Quiambao v Barker
[2020] NZHC 371
•3 March 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1820
[2020] NZHC 371
IN THE MATTER OF An appeal under s 116 of the Real Estate Agents Act 2009 and Part 20 of the High Court Rules BETWEEN
JOHN QUIAMBAO AND HOI (STEPHEN) WAN
Appellants
AND
LANCE ROBERT BARKER AND GEORGINA BARKER
First Respondents
THE REAL ESTATE AGENTS AUTHORITY (CAC 518)
Hearing: 26 February 2020 Appearances:
K Harkess and L van Arendonk for the Appellant M Cherrington for the First Respondents
E Mok for the Second Respondents
Judgment:
3 March 2020
JUDGMENT OF MUIR J
This judgment was delivered by me on Tuesday 3 March 2020 at 4.00 pm
pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:………………………….
Solicitors:
McElroys, Auckland
MBC Law Limited, Auckland Meredith Connell, Auckland
QUIAMBAO v BARKER [2020] NZHC 371 [3 March 2020]
Introduction
[1] John Quiambao and Hoi (Stephen) Wan (together the Licensees) appeal a decision of the Real Estate Agents Disciplinary Tribunal (the Tribunal),1 in which the Tribunal made findings of unsatisfactory conduct against them.2 That decision was on appeal by the first respondents (the Barkers), from a determination of the Complaints Assessment Committee 518 (the Committee), to take no further action on the Barker’s complaint. The Licensees operate from the Ray White Remuera Office in Auckland.
[2]Before the Committee the Barkers had advanced four complaints.
(a)Mr Quiambao made misleading representations about the ease of selling their existing house at 15 Briody Terrace, Stonefields, Auckland (Property 1) for the desired price.
(b)The Licensees had provided them with an inaccurate comparative market analysis (CMA) in relation to that property based on out of date sales figures.
(c)The Licensees had failed in their duties by encouraging the Barkers to make an unconditional offer in respect of property situated at 12A Vialou Lane, Stonefields (Property 2).
(d)Mr Wan had said another prospective purchaser had put an offer in on Property 2 when there was no such offer.
[3]The Committee found none of these allegations to have been proved.
[4] On appeal the Tribunal held that the Licensees had breached their obligations under the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules):
(a)in respect of their appraisal of Property 1 (rr 10.2 and 10.3); and
1 Barker v Real Estate Agents Authority [2019] NZREADT 36.
2 The penalty imposed was censure only.
(b)by failing to tell the Barkers that an offer in respect of Property 2 by another party (the H Trust) had been rejected, thereby causing the Barkers to make a pre-auction offer under “undue or unfair pressure” (rr 6.2, 6.4 and 9.2).
[5]The Licensees say the Tribunal’s decision was wrong because:
(a)in relation to the appraisal of Property 1:
(i)the Tribunal imposed a requirement that comparable sales evidence be “recent” or “current” when there is no such requirement in the Rules.
(ii)it invoked r 10.3 relating to cases where there are no directly comparable or semi-comparable sales when that was not applicable.
(b)In relation to Property 2:
(i)the Tribunal acted outside its jurisdiction because the issue before the Committee had been whether or not there had in fact been another offer on the property, not, whether there was an obligation to communicate rejection of a bona fide offer.
(ii)there was, in any event, a conflict of evidence between Mr Wan and the Barkers in respect of which Mr Wan’s evidence should have been preferred.
(iii)The Barkers could not be said to have been placed under any undue or unfair pressure by non-communication of the rejection because they were aware of Ray White Remuera’s protocols in respect to pre-auction offers in terms of which, if the H Trust’s offer had been accepted, Property 2 would nevertheless have proceeded to auction.
[6] Before the Committee the matter was heard on the basis of a written complaint by the Barkers, written responses from the Licensees and a written reply by the Barkers. There was no sworn evidence nor opportunity for cross-examination. The Tribunal appeal proceeded on the same basis as, likewise, must this Court. Inevitably this means greater difficulty with some of the specifics of the chronology and associated factual assessments.
Background
[7] Mr and Mrs Barker were the owners of Property 1. They liked the Stonefields area but wished to downsize. Their reasons included recent ill-health on Mr Barker’s part, although the Licensees say that they were not told of this until after the property was sold.
[8] On 23 May Mr Quiambao met the Barkers at their home to discuss a proposed sale. Mr Quiambao leads a team known as “John Q” at Ray White Remuera office. Mr Wan is a member of that team.
[9] On 28 May Mr Wan prepared the CMA, which Mr Quiambao reviewed. They assessed what they described as a “realistic price range for your home” as between
$1,450,000 (described as “buyer value”) and $1,550,000 (described as “optimum value”).
[10] In respect of the r 10.2(c) requirement that the CMA be supported by “comparable information on sales of similar land in similar locations” they identified three properties:
(a)11 Baber Driver, Stonefields,
(b)5 Briody Terrace, Stonefields, and
(c)17 Korere Terrace, Stonefields.
