BEFORE THE REAL ESTATE AGENTS DISCIPLINARY TRIBUNAL [2017] NZREADT 43 READT 030/16 UNDER THE REAL ESTATE AGENTS ACT 2008 IN THE MATTER OF BETWEEN AND of charges pursuant to section 91 of the Real Estate Agents Act 2008 THE REAL ESTATE AGENTS AUTHORITY (CAC 408) Applicant COLIN STUART BOYER Defendant Hearing: Auckland on 16 May 2017 Tribunal: Appearances: Ms K Davenport QC Chair Ms N Dangen member Mr G Denley member Ms Copeland for applicant Mr P Barrowclough for defendant Decision: 3 July 2017 DECISION OF THE TRIBUNAL [1] Mr Boyer is charged under s 73(a) or s 73(c)(iii) of the Real Estate Agents Act. He pleads guilty to this charge. Mr Boyer had faced two charges but following his plea of guilty to charge one the Complaints Assessment Committee withdrew charge two. [2] The charge that Mr Boyer faced is as follows: Charge one: misconduct (unlicensed trading by Herman Cloete) The Committee charges Mr Boyer with misconduct under s 73(a) or (in the alternative) s 73(c)(iii) of the Real Estate Agents Act 2008 (Act).
2 Particulars 1 Mr Boyer is a licensed agent, and was the eligible officer and supervising agent of Pakuranga Realty Limited (Agency); 2 On 1 October 2013, Mr Boyer sold his business, Colin Boyer Realty, to Herman Cloete, as the director of Pakuranga Realty Limited. 3 As part of the sale, Mr Boyer agreed to provide technical and legal advice for a minimum of three years and to be the licensed agent for the Agency for three years. 4 Mr Cloete was not licensed and the terms of the sale included that he would make every endeavour to become licensed within this three year period. 5 Mr Cloete never became licensed within this three year period. 6. During this period, Mr Boyer allowed Mr Cloete, who was not licensed, to take responsibility for the listing of 10, 10A and 10B Gwenand Place. 7 The vendor, Ms Anthony, signed an agency agreement for all three properties with Mr Cloete. 8 Mr Cloete prepared a marketing proposal for 10, 10A and 10B Gwenand Place. 9 Mr Cloete s name and contact details were listed on the Trademe advertisement for 10A Gwenand Place. 10 Mr Cloete s name and contact details were listed on a Century 21 advertisement for 10 Gwenand Place. 11 Ms Anthony also queried Mr Cloete regarding advertisements that had Mr Boyer s details. Mr Cloete advised her that he was looking after the properties but Mr Boyer would take care of the sales. 12 Mr Cloete ran the open homes for the Gwenand Place properties. 13 Mr Cloete presented an offer for 10 Gwenand Place. 14 Mr Boyer knew that: (A) (B) (C) (D) (E) Mr Cloete had obtained the listings for Gwenand Place. Mr Cloete was holding open homes for the Gwenand Place properties. He had not seen the listing documents for the Gwenand Place properties. There were issues with the Gwenand Place listings and advised Mr Cloete to withdraw them on 5 December 2014. Mr Cloete should not be completing appraisals but he had instructed him to do them anyway. 15. At no point did Mr Boyer report to the Authority that Mr Cloete was committing an offence by undertaking real estate agency work without a license. Mr Boyer knew that Mr Cloete was undertaking unlicensed real estate agency work and took no action to stop him. To the contrary Mr Boyer had facilitated this consequent on the arrangements made when Mr Boyer sold his business to Mr Cloete. 16 This conduct would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful. This conduct is also a wilful or reckless contravention of rr 5.1, 6.3 and 7.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012. [3] Mr Boyer through his counsel pleaded guilty to this charge. An agreed summary of facts was given to the Tribunal.
