Kumandan v Real Estate Agents Authority

[2013] NZHC 1528

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV- 2013-404-002433 [2013] NZHC 1528

IN THE MATTER OF       The Real Estate Agents Act 2008

BETWEEN  DELAWER KUMANDAN Appellant

ANDREAL ESTATE AGENTS AUTHORITY Respondent

Hearing:                   30 May 2013

Appearances:           Appellant in person

M Hodge for Respondent

Judgment:                28 June 2013

JUDGMENT OF WOOLFORD J [as to appeal against penalty decision]

This judgment was delivered by me on Friday 28 June 2013 at 3.00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

Counsel/Solicitors:

M Hodge, Meredith Connell, Auckland

Copy to: Appellant

KUMANDAN v REAL ESTATE AGENTS AUTHORITY [2013] NZHC 1528 [28 June 2013]

Introduction

[1]      On 17 April 2013, the Real Estate Agents Disciplinary Tribunal suspended Delawer  Kumandan’s  salesperson’s  licence  for  12  months  from  the  date  of  the order.1    Mr Kumandan now appeals against the decision of the Tribunal to suspend his licence.

[2]      The background to this appeal can be found in the judgment of Katz J dated

19 December 2012.2     In the judgment Katz J dismissed Mr Kumandan’s appeal against the Tribunal’s decision of 5 April 2012.3    Mr Kumandan was appealing the Tribunal’s finding that a charge of misconduct under s 73(a) of the Real Estate Agents Act 2008 (the 2008 Act), had been established.  However, Katz J allowed Mr

Kumandan’s appeal against the Tribunal’s subsequent decision dated 12 June 2012 to cancel Mr Kumandan’s licence.4   The Judge remitted the question of penalty back to the Tribunal to be determined in light of the interpretation of s 172 of the 2008 Act set out in her judgment.  It is from the Tribunal’s subsequent penalty decision that Mr Kumandan now appeals.

Approach on appeal

[3]      I am aware of the conflicting authorities regarding the approach to be taken to appeals against penalty decisions of professional disciplinary tribunals.  Many of the conflicting authorities were reviewed by Collins J in Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand5.  Mr Roberts had been suspended from practising as a nurse for three years by the Health Practitioners Disciplinary Tribunal, the maximum period prescribed by the relevant Act.   On appeal, the order was quashed and replaced with an order for suspension of Mr

Roberts’ registration for 18 months.

1      Real Estate Agents Authority (CAC10003) v Kumandan [2013] NZ READT 28.

2      Kumandan v Real Estate Agents Authority [2012] NZHC 3555.

3      Real Estate Agents Authority (CAC10003) v Kumandan [2012] NZ READT 15.

4      Real Estate Agents Authority (CAC10003) v Kumandan [2012] NZ READT 32.

5      Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand [2012] NZHC 442.

[4]      After  reviewing  the  conflicting  authorities,  Collins  J  held  that  a  penalty decision of the Health Practitioners Disciplinary Tribunal involves the exercise of discretion by the Tribunal. Collins J stated:

[43] The distinction between an appeal from the exercise of discretion, and a general appeal is not always clear. However, in my assessment the penalty decision in this case involved the exercise of discretion by the Tribunal. I have reached this conclusion because, when deciding what penalty to impose the Tribunal evaluated a wide range of factors, including the penalty options that were available. The process of evaluating penalty options and deciding what penalty to impose involved an exercise of discretion by the Tribunal in the same way that a decision about bail or name suppression also involves the exercise of discretion by judicial officers. All involve the careful evaluation of options and the choosing of the most suitable option that is available.   In   this   respect,   the   Tribunal’s   penalty   decision   can   be distinguished from its role when interpreting the law, deciding facts and/or applying the law to established facts when determining if a practitioner has committed a disciplinary offence. That aspect of the Tribunal’s role does not involve the exercise of discretion.

[5]      The Supreme Court confirmed the approach to an appeal against the exercise of discretion in Kacem v Bashir.  It stated:6

... the important point arising from Austin, Nichols is that those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion involves an assessment of fact and degree and entails a value judgment. In this context a general appeal is to be distinguished from an appeal against a decision made in  the  exercise  of  a  discretion.  In  that  kind  of  case  the  criteria  for  a successful appeal are stricter: (1) error of law or principle; (2) taking account of irrelevant considerations; (3) failing to take account of a relevant consideration; or (4) the decision is plainly wrong.