[11] They considered these comparable sales to be the most relevant to the Barkers’ property in that they were four bedroom, two bathroomed terraced houses two of
which (Baber Drive and Korere Terrace) had, like the Barkers’ property, park views. All three sales occurred in the period of June to August 2017 and were identified as such in the comparative material.
[12] On 30 May Mr Quiambao presented the CMA to the Barkers. They discussed the 2017 comparable sales and other recent sales the area which had not been included in the CMA because of the Licensees’ assessment they were not as comparable in terms of bedrooms, aspect and location.
[13] The Licensees’ recommendation at that stage was for a four week campaign beginning on 11 June and with an auction date of 14 July. The Barkers did not give an immediate go-ahead. However, over the succeeding two weeks they attended a number of auctions of properties in the Stonefield’s area and made an inquiry of another agent in the John Q team about a property listed at $969,000.
[14] On 9 June Mr Quiambao entered into a listing agreement for Property 2. He commenced marketing it on 26 June 2018.
[15] The Barkers inspected Property 2 three times, on 26, 27 and 30 June 2018. After the first inspection they expressed an interest in purchasing the property by way of a pre-auction offer and were provided (9.07 pm that evening) with Ray White’s standard pre-auction offer documents. These included a document identified as “Pre- auction Offer – Purchaser’s Form” which set out Ray White’s procedures in relation to a pre-auction offer. In particular, paragraph 5 identified that if the offer was at an acceptable level, other interested parties would be contacted as soon as possible and advised of an accelerated auction date at which the purchaser’s offer would be accepted in the absence of a higher bid. The materials sent to the Barkers also included a recommendation that they seek independent legal or technical advice.
[16] In his statement, Mr Wan says that at a time which is not identified but was presumably at or about 26 June, Mr and Mrs Barker asked him if there was any other interest in Property 2, at which point he told them “truthfully” that there was and that buyer feedback was in the range of mid-high 900s. He also says the Barkers asked
whether they should make an offer on the property and he recommended they discuss it with their financial adviser.
[17] The advice in respect of other interest in the property was premised on inquiries by another couple (representatives of the H Trust) who, on 27 June, submitted a pre- auction offer for $970,000. The Barkers expressed a desire to make a similar pre- auction offer is therefore likely to have been communicated before the other prospective purchaser’s offer was finalised.
[18] The H Trust’s offer was not accepted. There are conflicting reasons in the record. Mr Quiambao says it was “not at an acceptable level to the vendors”, but elsewhere it is suggested that it was not accompanied by the required 10 per cent deposit (the purchasers had included a clause in their pre-auction offer saying that they would “pay the deposit immediately if purchase successfully in the auction”).
[19] In his statement Mr Wan variously says of the rejection, “I would have told Mr and Mrs Barker of this” and “I informed Mr and Mrs Barker about this”. The Barkers did not address this evidence, although their reply described various other statements of the Licensees as “quite incorrect” or “totally incorrect”.
[20] On 30 June the Barkers inspected Property 2 for a third time at which point their desire to make a pre-auction offer was repeated. Later that afternoon Mr Wan emailed them with details of the Ray White Trust account for the purposes of the deposit which he had told them would be necessary in support of a pre-auction offer.
[21] No such offer was made immediately. Over the next several days the Barkers communicated with their bank and with a neighbour and other unidentified people (all of who advised them against making an unconditional offer prior to the sale of Property 1). It is clear that there were also discussions between the Barkers and Mr Wan during this period about the level of offer which would be necessary to obtain vendor interest.
[22] On 6 July 2018 the Barkers made a pre-auction offer for Property 2 in the amount of $980,000. In that context they signed Ray White’s standard Pre-auction
Offer form with the provisions previously described. The associated agreement for sale and purchase contained an initial offer price of $975,000 which had been crossed out and increased, presumably after discussions with Mr Wan.
[23] On 7 July the vendor of Property 2 indicated that the Barkers’ offer was acceptable resulting in acceleration of the auction date to 11 July and with the reserve fixed at the offer price. The Barkers were the only bidders at the auction and therefore secured the property on the terms of their offer.
[24] On 12 July they entered into a listing agreement for Property 1 with Ray White, Remuera. This provided for the property to be auctioned on 16 August. A number of open homes were conducted by the Licensees with buyer feedback duly communicated to the Barkers. One prospective buyer indicated a keen interest at or about the level of $1.4 million but withdrew shortly before the auction.
[25] Other prospective buyers attended but the bidding stopped at $1,270,000 against a reserve of $1.460,000. The property was passed in on a vendor’s bid of
$1,350,000.3 Subsequent to the auction and on or about 23 August 2018, the Barkers accepted a refreshed offer by the highest bidder at the level of $1,270,000. They subsequently complained to the Real Estate Agents Authority (the Authority), alleging that they were misled into believing that they could easily sell Property 1 within the indicated range, that they had been unfairly pressured to purchase Property 2 and that, in the result, had been forced to accept an offer between $180,000 and $280,000 less than the appraised value.
The Tribunal’s decision
[26] Having introduced the key players, the Tribunal decision summarised Mr and Mrs Barkers’ complaint as follows:
(a)Mr Quiambao made misleading representations about the ease with which Property 1 would be sold, for the desired price.
