Real Estate Agents Authority v A
[2017] NZHC 2929
•28 November 2017
NOTE: PUBLICATION OF NAME, ADDRESS, OCCUPATION OR IDENTIFYING PARTICULARS OF RESPONDENT PROHIBITED BY S 201
OF THE CRIMINAL PROCEDURE ACT 2011.
ORDER PROHIBITING PUBLICATION OF NAME, ADDRESS OR IDENTIFYING PARTICULARS OF REAL ESTATE AGENCY EMPLOYING THE RESPONDENT PURSUANT TO S 202 CRIMINAL PROCEDURE ACT
2011.
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2017-412-000032 [2017] NZHC 2929
BETWEEN REAL ESTATE AGENTS AUTHORITY
Appellant
AND
A Respondent
Hearing: 13 September 2017 Appearances:
M Hodge for the Appellant
C S Withnall QC and M Ryan for the RespondentJudgment:
28 November 2017
JUDGMENT OF NATION J
[1] In July 2016, the respondent pleaded guilty to 26 charges of aiding and abetting a company to apply PAYE deductions for a purpose other than payment to the Commissioner of Inland Revenue, and five charges1 of aiding and abetting the
same company to fail to furnish GST returns.2 The total amount of unpaid tax was
1 This appeal arises indirectly out of those proceedings. In those proceedings, orders were made for the suppression of the respondent’s name and also that of the real estate agency which she was working with. Because of the need to recognise those orders, neither the respondent nor the agency are referred to by name in this judgment.
2 Tax Administration Act 1994, ss 143A and 143B.
REAL ESTATE AGENTS AUTHORITY v A [2017] NZHC 2929 [28 November 2017]
$233,866.31. The offending occurred between July 2013 and September 2015. Between October 2013 and October 2015, the respondent spent approximately
$278,000 on online gambling.
[2] On 2 September 2016, the respondent was sentenced to five months’ community detention and 200 hours’ community work. She was also ordered to pay reparation of $233,866.31.
[3] In August 2016, the respondent applied to renew her salesperson licence under the Real Estate Agents Act 2008 (the Act). The appellant, the registrar of the Real Estate Agents Authority (the registrar), declined her application for renewal on the basis she was not satisfied the respondent was a fit and proper person to be licenced as a sales person.
[4] The respondent subsequently applied for a review of the registrar’s decision
to the Real Estate Agents Disciplinary Tribunal (the Tribunal).
[5] In a decision of 1 March 2017, the Tribunal granted the respondent’s application and renewed her salesperson licence.3 The registrar appeals against that decision.
Previous decisions
[6] In her decision of 14 September 2016, the registrar said:
The offences you were convicted of required knowledge of wrong doing on
your part. Licence holders under the Act have a number of obligations
which require them to act with the highest level of honesty and integrity. While tax evasion is not a crime of dishonesty under section 2(1) of the
Crimes Act 1961 these convictions mean that … you are not a fit and proper
person to hold a licence. It is essential that consumers are able to rely on the honesty and integrity of real estate agents in respect of real estate
transactions.
[7]
The Tribunal carefully summarised the respondent’s offending.
It
summarised the registrar’s reasons for her decision and then the evidence she had
heard from the respondent and from the manager of the real estate agency which was
3 [A] v Registrar of the Real Estate Agents Authority [2017] NZREADT 10.
then employing the respondent as an administrative assistant. The Tribunal referred to the submissions which had been made by counsel for the respondent and on behalf of the registrar who was the respondent to her application. In making its assessment as to whether the respondent was a “fit and proper person”, the Tribunal set out four features relevant to the assessment, as previously identified by the Tribunal in Revill v Registrar of the Real Estate Agents Authority and in a judgment of the High Court in Re M concerning a law practitioner.4
[8] The Tribunal stated that neither it nor the registrar could treat the respondent’s convictions lightly. In accordance with the purposes of the Act, it said it was essential that clients and customers could rely on the honesty and integrity of licensees and that they be protected from any form of dishonesty. The Tribunal considered the respondent’s decisions, with regard to her offending, had a serious adverse impact on her employees. It said that, as a licensee of several years standing, the respondent had a heavier burden in establishing that she is a fit and proper person than would a new applicant. It also noted that her offending was not an error of youth by an immature person.
