BEFORE THE REAL ESTATE AGENTS DISCIPLINARY TRIBUNAL. A charge laid under s 91 of the Real Estate Agents Act Defendant

Transcription

1 BEFORE THE REAL ESTATE AGENTS DISCIPLINARY TRIBUNAL [2018] NZREADT 8 READT 032/17 IN THE MATTER OF A charge laid under s 91 of the Real Estate Agents Act 2008 BROUGHT BY COMPLAINTS ASSESSMENT COMMITTEE 409 AGAINST ROBERT WONG Defendant Hearing: Tribunal: Appearances: 12 March 2018, at Auckland Hon P J Andrews, Chairperson Ms C Sandelin, Member Mr N O Connor, Member Mr Mortimer, on behalf of the Committee Mr Wong, defendant Date of Decision: 3 April 2018 DECISION OF THE TRIBUNAL

2 Introduction [1] Complaints Assessment Committee 409 ( the Committee ) has charged Mr Wong with misconduct, under s 73(b) of the Real Estate Agents Act 2008 ( the Act ). The Committee alleges that Mr Wong has engaged in seriously incompetent or seriously negligent real estate agency work. In the alternative, the Committee submits that it is open to the Tribunal to find Mr Wong guilty of unsatisfactory conduct, under s 72(c) (incompetent or negligent real estate agency work) or (d) (real estate agency work that would reasonably be regarded by agents of good standing as unacceptable). Factual background [2] There was no significant dispute as to the narration that follows. [3] Although he has now surrendered it, Mr Wong held an agent s licence at the time of the events that are relevant to this charge. As from July 1993 he traded as Able Realty, or Able Realty One ( the Agency ). Mr Wong closed the Agency s office premises in Papatoetoe in 2013, but maintained his licence, giving his home address as the Agency s office address. He continued to operate the Agency s trust account ( the trust account ). [4] Mr Suresh Ganesh has held a licence since November 2009 and at the relevant time held an agent s licence. The Real Estate Agents Authority ( the Authority ) records show that from May 2000 to July 2003, and again in 2004, he was employed by Robert Wong t/a Able Realty. He operated his own agency from [5] Mr Ganesh voluntarily suspended his licence between June 2013 and June It was common ground that the suspension occurred when Mr Ganesh was facing charges brought by the Inland Revenue Department. Mr Ganesh was found guilty on 31 January 2013 on three counts of tax evasion relating to property transactions. [6] In an application to revive his licence, dated 11 November 2014, Mr Ganesh stated that he expected to be working for Robert Wong of Able Realty One. He gave Mr Wong s home address as the office address for Able Realty.

3 [7] Mr Ganesh s daughter, Deepashna Prasad-Ganesh, was a licensed salesperson, and worked under the supervision of Mr Ganesh. [8] When he closed the Agency s Papatoetoe premises in 2013, Mr Wong allowed staff to take any furniture, office equipment, or forms that they wanted. Mr Wong stated in a response to questions from an Authority investigator that when he closed the Papatoetoe premises he had given my listing and other forms to [Mr Ganesh] to utilise. The Agency listing agreement forms carried the Able Realty branding, a numeral 1 inside a red circle, and the words ABLE REALTY PAPATOETOE in a rectangular box alongside. We note that at the hearing, Mr Wong said he may have offered the forms to Mr Ganesh, adding that they were expired forms. [9] Around the time that Mr Wong closed the Agency s Papatoetoe premises Mr Ganesh asked him if he could use the trust account for real estate transactions. Mr Wong said that Mr Ganesh said he wanted to save the cost of maintaining a trust account. Mr Wong agreed to the use of the trust account on the basis that he would charge Mr Ganesh a fee of six percent of the commission Mr Ganesh received on each transaction. [10] On 16 March 2015 Mr Wong provided the names of four people associated with Able Realty (himself, Mr Ganesh, Ms Prasad-Ganesh and one other) for loading onto the realestate.co.nz website, and commented that We don t have a Logo created as yet but it would be a solid ring with the numerical 1 in the centre. On 23 March 2015 Mr Wong sent Mr Ganesh an We are on. Mr Wong set out the website name, and his password, and commented they can add as we want by advising them. [11] On or about 31 July 2015 the Authority received a complaint made by Mr Newal Singh against Mr Ganesh and Ms Prasad-Ganesh. The complaint concerned Mr Singh s purchase of a property in Manurewa in which Mr Ganesh and Ms Prasad- Ganesh had acted for the vendor. 1 In the course of its investigation into Mr Singh s 1 The Committee has laid a disciplinary charge against Mr Ganesh in respect of this transaction. However, that charge is not relevant to the charge against Mr Wong.