3 There was some conflict in the statements about whether the top bidder was persuaded to increase his offer beyond the $1,270,000 indicated before the property was passed in. Mr Wan said that he declined to do so. The Barkers said that he was prepared to increase it to $1,300,000.
(b)The Licensees provided an inaccurate current market appraisal of Briody Terrrace based on out of date sales figures.
(c)The Licensees told them that another prospective purchaser had made an offer on Vialou Lane, when in fact that offer was rejected; and
(d)The Licensees failed in their duties to the Barkers by encouraging them to submit an unconditional offer on Property 2 when they had not sold Property 1,
(Emphasis added)
[27] It will be observed that complaints (a), (b) and (d) mirror those recorded by the Committee. However, item (c) differs from the equivalent complaint set out in the Committee’s decision. That was in terms “that [Mr Wan] said another prospective purchaser had put an offer on Property 2 when there was no offer”. It is this discrepancy which lies at the heart of the Licensee’s jurisdictional submissions.
[28] The Tribunal then proceeded to describe the background in detail, highlighting the stated “inconsistency” in Mr Wan’s statements about whether he told the Barkers that the other offer had been rejected.
[29] In analysing the issues, the Tribunal started by asking itself what duties were owed by the Licensees. It concluded that the Committee had erred in finding they owed client duties (including fiduciary obligations) from late May 2018. It said that no such client relationship existed until the Barkers signed a listing or agency agreement and that, in the interim, the only duties were those to a “prospective client” or “customer”. There is no cross-appeal for that finding.
[30] It then asked itself “was the Committee wrong to find the allegation Mr Quiambao made misleading representations as to selling Briody Terrace was not proved”? It upheld the Committee’s finding in this respect. It noted that Mr Quiambao’s marketing reports confirmed the existence of a data base of potential buyers and that some of these were in a position to make an unconditional offer of up
to $1.4 million. It concluded Mr Quiambao “had a reasonable basis for saying that there were potential buyers for Briody Terrace at or near the price the Barkers wanted”. There is no cross-appeal from that finding either.
[31] Next the Tribunal addressed the issue of the CMA. It asked itself “was the Committee wrong to find Messrs Quiambao and Wan were not in breach of their obligations in relation to the appraisal of [Property 1]”? It cited Rodgers v Real Estate Agents Authority in terms that:4
An appraisal needs to do more than simply show a prospective client comparable properties and sales figures. It must inform the prospective client why the properties have been selected and how that information translates into the appraised price…
[32] It noted that the CMA had referred to three properties which in terms of location, layout, size and condition of property were comparable and that the fact that Property 1 did not ultimately achieve a sale price within the appraisal range did not of itself establish that the appraisal did not comply with the Rules. It was critical, however, of the fact that the three properties selected for comparative purposes had sold between nine and 11 months before the appraisal. It continued:
[54] … While there is no “bright line’ for determining how far back a sale may be before it ceases to be relevant to “current” market value, we accept Ms Cherrington’s submission that sales nine to eleven months before an appraisal may not still be “current” at the time of the appraisal.
[55] When Mr Quiambao and Mr Wan considered the sales to be comparable, notwithstanding that they had occurred nine to eleven months previously, then that should have been pointed out and explained in the appraisal. If there were no more recent sales of comparable properties then, in accordance with r 10.3, that should have been pointed out and explained.
[56] For this reason, we are satisfied that the Committee was wrong to find that Mr Quiambao and Mr Wan complied with rr 10.2 and 10.3 when preparing and presenting the appraisal.
[33] Finally, the Tribunal turned to the issues arising out of the purchase of Property 2. It framed the relevant question in terms; “Was the Committee wrong to find that Mr Quiambao and Mr Wan were not in breach of their obligations in relation to Mr and Mrs Barker’s purchase of Vialou Lane?”
4 Rodgers v Real Estate Agents Authority [2016] NZREADT 7 at [50].
[34]It held that the Committee was:5
.... wrong to find that it could not determine the conflict between the evidence given between Mr and Mrs Barker (that they were not told that the H Trust had been rejected) and that given by Mr Wan (that he would have told them that the offer was rejected or that he “informed” them).
[35] It said Mr and Mrs Barker’s evidence that they were not told was supported by their conduct in arranging bank finance and by increasing their offer. The Tribunal considered it to be “more likely than not that if they had been told that the H Trust’s offer was no longer “live”, they would not have submitted their pre-auction offer”6 and that by failing to advise them that the H Trust offer had been rejected, Mr Quiambao as listing agent for the property and Mr Wan as sales person “put Mr and Mrs Barker under undue or unfair pressure”7 in breach of r 9.2. It held that the same conduct was likewise a breach of rr 6.2 and 6.4.8
[36] The Tribunal accordingly found that there was unsatisfactory conduct, albeit at the “low end of the range” and made an order for censure.