3 [4] The facts agreed are as follows: (a) (b) (c) (d) (e) (f) (g) (h) During the relevant period, the Defendant was a licensed agent and the eligible officer and supervising agent of Pakuranga Realty Limited t/a Century 21 (Agency). The Defendant has now voluntarily suspended renewal of his licence. On 1 October 2013, the Defendant sold his business, Colin Boyer Realty, to Herman Cloete, as the Director of Pakuranga Realty. The conditions of sale included an agreement by the Defendant to provide technical and legal advice for a minimum of three years and to be the licensed agent for the Agency for a period of three years. Mr Cloete was not licensed and the conditions of sale also included an agreement that he would make every endeavour to become licensed within this three year period. He failed to comply with this condition. Within the first few months, Mr Cloete started a property rental division with his son, Jean Cloete, managing the rental portfolio. The Defendant had no involvement with the rental division. At the end of January 2014, the Defendant suffered a serious heart attack with the result that he was flown by helicopter to Middlemore Hospital where he was admitted for emergency surgery. Upon his discharge from hospital the Defendant received medical advice to reduce his workload and to focus on his recuperation. He remains on medication and undergoes three-monthly check-ups with his doctor. As a consequence of his heart attack and acting on medical advice, the Defendant reduced the hours he attended at the Agency in his capacity as the licensed agent. In June 2014, Sathya Anthony, the owner of three properties at Gwenand Place (10, 10A and 10B), contacted the rental division at the Agency in regard to a rental property but discussed that she had three houses that
4 would be ready for sale shortly. Mr Cloete offered to market and sell the houses for her. (i) (j) (k) (l) Ms Anthony signed an agency agreement with Mr Cloete (in respect of all three properties) and understood that he would be the main agent dealing with the properties. Due to his health issues, the Defendant allowed Mr Cloete to prepare the listing agreement which he was going to approve. However, Mr Cloete never took the listing agreement to the Defendant for approval, instead forging the Defendant s signature. Two Century 21 advertisements for both 10 and 10A Gwenand Place listed the Defendant as the sales agent and provided his contact details. Another Century 21 advertisement for 10 Gwenand Place included Mr Cloete s contact details and a Trademe advertisement for 10A Gwenand Place, listed the agent s details as Mr Cloete and provided a landline and mobile for him. Ms Anthony queried this with Mr Cloete who explained that he was the contact person but that the agency worked as a pool of agents so that any agent could market and sell the property. Ms Anthony also queried Mr Cloete about the Trademe advertisement that had the Defendant s contact details listed and was told that Mr Cloete was looking after the properties but that the Defendant was the owner of Century 21 and was taking care of the sale. Ms Anthony never met or dealt with the Defendant. The Defendant allowed Mr Cloete to run the open homes for the properties due to his reduced hours but accepted to an informant, acting as a prospective purchaser, that the listing was his. The Defendant also noted during the call that Mr Cloete was looking after the sale because he was hardly in the office. (m) On 10 October 2014, an Investigator with the Real Estate Agents Authority (Authority) contacted Mr Cloete after viewing the Trademe listing for 10A Gwenard Place. Mr Cloete organised for the Investigator to view the property with him the following day.
5 (n) The following day this visit took place. Mr Cloete provided the Investigator with a brochure for the property that included his name as the contact for the property, his business card, a copy of the certificate of title for the property and a property guru report. Mr Cloete accompanied the Investigator through the property and discussed various features and other comparable properties. The Investigator asked Mr Cloete the process if he was interested in going further. Mr Cloete indicated that he would email the agreement for sale and purchase, negotiations could occur by email and that the Investigator s lawyer should request the LIM report. Mr Cloete also stated that he is not a real estate agent but he is the principal of Century 21 and the Investigator could still deal directly with him throughout the process as he would just get an agent to sign off the technical details. (o) (p) (q) (r) Mr Cloete subsequently presented an offer for 10 Gwenand Place and the property was sold. The Defendant was not aware that Mr Cloete was conducting negotiations on the property. As a result of a complaint the Real Estate Agent s Authority (REAA) commenced an investigation into Mr Cloete s conduct. During the course of this investigation, the Defendant was interviewed and conceded that once he was aware Mr Cloete had listed the properties, in December 2014, he should have sat down with the vendor and gone through the process with them, including cancelling the listing agreements and relisting the properties. This did not occur. However, once aware of the Authority investigation, the Defendant took Mr Cloete to the vendor, Ms Anthony, and asked her if she wished to continue with the sale. Ms Anthony advised she wished to withdraw the property from the market and the Defendant did so immediately. The Defendant also accepted that he should also have reported Mr Cloete s conduct, and the fact he was undertaking real estate agency work without a license to the Real Estate Agents Authority.