4 complaint the Committee commenced an own motion inquiry into the conduct of Mr Wong. 2 [12] The inquiry disclosed that: [a] The listing agreement used by Mr Ganesh, dated 8 April 2015, carried the Able Realty Papatoetoe branding and was headed Robert Wong trading as Able Realty. The agreement was stated as being between Able Realty Licensed REAA 2008 ( the Agent ) and the vendor of the property. The address for Able Realty was recorded as ablerealtyone@gmail.co.nz. [b] An appraisal of the property, also dated 8 April 2015, was stated to have been prepared by Suresh Ganesh, Marketing Consultant, (Able Realty licensed under REAA 2008), with Mr Wong s home address given as the address for Able Realty. [c] The Agreement for Sale and Purchase, dated 18 June 2015, recorded on its front page that the deposit was payable to Able Realty Trust Account. The SALE BY box was completed as Able Realty Licenced under REAA". On the final page, the box headed Licensed Real Estate Agent recorded the agent s name as Able Realty, the Manager as Robert Wong, and the Salesperson as Deepashna Ganesh. [d] The deposit was paid into the trust account and Mr Wong received six percent of the commission when it was disbursed. Summary of the charge against Mr Wong [13] The allegations against Mr Wong may be summarised as follows: 2 Section 78(b) of the Act provides that one of the functions of a Complaints Assessment Committee is on its own initiative, to inquire into and investigate allegations about any licensee.

5 [a] Mr Wong provided Mr Ganesh and Ms Prasad-Ganesh with Able Realty documentation; [b] Mr Wong knew that they would use the documents, and take other steps, to present themselves as working for Mr Wong and Able Realty; [c] Mr Ganesh and Ms Prasad-Ganesh acted on the sale of the property and presented themselves during the listing, marketing, and sale of the property as working for Mr Wong and Able Realty; and [d] Mr Wong allowed Mr Ganesh and Ms Prasad-Ganesh to use the trust account to receive the deposit on the sale of the property and paid out the deposit at the direction of Mr Ganesh and Ms Prasad-Ganesh, deducting six percent from the commission on the sale. [14] The Committee further alleged that in the circumstances set out above, Mr Wong had an obligation to exercise adequate management responsibility over Mr Ganesh and Ms Prasad-Ganesh and the real estate agency work they were undertaking, and failed to do so. Did Mr Wong provide Mr Ganesh with real estate documents with Able Realty branding on them? [15] We are satisfied by Mr Wong s statement to the Authority, set out at paragraph [8], above, that Mr Wong provided Mr Ganesh with real estate documents (in particular listing agreements, with Able Realty branding on them). We are also satisfied that Mr Wong knew that Mr Ganesh would use those documents for real estate agency work. Were Mr Ganesh and Ms Prasad-Ganesh employed by Mr Wong and/or the Agency? [16] Mr Wong strongly asserted that, in contrast to a part-time salesperson he employs, he did not employ Mr Ganesh or Ms Prasad-Ganesh.

