of s 50 is fundamental to the real estate industry functioning properly, but that it needs to be applied in terms of sensible business practice and common sense Hutt City Ltd v Real Estate Agents Authority [2013] NZREADT Barfoot & Thompson Ltd v Real Estate Agents Authority (CAC 20007) [2014] NZHC Hutt City, at [46].

13 [52] Hutt City was concerned with a salesperson who had handed over the keys to a property prematurely, without seeking advice from her manager (who was out of the office when the event occurred), and contrary to the agency s management processes. The Tribunal overturned a Complaints Assessment Committee s finding that the agency was guilty of unsatisfactory conduct. [53] The difference between Hutt City and the present case is that this is not a supervision case, it is a case concerning whether an agency bears ultimate responsibility for information provided in its name. The Committee was not considering whether the Agency properly supervised Mr Andrews, it was considering whether the Agency had overriding responsibility for a publication bearing its name and logo, which was ordered and sent out for printing, by the Agency s administrator. [54] The Committee had before it Mr Andrews acknowledgement that the brochure contained inaccurate information, and the brochure in the Agency s name, with the Agency s logo on it. The Committee had the Agency s statements and submissions that the brochure was not submitted to it for checking, or part of the Agency s standard procedures, but it also had evidence that the brochure was sent out for printing by the Agency s administrator. The material before the Committee also included a letter from the Agency to Mr de Martin (dated 7 September 2016) in response to his complaint, in which the Agency said that the inaccuracy [was] unacceptable, and as a result we will be changing our internal policies around outside suppliers of products and standards of proofing. [55] We are not persuaded that on the material before it the Committee was wrong to find that the Agency bore overriding and ultimate responsibility for the accuracy of the brochure. Nor are we persuaded that the Committee was wrong to comment that the fact that the Agency had tightened up its processes after it became aware of the inaccuracy of the brochure underscored its responsibility for the contents of the brochure.

14 (c) The Agency s Policy [56] At the hearing, Mr Anderson referred the Tribunal to the Agency s Company Policy Gillies and Mark Realty Ltd ( the Agency s Policy ). A copy of a document signed by Mr Andrews that he had read and familiarised himself with the Company Policy was included in the bundle of the material before the Tribunal, but any significance of that document was not explained. [57] The Agency s Policy was not referred to (either in general terms, or to specific provisions of it) in the Agency s statements or submissions to the Committee, nor provided to the Committee. There was also no reference to the Agency s Policy in its submissions on penalty, and the submissions note that the wisdom of hindsight may have caused it to require all agents to submit [marketing] material to it beforehand. [58] While no application was made for the Agency s Policy to be admitted as fresh evidence, the Tribunal directed that a copy be provided to the Tribunal and Ms FitzHerbert. The Tribunal received further submissions from Ms FitzHerbert, and (in reply) from Mr Anderson. [59] The Agency s Policy provides, at paragraphs 9.1 and 9.2 (as relevant): 9.1 Marketing material to be approved All marketing material must be signed off in writing and a copy kept by the Marketing Manager. All marketing, branding and advertising material must prominently display the name and details of the Company. The responsibility to have the material proofed for grammar and spelling is that of the Salesperson, prior to submitting it to the Marketing Manager. Proofing services such as Proof Red are available for this purpose at the Salespersons cost. 9.2 Advertising It is the responsibility of the Salesperson to check their advertising proofs prior to the deadlines

15 [60] Ms FitzHerbert submitted that while alleging that Mr Andrews did not comply with the Agency s Policy, the Agency had not offered any evidence or detail about the non-compliance. She submitted that it was not clear whether it is the Marketing Manager or some other person who signs off marketing material, and no evidence had been offered as to whether the brochure was signed off by whomever was required to do so, or held by the Marketing Manager. [61] Ms FitzHerbert also submitted that whether or not there was compliance with the Agency s Policy, the existence of the Policy does not absolve the Agency of any responsibility for the brochure. She submitted that it is clear that the brochure was ordered through the Agency, and that it had the Agency s logo and details on it. [62] She further submitted that whether or not the Agency s Policy required Mr Andrews to proofread marketing material, submit it, and for it to be signed off, that does not on any plain reading or critical analysis suggest that the Agency is not responsible for it. She submitted that the Agency s Policy, by expressing a requirement for Agency sign-off or oversight of marketing material, imposes a mutual responsibility, and that the Agency itself did not comply with its own policy. [63] Mr Anderson challenged Ms Fitzherbert s submission that the Agency had not offered evidence as to whether marketing material had been signed off, or held by the Marketing Manager. He submitted that the Agency had provided significant evidence. He then set out the Agency s case that the brochure prepared by Mr Andrews was not submitted to the Marketing Manager, and that had it been submitted in accordance with the policy, the Agency says the error in the brochure would have been corrected. [64] Mr Andrews also submitted that the consequence of Mr Andrews noncompliance was that without submitting the brochure to the Agency for its review in accordance with the policy, the Agency was not aware of it and could not correct it. He submitted that this is why the Agency maintains that the brochure was prepared by Mr Andrews on his own initiative without running it through the Agency s review procedures to ensure accuracy.