6 (s) (t) Mr Cloete subsequently left New Zealand and returned to South Africa. Neither the REAA nor the Defendant has been able to locate Mr Cloete. The Defendant accepts he engaged in misconduct pursuant to s 73(c)(iii) of the Act having recklessly breached rr 5.1, 6.3 and 7.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012. Discussion [5] Despite the guilty plea the Tribunal still have to determine whether or not the facts as agreed demonstrate conduct of such a serious nature that a finding of misconduct should be made. The conduct in allowing an unlicensed person to run the agency and sell property is serious. It is contrary to one of the main purposes of the Act which is to ensure that those who sell property are trained and licenced to do so. Mr Cloete had neither. My Boyer s role was to prevent such a situation and report abuses of the Act. He failed to do this. [6] As can be seen from the facts Mr Boyer sold his business to a Mr Herman Cloete. Mr Cloete was not licensed as an agent and did not become licensed although he had said that he would become licensed after his purchase. In terms of the agreement for sale and purchase between Mr Boyer and Mr Cloete, Mr Boyer was to remain the licensed agent for the agency. As can be seen from the facts Mr Boyer suffered a serious heart attack in early 2014 and thereafter reduced his hours at the agency. [7] In June 2014 an agency agreement was signed by Mr Cloete allowing him to sell properties at 10 and 10A Gwenand Place. Mr Cloete prepared the listing agreement and he forged the defendant s signature. Some of the advertisements for the properties had Mr Boyer as their sales agent, others had Mr Cloete s details and information. Mr Cloete was allowed to run open homes and subsequently presented an offer for 10 Gwenand Place. The property was sold as a result of this agreement despite Mr Boyer being unaware the negotiations were going on. However, during the investigation into Mr Boyer s conduct he conceded that he was aware that Mr Cloete had listed the properties and did not take action to stop him.
7 [8] The Tribunal conclude this conduct is misconduct as it demonstrates a complete failure of Mr Boyer s responsibility as the licensed agent. The Tribunal conclude that this is a breach of s 73(c)(iii). The Tribunal understands that the conduct may in part have been caused by Mr Boyer s ill health and his somewhat misplaced trust in Mr Cloete. Mr Cloete has apparently now left New Zealand. However, Mr Boyer had an overriding duty to protect the public and take steps to advise the REAA when he became aware of the actions of Mr Cloete, and the potential risks. Penalty [9] The Tribunal now has to consider the appropriate penalty, if any, to impose upon Mr Boyer. Mr Boyer has voluntarily suspended his licence. He also has a licence in the name of Boyer Limited and this licence is also voluntarily suspended. [10] The principles applicable to penalty: 10.1 It is well established that penalty decisions of professional disciplinary tribunals should emphasise both the maintenance of proper professional standards and the protection of the public through specific and general deterrence. While this may result in orders having a punitive effect, this is not their primary purpose. 1 10.2 This is consistent with the purposes of the Act in s2 to promote and protect 2 the interests of consumers in respect of transactions that relate to real estate work and to promote public confidence in the performance of real estate agency work. 3 10.3 In Z v Dental Complaints Assessment Committee the Court said: 4 1 2 3 4 See Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at [128]; CAC v Walker [2011] NZREADT 4 at [17]-[19]; and discussed in CAC v Black & Wong [2016] NZREADT 64 at [6]. Emphasis added. Real Estate Agents Act 2008, s 3(1). Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 (footnotes omitted). See also Bolton v Law Society [1994] 2 All ER 486 (CA) at 492.