6 [17] The Committee accepted that there was no formal employment relationship between Mr Wong and/or the Agency, and Mr Ganesh and Ms Prasad-Ganesh. The Tribunal is not required to give this issue further consideration. Did Mr Wong know that Mr Ganesh and Ms Prasad-Ganesh were registered by the Authority as being employed by Robert Wong t/a Able Realty One? [18] Mr Wong asserted that he was never informed that Mr Ganesh and Ms Prasad- Ganesh were registered as working for him and/or the Agency. He contended that the Authority should not register an applicant for a licence without asking, informing, advising, or notifying the agency with which the applicant claimed to be working. He submitted that the Authority should have told him that Mr Ganesh and Ms Prasad- Ganesh had said they worked for him, but it did not. [19] The Authority s records show that contrary to his assertion, Mr Wong was informed that Mr Ganesh and Ms Prasad-Ganesh were registered as working for Robert Wong t/a Able Realty One. [20] In an to Mr Wong dated 16 February 2015, the Authority provided Mr Wong with a list of licensees who, according to the Authority s records, were currently working for his agency. The list included the names of Mr Ganesh and Ms Prasad- Ganesh. Mr Wong was asked to check the list and advise the Authority of any additions or deletions required. In particular, he was asked to advise if any of the listed persons had left his agency. Mr Wong did not respond to that . [21] Mr Wong variously told the Tribunal that he did not look at the , because it was from a private name, anonymous, and not under the auspices of the Authority, and that since he closed the Agency s office premises, he was not looking at any s. [22] We do not accept Mr Wong s assertion that he was not advised that Mr Ganesh and Ms Prasad-Ganesh were registered as working for his agency. It is clear from the footer of the that, although sent to him by an employee of the Authority, it was sent under the auspices of the Authority. At the time the was sent to Mr Wong, he was a licensed agent under the Real Estate Agents Act 2008, notwithstanding that

7 he had closed the Agency s Papatoetoe premises. He cannot claim that he did not receive the Authority s advice when he chose not to open the Authority s communication. Was the Authority obliged to advise Mr Wong of the Inland Revenue Department charges against Mr Ganesh? [23] Mr Wong submitted that the Authority should have advised him of Mr Ganesh s issues, which would have led to Mr Ganesh not being able to operate as a full agency. He submitted that if the Authority had told him of those issues he would never have permitted Mr Ganesh to be associated with the Agency. It was apparent that the issues Mr Wong referred to were the charges brought against Mr Ganesh by the Inland Revenue Department. [24] Notwithstanding that submission, Mr Wong accepted at the hearing that he was aware of the charges. In answer to a question in cross examination, Mr Wong said that he had been a witness for the prosecution. Further, the Tribunal was provided with a copy of the sentencing notes of Judge Swaran Singh, in the District Court at Auckland, dated 12 March The Judge referred, when setting out references provided in support of Mr Ganesh, to a letter from Mr Wong, who was Mr Ganesh s previous employer. [25] Mr Wong accepted that he did not ask Mr Ganesh about the charges when he asked to use the trust account, and did not check on Mr Ganesh s licence status. He said this was because he had known Mr Ganesh before. Finally, Mr Wong acknowledged to the Tribunal that he could not criticise the Authority for not advising of a matter if which he was well aware, and as to which he made no inquiry. [26] The Tribunal is not required to give this issue further consideration.

8 Was there an association between Mr Wong and Able Realty, and Mr Ganesh and Ms Prasad-Ganesh? Submissions (a) The Committee [27] As noted earlier, the Committee accepted that Mr Wong and/or the Agency did not employ Mr Ganesh or Ms Prasad-Ganesh. Mr Mortimer submitted for the Committee that the evidence established that there was a close association between them. He referred to Mr Wong s having given Mr Ganesh the Agency s branded real estate forms to be used in real estate agency work with clients and customers, his facilitating payments of deposits through the trust account, and receiving a financial benefit from doing so. [28] He submitted that Mr Wong knew that Mr Ganesh and Ms Prasad-Ganesh had claimed to the Authority to be working for him, trading as Able Realty, and knew that they would hold themselves out as working with the Agency. He also referred to Mr Wong s statements during the investigation and to the Tribunal that he was happy for anyone to use the Able Realty name. He also referred to Mr Wong s statement to the Tribunal that he wasn t too surprised to see himself referred to as Manager of Able Realty in the agreement for sale and purchase entered into by Mr Singh. [29] Finally, Mr Mortimer referred to the communications between Mr Wong and Mr Ganesh concerning the entry on the realestate.co.nz website. [30] Mr Mortimer submitted that the close association between Mr Ganesh and Ms Prasad-Ganesh was supported by the evidence. He further submitted that that association allowed Mr Ganesh and Ms Prasad-Ganesh to present themselves as being associated with Mr Wong and Able Realty, and obliged Mr Wong to exercise management responsibility over them.