Approach on appeal
[37] This is an appeal under s 116 of the Real Estate Agents Act 2008 (the Act). Appeals under this section are governed by the principles in Austin, Nichols & Co Inc v Stichting Lodestar.9 As such, the Court is required to come to its own view on the issues. If that analysis results in an outcome that differs from the one reached by the Tribunal then the appeal is appropriately allowed. Although the Tribunal is a body with specialist expertise in respect of which this Court rightly hesitates before making any contrary findings of fact or degree, it is not required to defer to the Tribunal’s views and the weight given to such views are a matter for its judgment.
5 Barker v Real Estate Agents Authority [2019] NZREADT 36 at [58].
6 At [59].
7 At [60].
8 At [61].
9 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141. Referred to in Vosper v Real Estates Agent Authority [2017] NZHC 453, [2017] 18 NZCPR 633 at [10]. The test was specifically applied in the context of appeals against the finding of unsatisfactory conduct.
[38] Significantly, this is not a case where the Committee or the Tribunal had any advantage over this Court in terms of assessing conflicts of evidence or credibility issues. The Committee conducted its hearing on the papers, being the Barker’s complaint, supporting documents, the Authority’s Decision to Inquire (which framed the scope of the investigation and the matters the Licensees were required to address), the Licensee’s statements and supporting documents, the Barkers reply and the Authority’s own “Investigation Report” which included details of the investigator’s own inquiries of various individuals (including the Barkers’ neighbour). The Tribunal in turn conducted its re-hearing based on the record before the Committee.
The relevant rule provisions
[39] The rules engaged before the Tribunal and on this appeal are rr 6.2, 6.4 and 9.2 (governing undue pressure and disclosure) and 10.2 and 10.3 relating to the CMA. I set these out for convenience.10
6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.
…
6.4 A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client.
…
9.2 A licensee must not engage in any conduct that would put a prospective client, client, or customer under undue or unfair pressure.
…
10.2An appraisal of land or a business must –
(a)be provided in writing to a client by a licensee; and
(b)realistically reflect current market conditions; and
(c)be supported by comparable information on sales of similar land in similar locations or businesses.
10.3Where no directly comparable or semi-comparable sales data exists, a licensee must explain this, in writing, to a client.
10 The submissions for the Barkers also refer to r 9.4 which contains a proscription on licensees misleading customers as to the price expectations of the client. This is irrelevant to the issues engaged on the appeal.
The Issues
[40]These appear to be:
(a)Whether the Tribunal was correct in requiring that the “comparable information on sales of land in similar locations” specified in r 10.2(c) necessitated that the information be “current” and in concluding that because the information appearing in the CMA “may not still be current”, there was noncompliance with r 10.2.
(b)Whether r 10.3 was engaged.
(c)Whether there was jurisdiction to find that the Licensees had failed to advise the Barkers of rejection of the H Trust offer.
(d)Whether the Tribunal was correct to hold, on the balance of probabilities, that there had been such a failure.
(e)Whether, in any event, such a failure could be said to have placed the Barkers under “undue or unfair pressure”.11
Discussion
The proper interpretation of r 10.2
[41] As previously identified, r 10.2 has three requirements in respect of any CMA. It must:
(a)be in writing;
(b)realistically reflect current market conditions; and
(c)be supported by comparable information on sales of similar land in similar locations.
11 Barker v Real Estate Agents Authority [2019] NZREADT 36 at [60].
[42] Apart from being in writing, the Rules do not prescribe the format in which the appraisal is to occur. That is a matter for the judgment of the Licensee. However, the appraisal must inform the prospective client why the comparable properties have been selected and how that information translates into the appraised price.12
[43]I make the following general comments about these provisions:
(a)It is the appraised figure or range (the Licensee’s opinion), not the selected comparable sales (the data justifying the opinion) which must realistically reflect current market conditions and in that sense be “up to date” or “current”. That opinion is one which the Licensee must arrive at using his or her due care skill, expertise and judgment.
(b)The appraisal must be supported by “comparable information” – that is information capable of being compared.
(c)The comparable information must be on “sales of similar land and similar locations”.
(d)There is no requirement that the comparable information be “recent” or “current”. Information may be capable of being compared, albeit eight to 11 months old. At most the date of previous sales is one factor among others, including the specific features of a property (bedrooms, bathrooms, etc), its layout, size, aspect and location generally which must be taken into account in collation of the “comparable information” required. I accept in that context the submission of both the Authority and the appellants that comparables are not to be considered prima facie excluded on account of their age.
(e)However, what is ultimately required is for the Licensee to stand back from the comparable information and make his or her own assessment of value on a basis which realistically reflects current market conditions. In the case of comparables some months or more earlier
12 Rodgers v Real Estate Agents Authority [2016] NZREADT 7 at [49]-[50].
than the appraisal, that may require an adjustment to reflect any positive or negative recalibration of the market. However, if the Licensee considers the market stable over the intervening period, there is no particular requirement to provide further explanation or justification for having used the comparables identified.
(f)It can be inferred from the words of r 10.3 that, for the purposes of r 10.2(c), “comparable” includes sales that are directly comparable and “semi-comparable” to the subject property. This is because it is only when such sales data does not exist that a Licensee is required to explain this in writing to the prospective client.
(g)If directly or semi-comparable sales data exists, r 10.3 does not apply. Its application is in respect of properties which might be described as unique or at least unusual.