[6]      A right of appeal against decisions of the Tribunal is provided by s 116 of the

2008 Act, which states:

116      Right of appeal

A person who is affected by a decision of the Tribunal may appeal to the

High Court against the decision.

The 2008 Act does not specify the approach to be taken by the High Court or what

powers it has on an appeal except to state that the High Court’s decision in the

determination of an appeal is final, subject to the right of a party to appeal to the

Court of Appeal on a question of law.7

[7]      In these circumstances, I respectfully adopt Collins J’s approach and am of the view that on the present appeal, I can only allow the appeal if I reach the conclusion that the Tribunal made an error of law or principle, took into account irrelevant considerations, failed to take into account relevant considerations or its decision was plainly wrong.  This does not contradict the approach taken by Katz J in her judgment of 19 December 2012 when in reliance on Austin, Nichols she expressed the view that an appellate court has the responsibility of arriving at its own assessment of the merits of the case.   This is because the issue before her was whether the Tribunal was correct in finding it proved on the balance of probabilities that Mr Kumandan was the person responsible for the forgery.  In Roberts, Collins J recognised that a Tribunal’s penalty decision can be distinguished from its role when interpreting the law, deciding facts and/or applying the law to established facts when determining if a practitioner has committed a disciplinary offence. That aspect of the Tribunal’s role does not involve the exercise of discretion.

Grounds of appeal

[8]      Mr  Kumandan  filed  a  17  page  notice  of  appeal  on  10  May  2013  with numerous attachments.    Although the document is sometimes difficult to comprehend, I take the following four grounds of appeal from Mr Kumandan’s summary in  part  8  of  the notice  of  appeal  which commences  “In  conclusion  I reiterate that my appeal is summarised as follows”.  Mr Kumandan also confirmed to me that these were his grounds of appeal:

(a)      At the time of the events in question, Mr Kumandan held a certificate of approval as a salesperson under the Real Estate Agents Act 1976 (the 1976 Act).   Certificates  of  approval  were  abolished with  the repeal of the 1976 Act.   The Tribunal was therefore not entitled to suspend his licence granted under the 2008 Act;

(b)Alternatively, the test in s 99(1)(b) of the 1976 Act that enabled the Tribunal to cancel or suspend a salesperson’s licence had not been met in his case;

(c)      Alternatively, the 12 month suspension imposed by the Tribunal was too long in that the Tribunal failed to take into account his inability to undertake real estate work since the initial complaint; and

(d)Alternatively,  the  12  month  suspension  imposed  by  the  Tribunal should have commenced from the date of the Tribunal’s initial penalty decision on 12 June 2012.  It should therefore expire on 12 June 2013.

Discussion

[9]      Section 172 of the 2008 Act applies to complaints in respect of conduct alleged to have occurred before the Act came into force on 17 November 2009.  It provides:

172     Allegations about conduct before commencement of this section

(1)       A Complaints Assessment Committee may consider a complaint, and the Tribunal may hear a charge, against a licensee or a former licensee in respect of conduct alleged to have occurred before the commencement of this section but only if the Committee or the Tribunal is satisfied that,—

(a)       at the time of the occurrence of the conduct, the licensee or former licensee was licensed or approved under the  Real Estate Agents Act 1976 and could have been complained about or charged under that Act in respect of that conduct; and

(b)       the licensee or former licensee has not been dealt with under the Real Estate Agents Act 1976 in respect of that conduct.

(2)       If, after investigating a complaint or hearing a charge of the kind referred to in subsection (1), the Committee or Tribunal finds the licensee or former licensee guilty of unsatisfactory conduct or of misconduct in respect of conduct that occurred before the commencement of this section, the Committee or the Tribunal may not make, in respect of that person and in respect of that conduct, any order in the nature of a penalty that could not have been made against that person at the time when the conduct occurred.

[10]     In her judgment, Katz J confirmed that s 172 requires a three-step approach:8

(a)       Could the conduct have been complained about or a charge laid under the 1976 Act?