9 (b) Mr Wong [31] Mr Wong submitted that he did not own the name or branding of Able Realty, or Able Realty One, and use of the name was not legally protected. He submitted that anyone could use the name, and that Mr Ganesh would have been entitled to take over the Able Realty name and branding. [32] Mr Wong also submitted that it was obvious to anyone in Papatoetoe that the Agency no longer existed, and that there was no association between himself and the Agency. He submitted that the Agency, and its office premises, were very well known in the Papatoetoe commercial area, and the Agency s signs had been taken down, the premises were occupied by another business, and the Agency s telephone number no longer existed. [33] He acknowledged, however, that it would not have been obvious to a person unfamiliar with the Papatoetoe commercial area that the Agency had had premises in the area, which had closed, and that such a person would associate his name with Able Realty and Able Realty One. He also accepted that the documents given to, and used by, Mr Ganesh and Ms Prasad-Ganesh were not, on their face, expired. [34] Mr Wong also accepted that his own application to renew his agent s licence, dated 10 March 2015, recorded his workplace as Robert Wong t/a Able Realty One. He further accepted that he had provided his own name, and those of Mr Ganesh and Ms Prasad-Ganesh, to realestate.co.nz, and that the references to those names on the Agency s presence on the website would lead people to believe that each of them was associated with the Agency. He also accepted that the only people he knew of who were using the Able Realty or Able Realty One name and branding were Mr Ganesh and Ms Prasad-Ganesh. Discussion [35] We are satisfied that the evidence before us establishes a close association between Mr Wong, Able Realty and Able Realty One, and Mr Ganesh and Ms Prasad- Ganesh.

10 [36] Given that finding, and our earlier finding that Mr Wong provided Mr Ganesh with the Agency s branded real estate documents, we are satisfied that Mr Wong knew that Mr Ganesh and Ms Prasad-Ganesh could use those documents, and take other steps, to present themselves as working for Mr Wong and/or the Agency. Did Mr Wong have an obligation to exercise management responsibility over Mr Ganesh and Ms Prasad-Ganesh? Submissions (a) The Committee [37] As recorded earlier, the Committee accepted that Mr Ganesh and Ms Prasad- Ganesh were not employed by Mr Wong and/or the Agency. Mr Mortimer submitted that this is not, therefore, a case involving the statutory requirements as to supervision in s 50 of the Act. He submitted that the issue here is whether Mr Wong met a more general obligation of an agent in a position of responsibility to oversee and manage licensees and their work. He described this as a management responsibility. [38] Mr Mortimer referred, by way of example, to a situation where there is a disciplinary finding against a licensed agent who is employed by an agency. He submitted that the agent s wrongdoing cannot be divorced from the agency, simply because there was no duty of supervision (under s 50 of the Act) over the agent. He submitted that an agency cannot disclaim any responsibility simply by saying that the wrongdoer held an agent s licence. While the agency may not be in breach of s 50, a failure to put in place systems to prevent, by way of example, defalcation of client s money would be a failure to exercise management responsibility over the agent. [39] Mr Mortimer submitted that the principle of management responsibility is supported by the judgment of the Court of Appeal in Barfoot & Thompson v Real Estate Agents Authority 3 (concerning an agency s policy as to managing agents and salespersons conflicts of interest). He also referred to the decision of the Tribunal in 3 Barfoot & Thompson v Real Estate Agents Authority [2016] NZAR 648.

11 Maserow v Real Estate Agents Authority (CAC 404) 4 (which concerned agencies responsibilities over individual agents drafting of agreements for sale and purchase). [40] He submitted that management responsibility involves: [a] overseeing and ensuring compliance with continuing professional development; [b] satisfying oneself that licensees in fact hold current licences; [c] ensuring arrangements exist for employed agents to supervise salespersons and monitoring to check this in fact takes place; [d] setting up policies and systems that other agents and salespersons are to follow; and [e] training employed agents on these policies and practice issues. [41] Mr Mortimer submitted that the principle of management responsibility is tied directly to the consumer protection goals of the Act, and ensures that licensees working in agencies operate within an environment of high level oversight, to foster broader compliance with the regulatory requirements of the Act. (b) Mr Wong [42] Mr Wong submitted that management responsibility is not the issue in this case. He submitted that this an employment case, and as he did not employ Mr Ganesh and Ms Prasad-Ganesh, he is not in breach of any duty regarding them. He submitted that Mr Ganesh employed Ms Prasad-Ganesh, and was required to supervise her pursuant to s 50 of the Act. 4 Maserow v Real Estate Agents Authority (CAC 404) [2016] NZREADT 19.