16 [65] Mr Anderson further submitted that while the brochure had the Agency s branding, that is not enough to make it automatically the responsibility of the Agency. He submitted that the Agency can only control what it knows about and can only correct advertising material submitted through its channels in accordance with its policy. He also submitted that Mr Andrews had never supplied evidence that he did submit the brochure for review by the marketing manager, or otherwise complied with the policy. Accordingly he submitted, the error is his and not the liability of the Agency. [66] Mr Anderson s submissions are in essence a restatement of his earlier submissions. They do not address the particular issue of the Agency s Policy, or the absence of any reference to the Agency s Policy, or to particular provisions of it, in the material provided to the Committee. Further, the submissions do not advance the Agency s argument that the Agency should be absolved of any responsibility for the brochure. [67] We accept Ms FitzHerbert s submission that whether or not there was compliance with the Agency s Policy, the existence of the Policy does not absolve the Agency of any responsibility for the brochure. This is particularly so where the brochure was ordered through the Agency, and included the Agency s logo and details. [68] We also note that while Mr Andrews acknowledged receipt of the Policy, and that he had read and familiarised himself with it, on 20 June 2016, it was stated both in Mr Andrews acknowledgement and the Policy itself, to be effective from 1 July The brochure was sent out for printing on 21 June, and the agreement for sale and purchase of the property was signed on 2 July The relevant events therefore occurred before the Policy came into effect. [69] We have concluded that the Agency s Policy does not alter our finding that it was open to the Committee to find that the Agency bore overriding and ultimate responsibility for the brochure, and that a finding of unsatisfactory conduct should be made.

17 Did the Committee err in ordering the Agency to pay a fine of $1,000? [70] In reaching the conclusion that a fine of $1,000 should be imposed, the Committee recorded at paragraphs 3.1 and 3.2 of the penalty decision that it agreed with the Agency s submission that the primary responsibility for the incorrect brochure lay with Mr Andrews rather than the Agency. Having referred to the maximum fine that could be ordered against the Agency ($20,000) and Mr Andrews ($10,000), the Committee stated that by imposing a fine of $1,000 against the Agency, it took account of the Agency s lesser culpability. The Committee also stated that the level of fines imposed reflected its views that the failings of Mr Andrews and the Agency fell towards the lower end of the scale of seriousness. Submissions [71] Mr Anderson submitted that the fine imposed on the Agency could not be correct, given its finding that the primary responsibility lay with Mr Andrews. He also submitted that the Committee s reasoning for imposing the same level of fine on both Mr Andrews and the Agency was flawed. He submitted that its finding that the Agency was less culpable should be reflected in a lesser fine. [72] Mr Anderson also submitted that the Committee was wrong to assess the level of fine by reference to the maximum available fine. He submitted that the higher level of fine recognises the fact that an agency is a body corporate whereas a salesperson is an individual. He submitted that it does not follow that where the culpability of an agency is less than that of a salesperson, their fine should be of the same amount. [73] Mr Anderson further submitted that consideration should have been given to the Agency s co-operation with the investigation, and the complainant s view that the Agency should not be held directly liable. [74] Ms FitzHerbert submitted that an appeal against penalty is an appeal against an exercise of discretion. She referred to the judgment of his Honour Justice Woodhouse in Morton-Jones v Real Estate Agents Authority 12 in which he confirmed that the 12 Morton-Jones v Real Estate Agents Authority [2016] NZHC 1804.