(b)       Has the licensee been guilty of misconduct or unsatisfactory conduct under the 2008 Act?

(c)       If the answers to both (a) and (b) are “yes” then a penalty may be imposed under the 2008 Act. However it may only be a penalty which  could  have  been  imposed  in  relation  to  that  particular conduct under the 1976 Act. This requires the Tribunal to consider s

99 of the 1976 Act in this case, before a penalty of cancellation or

suspension of Mr Kumundan’s licence can be imposed.

[11]     Section 99 of the 1976 Act gave the former Real Estate Agents Licensing Board the power to cancel or suspend the certificate of approval of a salesperson. The Board had to be satisfied, however, that the salesperson had been or was of such a character that it was, in the opinion of the Board, in the public interest that the certificate of approval be cancelled or suspended.

[12]     Mr  Kumandan’s  first  ground  of  appeal  is  a  narrow  one  which  can  be answered by a close consideration of the transitional provision set out in s 172 of the

2008 Act, which gives the Tribunal jurisdiction over Mr Kumandan, and its three- step test.   Firstly, it is accepted that Mr Kumandan’s conduct could have been the subject of complaint or a charge laid under the 1976 Act.  Secondly, the Tribunal has found Mr Kumandan guilty of misconduct under the 2008 Act.   This finding was upheld on an appeal by Katz J.  Thirdly, a penalty has been imposed by the Tribunal under the 2008 Act, which could have been imposed under 1976 Act and after consideration of the test in s 99 of the 1976 Act.  The three-step test has therefore been satisfied.

[13]     Mr Kumandan  still  submits  that  the licence  granted  under the  2008 Act cannot be cancelled or suspended for activities when he held a certificate of approval under the 1976 Act.  Mr Kumandan was, however, registered under both the 1976

Act and 2008 Act, as a salesperson.  The purposes of the two Acts are similar.  The

1976 Act was expressed as an Act to make provision for the licensing of real estate agents and for matters related thereto and to consolidate and amend the law relating

8      Kumandan v Real Estate Agents Authority, above n 2, at [65].

to the conduct of the business of real estate agents.   The 2008 Act expressed its purpose in the following manner:

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 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.

[14]     Under the 1976 Act, Mr Kumandan held a certificate of approval.  Under the

2008 Act, he held a licence.  Section 167 of the 2008 Act provides that everyone who held  a current  certificate of approval  as  a salesperson  under the 1976 Act  was deemed to hold a licence as a salesperson under the 2008 Act on its commencement. I am therefore of the view that there is no significant difference between a certificate of approval and a licence.   Both made Mr Kumandan subject to the disciplinary provisions of the Acts.

[15]     As set out above, s 172 of the 2008 Act also specifically allows the Tribunal to hear a charge against the licensee in respect of conduct alleged to have occurred before  the  commencement  of  the Act.    The  three-step  test  set  out  therein  was satisfied in this case.  Mr Kumandan’s first ground of appeal must therefore fail as a matter of statutory interpretation.

[16]     Mr Kumandan’s second ground of appeal is that the test in s 99(1)(b) of the

1976 Act that enabled the Tribunal to cancel or suspend his salesperson’s licence had not been met in his case.  This is essentially a requirement that the Tribunal had to be satisfied that Mr Kumandan’s character was such that, in its opinion, it was in the public interest that Mr Kumandan’s licence be cancelled or that he be suspended. This character test was discussed by Tompkins J in Sime v Real Estate Institute of

New Zealand (Incorporated) & Anor.9    Tompkins J noted that s 99 sets out a two- step test.  First was the enquiry into the person’s character, which meant something other than whether the person was a fit and proper person to be employed as a salesperson.  Tompkins J was of the opinion that it was clearly intended that the type of character required to be established under s 99(1)(b) was something of a more serious kind than professional misconduct or breach of duties imposed under the Act, although he acknowledged that conduct that reflected adversely on a person’s character might also amount to professional misconduct or a breach of those duties. Tompkins J stated:10

So what the Board is required to enquire into is that person’s character in the sense  of  his  personal  qualities,  his  individual  traits,  his  reputation  and aspects of his behaviour that reflect on his honesty and integrity.