(h)It is implicit in the Rule that the Licensee must not be selective in the choice of comparables to either elevate or suppress his or her appraisal. That point was made by the Tribunal in McCay-Woods13 when it noted that the purpose of the Rule is to:
… ensure transparency and that any appraisal provided by a licensee is realistic so as to avoid the risk of an overinflated (and therefore misleading) appraisal used simply to obtain a property listing; or an unrealistic low appraisal to ensure a quick sale and commission for the Licensee, but which may lead to vendors achieving significantly lower than market value for the property.
[44] Against this background, I agree with the Real Estate Agents Authority (the Authority) that the focus of the Tribunal should have been on whether the appraised value was consistent with the actual market at the time, not whether a property which sold nine to 11 months earlier “may not still be current”.
[45] In the present case there can be no dispute that the comparables chosen were indeed capable of being compared with the Barkers’ property in terms of location,
13 McCay-Woods v Real Estate Agents Authority [2014] NZREADT 103 at [57].
layout, size, condition, aspect and outlook. The Tribunal found as much. They were in that sense orthodox comparables.
[46] Nor was there any evidence that the Licensees did not regard them as realistically reflecting current market conditions. To the contrary, at the time they gave the appraisal they had just concluded the sale for $1,525,000 of another property in Briody Terrace (No.16), which was:
(a)smaller than the Barkers (198 square metres as opposed to 227);
(b)on a smaller parcel of land than the Barkers (181 square metres as opposed to 201);
(c)had the same CV as the Barkers ($1,500,000);
(d)sold at a higher price per square metre (psm) than the average of the three properties referred to in the appraisal ($7,702 as opposed to
$6,130 psm).
[47] Although the Licensees were unable to refer to this property in their appraisal (on account of confidentiality provisions relating to the sale), its sale price confirmed the continuing relevance of the three sales which they did rely on14 and was strongly suggestive of a stable or even improving market in the Stonefields area.
[48] The Tribunal’s decision proceeds on the assumption the appraisal “may not still be current”. Although that might always be said of a sale nine to 10 months earlier, there was no evidence before the Committee (or Tribunal) suggesting a decline in the market during the intervening period, which is the premise on which the Barker’s complaint about the CMA was based. In that sense I consider the Tribunal to have come close to speculating on the evidence.
14 Applying the average per square metre rate on the three sales to the Barkers’ property would have produced an assessed value of $1,391,000. It appears therefore then an adjustment was made to reflect the superior psm rate on the confidential sale.
[49] Criticising the appraisal because of a possible absence of currency is also difficult to align with the Tribunal’s previous decisions in Alan Rayner v Real Estate Agents Authority and McCay-Woods v Real Estate Agents Authority,15 where sales of between one (Alan Rayner) and two years (McCay-Woods) were considered valid comparables. Even if the intervening period had rendered the sales not directly comparable they must, in my view, be considered at least semi-comparable and as such were legitimate inclusions in the appraisal.
[50] Ultimately, as Ms Cherrington conceded in her submissions, the Licensees could not be criticised for including the comparables which they did. The problem was, she said, that the market had dropped in the intervening period and that the appraised value did not therefore satisfy the r 10.2(b) requirement. But as she also conceded, there was no evidence to that effect before either the Committee or the Tribunal. That in my view is ultimately fatal to the argument.
[51] I am also unable to agree with the Tribunal’s conclusion that if the Licensees considered the previous sales identified by them to be comparable, notwithstanding the elapsed time, “then that should have been pointed out and explained in the appraisal”.16
[52] Although the Tribunal held in Rodgers that an appraisal must inform prospective clients why particular properties have been selected and how that translates to the appraised price,17 perspective needs to be retained. An appraisal is not a registered valuation and, as the Tribunal itself observed in McCay-Woods,18 the Rule requirement is simply that the appraisal reflects current market conditions and that comparable sales information is provided. In particular, I see nothing in the Rules which would require detailed justification for inclusion of comparables approximately 10 months old, especially when the CMA was itself transparent about the sale dates of the properties which it identified. Of course the Licencees were, as I have indicated, still required to stand back from the comparable sales information and make their own
15 Alan Rayner v Real Estate Agents Authority [2019] NZREADT 30; McCay-Woods v Real Estate Agents Authority [2014] NZREADT 103.
16 Barker v Real Estate Agents Authority [2019] NZREADT 36 at [55].
17 Rodgers v Real Estate Agents Authority [2016] NZREADT 7 at [50].
18 At [68].
best assessment realistically reflecting current market conditions. But there is in my view no evidence that they failed to do so.
Was r 10.3 engaged?
[53] The Tribunal held that, if there were no more recent sales of comparable properties, then “in accordance with r 10.3 that should have been pointed out and explained”. Both the appellants and the Authority submit that this does not represent a correct application of the rule.