12 [43] Mr Wong accepted that Mr Ganesh was a friend, who lived nearby, and that they met from time to time. However, he submitted that as Mr Ganesh held an agent s licence, and as such did not need to be supervised by himself as another (equal) agent. He submitted that it was for Mr Ganesh to run his agency as he saw fit, and it was Mr Ganesh s own decision to use the Agency s old listing agreements. [44] Mr Wong further submitted that Mr Ganesh s use of the trust account was no different from using the REINZ trust account to hold deposits. All he had to do was to ensure that money held in the account was paid, as he was directed, to the persons entitled to receive it. He submitted that he did not have, and was not required to have, any other involvement in a real estate transaction Discussion [45] Mr Mortimer did not refer us to any authority directly on the point of a management responsibility, over and above, or outside of, the supervision requirement under s 50 of the Act. However, the authorities he referred to provide some support for the general principle of an agency exercising overall responsibility for the actions of its agents. [46] The starting point for considering management responsibility must be the purposes of the Act, stated in s 3 of the Act: 3 Purpose of Act (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 purposes by (a) (b) (c) regulating agents, branch managers, and salespersons; raising industry standards; providing accountability through a disciplinary process that is independent, transparent, and effective. [47] We accept that in order to further those purposes, agencies and agents have responsibility for general oversight of real estate agency work done in their name. We expressed this in our recent decision in Gillies v The Real Estate Agents Authority

13 (CAC 410) (in relation to an inaccurate marketing brochure prepared by an agent) as follows: 5 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. 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. [48] We reject Mr Wong s submission that the fact that Mr Ganesh held an agent s licence absolved him from exercising any management responsibility over real estate agency work done by Mr Ganesh in his and the Agency s name. We also reject his submission that he was not required to exercise any management responsibility over Mr Ganesh s use of the trust account. We find that Mr Wong had an overriding (or management) responsibility over Mr Ganesh s real estate agency work. Did Mr Wong fail to exercise management responsibility? Submissions (a) The Committee [49] Mr Mortimer submitted that Mr Ganesh failed to exercise management responsibility in that he: [a] did not check if Mr Ganesh and Ms Prasad-Ganesh held current licences; [b] was aware of possible issues as to Mr Ganesh, and the suspension of his licences, but did not raise these with Mr Ganesh, or otherwise investigate them; 5 Gillies v The Real Estate Agents Authority (CAC 410) [2018] NZREADT 4, at paragraphs [53] and [55].

14 [c] was told by the Authority that Mr Ganesh and Ms Prasad-Ganesh said they worked for him but did not tell the Authority that that was incorrect; [d] made payments from the trust account based only on directions by Mr Ganesh and Ms Prasad-Ganesh, without checking whether it was appropriate to make those payments; [e] decided that Mr Ganesh, as an agent, could set up his own policies and practices, so did not institute policies or practices, or institute training for Mr Ganesh and Ms Prasad-Ganesh; and [f] assumed that Mr Ganesh was supervising Ms Prasad-Ganesh but did not check whether his assumption was correct. (b) Mr Wong [50] Mr Wong did not make submissions on this issue, beyond submitting that as Mr Ganesh was a fellow agent, he was not required to exercise management responsibility over his real estate agency work, and that Ms Prasad-Ganesh was under the supervision of Mr Ganesh. Discussion [51] We accept Mr Mortimer s submission that Mr Wong failed to exercise adequate management responsibility. The evidence before us demonstrates that Mr Wong had a hands-off approach to the relationship between himself, the Agency, and Mr Ganesh and Ms Prasad-Ganesh. His approach was, as Mr Mortimer submitted, a near total abdication from any oversight or interest in the real estate agency work being undertaken by Mr Ganesh and Ms Prasad-Ganesh. [52] Mr Wong allowed Mr Ganesh and Ms Prasad-Ganesh to be closely associated with his business, but he did not put any policies and practices in place so as to meet the purposes of the Act.