18 approach set out by the Court of Appeal in May v May 13 applies to penalty decisions under the Act. An appellant must establish that the Committee made an error of principle, considered irrelevant matters, failed to consider relevant matters, or was plainly wrong. 14 She submitted that the Committee made no such error in this case. [75] She submitted that the Committee properly assessed penalty with reference to the available maximum penalty and expressly placed the Agency s conduct at the lower end of the scale of culpability, and that the fine of $1,000 appropriately reflected its view of the Agency s culpability. She submitted that the Committee took a principled approach to penalty, measuring culpability against the maximum fine available, and the requisite elements of penalty. Discussion [76] We accept Ms FitzHerbert s submission that an appeal against Complaints Assessment Committee s penalty decision is an appeal against the exercise of a discretion. That follows from s 89(1) of the Act under which a Committee may make 1 or more of the determinations described in subsection 92. [77] Penalty decisions under the disciplinary provisions of the Act must reflect the principal purpose of the Act, which is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work. 15 Penalties for misconduct and unsatisfactory conduct are determined bearing in mind the need to maintain a high standard of conduct in the industry, the need for consumer protection, the maintenance of confidence in the industry, and the need for deterrence. [78] It is well recognised that a penalty should be appropriate for the particular nature of the misbehaviour, and a Complaints Assessment Committee or the Tribunal should endeavour to maintain consistency in penalties imposed for similar conduct, in similar 13 May v May [1982] 21 NZFLR Morton-Jones, at [86]. 15 Section 3(1) of the Act.

19 circumstances. The penalty imposed should be the least punitive penalty that is appropriate in the circumstances. 16 [79] It is entirely consistent with standard principles of sentencing to take the maximum available penalty into account. 17 The Committee did not err in referring to the maximum fine available against the Agency. [80] Further, we are not persuaded that the Committee made any error of principle, took irrelevant factors into account, failed to take relevant factors into account, or was plainly wrong in ordering the Agency to pay a fine of $1,000. The Committee s decision is consistent with its finding that the Agency bore an overriding and ultimate responsibility for the brochure, and its finding that primary responsibility for the brochure lay with Mr Andrews. The quantum of the fine is also consistent with its assessment that the Agency s conduct was at the lower level of seriousness. [81] With regard to Mr Anderson s submission that the Committee failed to take the Agency s co-operation with the investigation into account, a licensee is obliged by s 86(1) of the Act to co-operate with an investigation, by complying with a notice given under s 85. In the circumstances, a licensee s co-operation is likely to be regarded as the absence of an aggravating factor when assessing penalty. In any event, we are not persuaded that the fine imposed on the Agency should be reduced on account of the Agency s co-operation with the investigation. [82] We note, also that the Agency s submissions on penalty to the Committee did not refer to the Agency s co-operation with the investigation; rather, the Agency submitted that the Agency had acted responsibly in every way. It gave correct advice as to process to [Mr de Martin], and fulfilled any possible obligation it had to [Mr de Martin]. This essence of this submission was recorded by the Committee in its penalty decision See Complaints Assessment Committee v Ferguson [2013] NZREADT 30, Morton-Jones v The Real Estate Agents Authority [2016] NZHC 1804, at [128] and Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1, at [97]. 17 See ss 7 and 8 of the Sentencing Act Penalty decision, at paragraph 1.8.

20 [83] The Committee also recorded Mr de Martin s view that the Agency should not be held directly liable, and it also recorded his submission that possibly the Agency could look at better management and in particular staff double-checking information used to promote property sales. 19 We are not persuaded that Mr de Martin s views were not adequately reflected in the quantum of the fine. [84] We have concluded that the fine imposed on the Agency is consistent with the principles and purposes of sentencing in the context of disciplinary proceedings, and should not be altered. Outcome [85] The Agency s appeals against the substantive decision and the penalty decision are dismissed. In the event that the fine imposed on the Agency has not been paid, it must be paid within 20 working days of the date of this decision. [86] Pursuant to s 113 of the Act, the Tribunal draws the parties attention to s 116 of the Act, which sets out appeal rights. Any appeal must be filed in the High Court within 20 working days of the date on which the Tribunal s decision is served. The procedure to be followed is set out in part 20 of the High Court Rules. Hon P J Andrews Chairperson Ms N Dangen Member Ms C Sandelin Member 19 Penalty decision, at paragraph 1.6.