[54] I agree with the Authority that r 10.3 provides for situations where a Licensee is unable to obtain any sales data which has, in the Authority’s words, any “appreciable degree of comparability to the vendor’s property”. It has no application to cases such as the present where the 2017 sales were directly comparable (or at the very minimum semi-comparable) to Property 1. It neither requires a Licensee to proffer any particular explanation when semi-comparable sales data has been used or to explain why certain sales (admittedly comparable or semi-comparable) are more comparable than others. However, in order to comply with the Licensee’s obligations under r 10.2 the Licensee will need to provide a reasonable explanation in terms of selection and “translation”. In the case of semi-comparable properties this may, as the Authority submits, involve outlining the features which distinguish the vendor’s property from the comparators.
Was there jurisdiction to find breaches of rr 6.2, 6.4 and 9.2 on the basis found by the Tribunal?
[55] The Tribunal’s jurisdiction on appeal is conferred by s 111(1) of the Act which provides that a person affected by a determination may appeal against such determination. The reference is to a determination of the Committee. The backdrop is what Mander J described in Edinburgh Realty Ltd v Scandrett as:19
... carefully prescribed procedures for bringing a complaint involving the investigation and determination by a Complaints Assessment Committee.
[56] He in turn described the appellate procedure as “limited … confined as it is to being from a Committee’s determination” and one which “could not be widened”.
19 Edinburgh Realty Ltd v Scandrett [2016] NZHC 2898, (2016) 18 NZCPR 23 at [38].
[57] That conclusion is consistent with the earlier decision of Wyatt v Real Estate Agents Authority where Woodhouse J held that, in the absence of any determination by the Committee, the Tribunal had no jurisdiction to decide the point in issue.20 In that case the point had not been the subject of a determination by the Committee and had not been argued before it.
[58] Nor does voluntary engagement with the issue before the Tribunal change the position. As Woodhouse J observed in Wyatt the jurisdiction cannot be “effectively granted by agreement”.21
[59] In the present case, and as I have already pointed out, the argument advanced by the Barkers at the Tribunal in relation to the H Trust offer was quite different to that advanced before the Committee where the allegation had been that there was no other bona fide offer – effectively therefore an allegation that the Barkers had been lied to. By contrast, the argument which appealed to the Tribunal was that by failing to advise the Barkers that the H Trust offer had been rejected the Licencees had placed them under “undue pressure”. That argument was first made in the course of counsel’s submissions before the Tribunal. It could not even be said to have been squarely raised in the notice of appeal from the Committee decision. Significantly, up until the Tribunal hearing, the allegation of “undue pressure” had been confined to positive actions on the part of the agents in the nature of “encouragement” to submit an offer. That allegation was rejected by the Committee whose decision in that respect was upheld by the Tribunal. Again, there is no cross-appeal from that aspect of the Tribunal’s decision.
[60] So the position is that the “undue pressure” allegation “morphed” before the Tribunal to include a new allegation based ultimately on the proposition that the agents had withheld information which in fairness they should have provided (r 6.4) and had thereby placed the Barkers under undue or unfair pressure (r 9.2).
[61] The difficulty with the way in which this unfolded is that, at the investigative and evidential phases which preceded the Committee’s determination, the focus was
20 Wyatt v Real Estate Agents Authority [2012] NZHC 2550, (2012) 25 NZTC 20-152 at [64].
21 At [65].
on whether there was in fact any other offer, not the precise nature of the advice given by the agents (whether for example the Barkers were told simply that there was other “interest” at a particular level or whether they were specifically advised another offer had been made), when precisely that advice was given (before or after the H Trust offer was rejected), or whether the advice was updated at the point the H Trust offer was rejected. Indeed, and as I have also indicated previously, the Barkers did not refer to the “updating” issue at all in their evidence despite the fact that Mr Wan had, as part of his overall narrative, variously stated that he had “informed” the Barkers about the rejection or “would have told them”.
[62] This in turn was reflected in the Committee’s decision. Its relevant determination was that “it is not proven that the Licencees … misled [the Barkers] about another prospective purchaser”. It had nothing at all to say about communicating rejection of a bona fide offer.
[63] Ms Harkness accepts that when the nature of the case changed before the Tribunal she did her best to rebut it by reference to Mr Wan’s evidence but she says no such voluntary engagement can confer jurisdiction where there was none and that this Court should allow this aspect of the appeal on jurisdictional grounds.
[64] For the Authority, Ms Mok submits that it is “unlikely” that the Tribunal had jurisdiction.22 She emphasises that the statutory limitation on jurisdiction is ultimately a reflection of natural justice considerations and that because the Barkers did not initially advance their case on the basis prosecuted in the Tribunal, the Authority’s Investigation Report did not address the “failing to advise” issue, it was not identified in the “Decision to Inquire”, and nor were the Licensees requested to respond to it. As a result, she submitted, various evidential lacunae had occurred which in turn had a bearing on the natural justice of the Tribunal’s approach.
[65]For the Barkers, Ms Cherrington relied on the older Court of Appeal authority
Palmerston North-Kairanga River Board v Frost.23 That was a case in which the
22 This represented a change from the position set out in the Authority’s written submissions as a result of matters traversed in the oral hearing.