15 [53] We therefore find that Mr Wong failed to exercise adequate management responsibility over Mr Ganesh and Ms Prasad-Ganesh and the real estate agency work they were undertaking. The alternative charges [54] Mr Wong was charged with misconduct under s 73(b) of the Act, that is, that his conduct constituted seriously incompetent or seriously negligent real estate agency work. The Committee submitted that if the Tribunal does not accept that Mr Wong s conduct met the threshold for misconduct, it is open to it to find Mr Wong guilty of unsatisfactory conduct, on the basis of his failure to comply with his obligation to exercise management responsibility. [55] In her judgment in Complaints Assessment Committee v Jhagroo, her Honour Justice Thomas said in relation to charges under s 73(b): 6 The words of s 73(b) must be given their plain meaning. Whether serious negligence or serious incompetence has occurred is a question to be assessed in the circumstances of each case. the Tribunal is well placed to draw a line between what constitutes serious negligence or incompetence, or mere negligence or incompetence, the Tribunal having considerable expertise and being able to draw on significant experience in dealing with complaints under the Act. [56] In Gillies (referred to in paragraph [47], above), the Tribunal did not disturb the decision of a Complaints Assessment Committee finding an agency guilty of unsatisfactory conduct in respect of the agency s breach of its ultimate and overriding responsibility for a brochure bearing its name and branding. [57] We also refer to the Tribunal s consideration of a charge of misconduct under s 73(c)(i) and (ii) of the Act (wilful or reckless contravention of the Act or Rules) (with an alternative charge of misconduct under s 73(b)) in Complaints Assessment Committee 403 v Goundar). 7 6 Complaints Assessment Committee v Jhagroo [2014] NZHC 2077, at [49]. 7 Complaints Assessment Committee 403 v Goundar [2017] NZREADT 52.

16 [58] Mr Goundar, a licensed agent, allowed his sister and another relative (neither of whom were licensed under the Act) to market and sell two properties. He had no involvement in their activities, other than to provide listing agreements in the name of his agency, and to prepare agreements for sale and purchase. He was charged with multiple breaches of the Act and Rules. The Tribunal found that his conduct constituted seriously incompetent and seriously negligent real estate agency work, under s 73(b). [59] In the present case, we have found that Mr Wong failed to exercise an agent s overriding responsibility (or management responsibility) in respect of real estate agency work undertaken by Mr Ganesh and Ms Prasad-Ganesh under his and the Agency s name and branding. [60] We find that that failure constituted negligent and incompetent real estate agency work. Mr Wong s failure is concerning, and is exacerbated by his unwillingness to accept any responsibility for real estate agency work done by Mr Ganesh and Ms Prasad-Ganesh which occurred at around the same time as he provided their names to realestate.co.nz for the purposes of entering the Agency onto its website. [61] However, we do not consider that Mr Wong s conduct was at the same level of seriousness as that of Mr Goundar. We conclude that his conduct does not cross the threshold for a finding of seriously negligent or seriously incompetent real estate agency work, but it was clearly negligent and incompetent and therefore unsatisfactory conduct under s 73(c) of the Act. Outcome [62] We find Mr Wong guilty of unsatisfactory conduct under s 73(c) of the Act. The Committee and Mr Wong are to advise the Case Manager within 14 days of the date of this decision if an oral hearing as to penalty is required. If a hearing is required, the Case Manager will allocate a hearing date and the Tribunal will issue directions as to filing written submissions. If neither party seeks an oral hearing, penalty submissions on behalf of the Committee must be filed and served within 21 days of the date of this

17 decision. Submissions by or on behalf of Mr Wong must be filed and served within a further 14 days, and penalty will then be determined on the papers. [63] Pursuant to s 113 of the Real Estate Agents Act 2008, the Tribunal draws the parties attention to s 116 of the Real Estate Agents Act 2008, which sets out appeal right. 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 C Sandelin Member Mr N O Connor Member