[17]     The second step to which the Tribunal must have regard is that the type of character the person must be shown to have must be such that it is in the public interest that the licence be cancelled or the person suspended. Tompkins J stated:11

The adverse qualities in his character relied on must be measured against the public interest in his continuing or not continuing as a salesman.  Traits such as dishonesty or gross incompetence may be within this category.   Less culpable characteristics may well not.

[18]     Sime has been referred to in a number of subsequent cases, including, Niall v Real Estate Institute of New Zealand Inc.12 and McNeill v The Real Estate Institute of New  Zealand  Incorporated.13     In  considering  Mr  Kumandan’s  character,  the Tribunal noted that the charge of which Mr Kumandan had been found guilty involved the forgery of a solicitor’s signature.  It noted that although Mr Kumandan did not receive any immediate financial advantage, it considered that forgery was a

serious matter.  The Tribunal also noted that the transactions at issue were unusual and Mr Kumandan made two commissions on related sales which did not proceed.

He also tried to blame the administrative assistant for the forgery.   The Tribunal

9      Sime v Real Estate Institute of New Zealand (Incorporated) & Anor Auckland HC M73/86, 19

August 1986.

10     Sime v Real Estate Institute of New Zealand (Incorporated) & Anor, above n 9, at 16.

11     At 16.

12     Niall v Real Estate Institute of New Zealand Inc HC Auckland, CIV-2009-404-000135, 9 July

2009, Allan J.

13     McNeill v The Real Estate Institute of New Zealand Incorporated (2009) 13 BCB 125; (2008) 9

NZCPR 511 (HC), Heath J.

referred to Mr Kumandan’s background as a lawyer in his native South Africa and commented that, in his role as a lawyer and then as a salesperson, it would have been clear to Mr Kumandan that forgery was outside the behaviour expected of a professional such as a solicitor or a salesperson.  The forgery therefore reflected on his reputation, his character and his honesty as a salesperson.

[19]     As  to  the  public  interest,  the  Tribunal  noted  that  the  public  interest  is generally recognised to be in ensuring that standards are maintained and for the public to be protected from salespersons operating outside the rules and that their behaviour reflects what society as a whole would recognise as a reasonable standard of behaviour.

[20]     As noted above, Mr Kumandan’s notice of appeal is sometimes difficult to

comprehend. When he referred to the two step test set out in Sime, he stated:

Add paragraph [15] It is submitted that The Tribunal erred its assessment of the facts of the case, in that it erroneously or by design sought to manipulate the facts of the case to seek justification for its 2 step test set out in the Simes Case.  It is submitted that the Tribunal and the Respondent utilized the same modes operadie in restoring the facts of this case, thereby obtaining a misconstrued picture of the Applicant which was negative so as to justify its penalty decision:

i.        The charge was established on a balance of probabilities, in the absence of prima facie evidence the Applicant being chosen to be the guilty party in advance and on the instruction of David Clifton of Harcourts, despite the office administrator (incompetent, on Notice, after being told to resign and at the centre of the forged document originally which document she destroyed and claimed the Manager did), and never considered to be a likely suspect by design by the Respondent.

It is submitted that the Character (personal qualities, reputation and behaviour)  that  is  supported  to  reflect  on  honesty  and  integrity cannot be applied in the absence of conclusive proof of the wrong doing, which onus of proof the Act 2008, does not necessitate, hence the averments of the Simes Case, I submit were not applicable to that of the Applicant.   I submit that the Tribunal in its haste to reach “functus officio” erred in applying the test of the Simes case haphazardly to this case.

[21]     In this passage, Mr Kumandan seems to suggest that he was singled out for investigation even though there were grounds to suspect the office administrator.  I

am however not able to revisit the finding that Mr Kumandan was responsible for the forgery of the solicitor’s signature which has been upheld on appeal by Katz J.

[22]     Mr  Kumandan  also  appears  to  take  issue  with  the  standard  of  proof, suggesting that conclusive proof of wrongdoing was necessary.   However, the Supreme Court has determined that the appropriate standard of proof in professional disciplinary proceedings is the civil standard of proof on the balance of probabilities, flexibly applied.14   Mr Kumandan therefore is quite wrong when he contends that the provisions of s 99(1)(b) of the 1976 Act require unequivocal proof, which he says was absent throughout the investigation and hearing.  The assessment of character is an assessment which proceeds from proven facts.  That is, the assessment is a matter

of weighing up all relevant factors bearing on the person’s character.