23 Palmerston North-Kairanga River Board v Frost (1916) 35 NZLR 1110.
Board was, on appeal, permitted to rely on a defence (statutory authority) which had not been pleaded separately but which had been raised in the context of another defence. This was despite the fact that the point had not been taken at trial. She submitted that because the Notice of Appeal to the Tribunal had stated that, “the reason we put in an unconditional pre-auction offer on Property 2 was because Stephen Wan told us there was another offer on the property”, a logical extension of that argument is that they would not have done so if Mr Wan had disclosed to them that the other offer was no longer in place. She submitted such “logical extension” was within the bounds of the Palmerston North case.
[66] In the specific statutory context to which I have referred I do not see the issue as resolved by the terms of the Appeal to the Tribunal. The correct focus is on the Committee’s determination and the carefully prescribed procedures which predated it. I agree with the appellants and the Authority that, in the way this issue developed, with the focus at investigative and evidentiary phase being on the existence of another offer and not whether there was an obligation to communicate rejection of an offer acknowledged to exist, the natural justice considerations which underpin the jurisdictional point are engaged. In particular, if that had been the focus then there would have to have been far greater emphasis in the evidence (and commensurate findings of fact) in respect of precisely what was said by Mr Wan, when and in what context. If, as Mr Wan says in his statement, he was simply responding to an inquiry by the Barkers about other interest in the property at a time before the H Trust offer was rejected, the result may well be different to a situation where Mr Wan was proactively trying to create pressure on the Barkers or where the offer was no longer current.24 And if the complaint had been put on the basis of a licensee obligation to provide updates on the status of a third party offer, then the Committee may well have had to consider how this aligned with licensee obligations of confidentiality to the vendor of Property 2. Indeed the Licensees may have considered it necessary to call expert evidence in this regard.
24 The authorities establish that it is legitimate for a Licensee to create a sense of urgency and competition but that it is contrary to their legal and ethical obligations to mislead a prospective purchaser into believing that there are other offers when there are not: Murphy v Real Estate Agents Authority [2015] NZREADT 44 at [43] and [65].
[67] None of these issues were considered by the Committee for the simple reason that it did not need to. Its focus was (appropriately) on whether there had in fact been another offer or not. It did not even have to make a finding about what was said in respect of the third party interest.25
[68] For these reasons I agree with the appellants and Ms Mok that the jurisdiction of the Tribunal did not extend to a finding that the Licensees placed the Barkers under undue or unfair pressure by failing to advice that the H Trust’s offer had been rejected. However, if I am wrong in that conclusion I go on to explain why their appeal from the finding should otherwise be allowed.
The Tribunal’s finding about communication of the rejection
[69] The Tribunal proceeded on the basis that there was a dispute as to whether Mr and Mrs Barker were told that the H Trust’s offer had been rejected.26 It defined the dispute as follows:27
Mr and Mrs Barker say they were not told this before they submitted their offer.28 Mr Wan’s response to the complaint was inconsistent. He first submitted that “he would have told Mr and Mrs Barker of this”. Later he said, “I informed Mr and Mrs Barker about this”.
[70] It then went on to hold that, “the Committee was wrong to find that it could not determine the conflict between [this evidence]”,29 that the Barkers “evidence” was supported by a number of extrinsic facts and that it was “more likely than not that if they had been told the H Trust’s offer was no longer “live” they would not have submitted their pre-auction offer”.30
[71]I have a number of difficulties with the approach which the Tribunal adopted.
25 The Barkers’ position in this respect was inconsistent. In places they referred to having been told about another “offer” but in others to the fact that there was “other interest in the property” (an uncontroversial proposition). Mr Wan referred to advising of other interest in the “mid to upper
$900,000s” but also to having “informed” the Barkers that the H Trust offer was “not at a level acceptable to the vendor”.
26 Barker v Real Estate Agents Authority [2019] NZREADT 36 at [15].
27 At [15].
28 At [58] and [59]. To similar effect the Tribunal referred to Mr and Mrs Barker’s “evidence” that they were “not told”.
29 At [58].
30 At [59]
[72] Firstly, the Barkers did not at any stage say that, “they were not told this before they submitted their offer”. There is nothing in the original complaint to that effect (for the understandable reason that their allegation at that stage was that there had been no bona fide offer at all). Moreover, and as I have already discussed, despite their reply containing vigorous rebuttal of various statements in the Licensee’s evidence, nothing at all was said in response to Mr Wan’s statements about having told them of the rejection. At most, all that was available by way of evidence about the Barker’s position were inferences. But the reliability of such inferences had also to be considered against the background of evidence which was inconsistent as to what they were initially told by Mr Wan, viz that there was another “offer” or, alternatively, that there was “other interest in the property”.31
[73] Secondly, the Committee did not make a finding that it could not resolve this particular alleged conflict. Its findings about there being “direct conflict[s] in the evidence which cannot be resolved one way or the other”, were directed to conflicts about the extent to which the Barkers were actively encouraged to make a pre-auction offer; and/or the Licensees inflated the Barker’s price expectation on Property 1. This, therefore, doubles back on the jurisdictional point – the issue of whether the Licensees had an obligation to communicate the outcome of the bona fide third party offer was simply never before the Committee because that was not the way the Barkers claim had been initially framed.