8 [128] It is accordingly appropriate to consider further the nature of, and public interest involved in, the disciplinary process, including the framework within which the Act provides for that process. The purpose of disciplinary proceedings is materially different to that of a criminal trial. It is to ascertain whether a practitioner has met appropriate standards of conduct in the occupation concerned and what may be required to ensure that, in the public interest, such standards are met in the future. The protection of the public is the central focus. Protection is a less prominent factor in the criminal process. One consequence of this difference is that the disciplinary process may cover wider ground than that litigated at the criminal trial. 10.4 The observations in Z v Dental Complaints Assessment Committee have been applied in the real estate disciplinary jurisdiction by the High Court in Morton-Jones v Real Estate Agents Authority. 5 Counsel s submissions [11] Mr Barrowclough submitted to the Tribunal that Mr Boyer had provided an unbroken and excellent service to the profession for many years and feels deep remorse for his conduct. Further he had imposed his own penalty in that he had voluntarily suspended his practising certificate. Mr Barrowclough admitted that the appropriate penalty would be to censure Mr Boyer and no other penalty. He submitted that Mr Boyer had earned very little money and could not pay a substantial fine. Finally, in mitigation be submitted that Mr Boyer was unaware to the conduct which had taken place until it was drawn to his attention by the REAA. [12] Ms Copeland drew to the Tribunal s attention a number of relevant decisions which may assist its deliberations. The two most relevant are: (i) Complaints Assessment Committee v Picknell [2013] NZREADT 41. Ms Picknell had allowed an unlicensed person to sell properties and when she became aware of this she sent an invoice for her services to the 5 Morton-Jones v Real Estate Agents Authority [2016] NZHC 1804 at [89].
9 unlicensed person. The Tribunal ordered her to be suspended for a period of nine months and that she pay a fine of $1,000. (ii) Egden v Real Estate Agents Authority and Abercromie [2015] NZREADT 80 Mr Egden employed an unlicensed agent and remained the principal agent despite caring for his sick wife. Further, he sought a renewal of the licence when the company was not trading and he was not engaged in the business. He was found guilty of unsatisfactory conduct and he was ordered to pay a fine of $1,500. The decision [13] The Tribunal have considered counsel s submissions and agreed facts and also consider Mr Boyer culpability. [14] A finding of misconduct is a serious matter and not a finding made lightly by the Tribunal. The Act mandates that a licensed agent must manage an agency so as to prevent exactly this situation - where people who are not properly trained and are unlicensed can sell houses at serious risk to the public. The purchase of a property is for many the most important financial transaction they will ever make in their life. Mr Boyer s inaction allowed an unlicensed person to pose as an agent which could have had very serious consequences. [15] The Tribunal acknowledge that Mr Boyer s health was uncertain during this time and that Mr Cloete both forged his signature and lied to him. However the Tribunal still consider that Mr Boyer should have been aware of his obligations and taken steps to have relinquished his role or made sure the agency was properly managed. The penalty must recognise these failings. Mr Boyer has taken steps to suspend his own and his company s licence. He instigated this step on 31 March 2017. He has thus been suspended for 2.5 months at the time of the hearing. The Tribunal consider that a further period of suspension for a period of six months is the appropriate penalty. This will recognise that Mr Boyer has been voluntarily suspended and that the facts of the case are more serious than the facts in Egden and less serious than the Picknell facts. Accordingly, the Tribunal order that Mr Boyer s
10 licences, both in his personal name and his company name, be suspended for a further period of six months from the date of this order. It is also appropriate that Mr Boyer pay a small fine so that the total cost of the prosecution does not fall on the profession. Mr Boyer is to pay a fine in the sum of $1,500. [16] Mr Boyer is also censured. A suspension recognises the severity of the conduct but still enable an agent to be rehabilitated. [17] The Tribunal draws to the parties attention the appeal provisions of s 116 of the Real Estate Agents Act 2008. Ms K Davenport QC Chair Ms N Dangen Member Mr G Denley Member [2017] NZREADT 43 - Boyer