[23]     I am of the view that the Tribunal was entitled to consider that forgery of a solicitor’s signature on a confirmation of settlement form reflected adversely on Mr Kumandan’s  character.    This  was  in  circumstances  where  the  solicitor  had subsequently sent a facsimile to Harcourts claiming that the sales and purchase agreement was never going to settle and that the vendor had been misled, deceived and misrepresented by Harcourts.  When confronted, Mr Kumandan offered to have the letter of complaint from the solicitor withdrawn.   Subsequently a letter was received from the vendor to the effect that no money was claimed from Harcourts. In those circumstances, I am not persuaded that the Tribunal made an error of law or principle, took into account irrelevant considerations, failed to take into account relevant considerations, or that its decision was plainly wrong when it found that Mr Kumandan had been shown, to the satisfaction of the Tribunal, to be of such a character  that  it  was,  in  the  Tribunal’s  opinion,  in  the  public  interest  that Mr Kumandan’s licence be cancelled or suspended.  There is, therefore, no merit in Mr Kumandan’s second ground of appeal.

[24]     Mr  Kumandan’s  third  and  fourth  grounds  of  appeal  can  be  considered together.  He submits that the 12 month suspension imposed by the Tribunal was too long in that the Tribunal failed to take into account his inability to undertake real

estate work since the initial complaint or, alternatively, the 12 month suspension

14     Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at [112].

should have commenced from the date of the Tribunal’s initial penalty decision on

12 June 2013 and it therefore should expire on 12 June 2013.

[25]     The evidence discloses that Mr Kumandan’s contract with Harcourts was terminated on 3 September 2009 and that a formal complaint was made to the Real Estate  Agents  Authority  on   12   February  2010.     It  appears,  however,  that Mr Kumandan retained his licence as a salesperson until an order was made by the Tribunal cancelling his licence on 12 June 2012.  Mr Kumandan therefore appears to have been able to continue work as a salesperson until then.  He has not specifically addressed the impact which the termination of his contract and the complaint had on his ability to undertake real estate work.  It seems that he was working for another real estate firm, Sure Reality Limited, as Mr Kumandan has provided an affidavit from Mr Inia Sega, who offers a position to Mr Kumandan with his firm should his licence be reinstated.  Mr Sega states that he has been assisting Mr Kumandan in an advisory role with his previous employer, Sure Realty Limited.

[26]     After the Tribunal cancelled his salesperson’s licence, Mr Kumandan sought an interim order to reinstate his licence.  This was to enable him to continue to do real estate work, pending the hearing and determination of his appeal against the finding of the Tribunal that he had been guilty of misconduct.  This was declined by Duffy J on the basis that he had not provided evidence to show that any interim licence would result in him being carefully supervised by a responsible person. Duffy J found none of his arguments helpful or relevant to the granting of a stay.

[27]     In its penalty decision, the Tribunal was unable to give much, if any, weight to Mr Kumandan’s assertions that he has, in effect, been deprived of real estate work since the termination of his contract with Harcourts because of the lack of evidence from Mr Kumandan.   However, the Tribunal took into account the fact that Mr Kumandan had already lost his licence for a period of nine months and as such considered that, in taking into account the character test, a further period of 12 months suspension was appropriate.  In other words, the Tribunal well knew that in imposing an order for suspension for 12 months, Mr Kumandan would be deprived of his licence for a period of 21 months from the date of the original order on 12

June 2012.

[28]     I am not persuaded that the Tribunal made an error of law or principle, took into account irrelevant considerations, failed to take into account relevant considerations, or that its decision was plainly wrong when it determined that the appropriate period of suspension of Mr Kumandan’s licence was in effect one of 21 months.  In those circumstances, Mr Kumandan has failed to establish the third and fourth grounds of appeal.

Result

[29]     The appeal is accordingly dismissed.  Costs are payable by Mr Kumandan on a 2B basis.  If the parties are unable to agree, I will receive memoranda.

Woolford J