[74] Thirdly, the Tribunal’s finding, on the balance of probabilities, that the Barkers would not have made a pre-auction offer if they had known the H Trust offer was no longer “live” was:
(a)unsupported by any statement to that effect by the Barkers;
(b)inconsistent with the statement by them that, having been “assured” by representations that the Licensees would “easily obtain a premium price for property, ... we went ahead and signed an unconditional pre-auction
31 Refer fn 25 above. Indeed the only response to what Mr Wan said about the H Trust offer was, “John and Stephen told us there was other interest in the property and we needed to make a move to secure it”. The reference to other interest was undoubtedly correct and the sense of urgency sought to be created within permissible grounds in accordance with the authorities.
offer for Property 2”.32 So it was the active encouragement argument, rejected by both the Committee and Tribunal, which the Barkers said was operative in their making a pre-auction offer, not failure to communicate the rejection;
(c)inconsistent with the fact that the Barkers had, on the occasion of their first visit to Property 2 on 26 June 2018, expressed a desire to make a pre-auction offer. This was before the H Trust had even made an offer (27 June) and at a time when all that could be said (and, I conclude, on the balance of probabilities, all that was said) was that there was other interest in the property. So the Barkers’ enthusiasm to make an offer was longstanding and uninfluenced by the specifics of the H Trust’s subsequent offer.
[75] Fourthly, I do not see any of the actions taken by the Barkers in the period between 26 June, when they first inspected Property 2, and 6 July, when they made their offer (including funding inquiries and a decision to lift their offer, from the
$975,000 initially indicated to $980,000), as any more supportive of the conclusion reached by the Tribunal than of the alternative thesis that they had from the outset wished to make a pre-auction offer at an acceptable level, and were simply putting in place the steps necessary for them to do so – including being able to pay a deposit and participate in the accelerated auction that would result from acceptance of a pre- auction offer.
[76] For these reasons, and had it been necessary, I would have come to a different conclusion on the evidence from that reached by the Tribunal. I acknowledge that Mr Wan’s statements did not precisely align and that references to what a witness “would have” done often predicate reconstruction. But his was the best evidence on the subject and it was never rebutted. More particularly however, I would not have considered it established on the balance of probabilities that if the Barkers had been told that the H Trust offer was no longer live they would not have submitted their pre- auction offer.
32 Statement in Reply, dated 8 December 2018, at 2.11.
Could the Barkers be said, in any event, to have been placed under undue or unfair pressure by alleged non-disclosure of the rejection?
[77] In my view, this was the critical factual inquiry and is appropriately answered in the negative. That is because, on the evidence:
(a)The Barkers were familiar with Ray White’s pre-auction sales processes from 23 May 2018 (when they were provided with them as part of the package of information supplied in the context of a potential listing for Property 1;
(b)They were provided with another copy of the material on the evening of 26 June after expressing a desire to place a pre-auction offer on Property 2;
(c)They had an extended period to take professional advice which they were advised by Mr Wan to do;
(d)They were led through the pre-auction procedures (and in particular told that an acceptable pre-auction offer would result in acceleration of the auction at which other interested parties would have an opportunity to bid) before they signed their offer on 6 July;
(e)The Pre-Auction offer – Purchaser’s Form signed by them clearly set out this procedure.
[78] At the time they signed the pre-auction offer the Barkers must therefore have known, or at a minimum, should reasonably have known that:
(a)If the H Trust offer had been accepted they would have themselves already been invited to an accelerated auction;
(b)That the offer must accordingly have either been rejected or at most was “hanging” in the sense of having neither been accepted or rejected;
(c)If “hanging”, that it was no threat to them until it was accepted at which point they would be able to compete for the property at an accelerated auction;
(d)That their own offer would, if accepted, result in the H Trust likewise having the opportunity to better it at auction.
[79] All of this is entirely consistent with the Barkers continuing with their preparatory inquiries. They had to be in a position to move at short notice if required. But it is inconsistent with the Tribunal’s conclusion that they were, at the time of their offer, under “undue or unfair pressure” as a result of non-communication of the rejection. If they had read any of the materials provided or the form signed, or had listened to Licensee’s explanation of the process they would have realised that they were under no particular pressure at that time, and if they had any contrary view then it was not the responsibility of the Licensees. Irrespective of whether the rejection was communicated, I cannot therefore agree with the Tribunal’s factual finding about the existence of undue and unfair pressure arising out of the H Trust offer. In coming to that conclusion I am mindful, as previously pointed out, that the Tribunal had no special advantage over this Court in assessing the facts.
Result
[80]I allow the appeal.
[81] I set aside the Tribunal’s finding of unsatisfactory conduct against the Licensees and the associated order of censure. I reinstate the decision of the Committee to take no further action.
Costs
[82] In their synopsis of submissions the Licensees seek costs. I have not however been addressed on the subject. That may be a position they wish to further reflect on after discussion with their Principal. If the costs claim is maintained and cannot be resolved, memoranda may be filed (maximum three pages). Respondent’s
submissions are to be filed within three weeks of any submissions by the appellants, and appellants’ reply (if any) within one week thereafter.
Muir J
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