[9] The Tribunal said it looked at the facts of the case in the round with the focus necessarily being forward-looking. It said it took into account that her offending did not relate to her work as a licenced sales person. It also took into account the many statements provided in her support from people who had known or had dealings with her over many years. It took into account the nature and extent of the support and supervision offered by the agency then employing her.
[10] The Tribunal concluded that its decision came down to its assessment of the steps the respondent had taken to address her addiction and to remove herself from personal business involvement, and the measures put in place by the agency concerning the nature of the professional work that she may undertake and the management of her personal financial matters. It particularly emphasised the latter: the way in which the agency would manage the filing of the respondent’s GST and
tax payments, and of the way the agency recognised that she would need particular
4 Revill v Registrar of the Real Estate Agents Authority [2011] NZREADT 41; Re M (Note) [2005]
2 NZLR 544 at 547 (HC).
supervision and particularly careful management and monitoring. It also took into account her evidence as to the steps she had taken to address her addiction, to make her bank account available to family members, to comply with the agency’s particular requirements and to be open with clients about her convictions. It said each of those matters gave the Tribunal comfort as to her fitness to continue practicing as a sales person.
[11] The Tribunal made it clear that its decision to renew her licence assumed that the measures she and the agency had put in place, to reduce any recurrence of the circumstances that led to her offending, would continue. It did not impose any conditions as to this but said that, if her position was to change, it was expected the agency employing her would promptly advise the Authority.5 It also indicated that it expected the registrar to seek confirmation of those matters when the respondent next applied for a renewal of her licence.
Approach on appeal
[12] The appeal is brought pursuant to s 116 of the Act which provides a general right of appeal for any decision of the Tribunal to the High Court. The appeal was conducted on the record before the Tribunal. There was no dispute that the principles affirmed by the Supreme Court in Austin Nichols & Co Inc v Stichting Lodestar apply in respect of appeals against licencing decisions under the Act.6
However, counsel emphasised different aspects of the Supreme Court’s judgment.
[13] Mr Hodge, for the registrar, emphasised that, in Austin Nichols, the appeal Court had the responsibility of arriving at its own assessment of the merits of the case.
[14] Mr Withnall QC accepted that Austin Nichols did apply but referred to the way the Supreme Court had said an appeal court “may rightly hesitate to conclude that findings of fact or fact and degree are wrong” on appeals from a tribunal with
special expertise and that, on an appeal, an appellate court may on occasions have to
5 In taking that approach, the Tribunal probably accepted the submission made for the registrar that, under the Act, neither the registrar nor the Tribunal had power to grant a licence subject to conditions other than those the Act stated were associated with the particular licence.
6 Austin Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 (SC).
acknowledge the particular advantage a tribunal of first instance has in assessing credibility. He referred to the way Woodhouse J in this Court had recognised this Tribunal was one with special expertise because of its membership and because of the experience of members in adjudicating on complaints under the Act.7
Woodhouse J and Lang J, in Robinson v Real Estate Agents Authority, had referred to the Authority having primary responsibility for setting appropriate standards of conduct within the real estate industry and maintaining constant oversight over the industry as a whole so that the Court should not lightly substitute its own standards for those set or imposed by the Tribunal.8
[15] Mr Withnall acknowledged there were no express findings of credibility in the instant case but said the Tribunal nevertheless had the advantage of seeing and hearing the respondent, assessing her credibility and made no adverse comment. Mr Withnall said the decision the Tribunal was called upon to make was ultimately a value judgment in deciding whether the respondent had discharged the onus on her of satisfying it that she was a fit and proper person to carry out the functions authorised by the grant of a salespersons licence. He submitted that, before the Court could substitute its own value judgment for that of the Tribunal, it has to be satisfied that the Tribunal was wrong in the conclusion it reached. He stressed the importance of evaluating the case on its own facts and merits, the importance of being forward-looking and considering all relevant matters in the round.
[16] There has been some divergence of opinion within the High Court as to whether appeals from the decisions of professional disciplinary tribunals as to penalty should be considered as appeals against the exercise of a discretion where the criteria for a successful appeal are stricter9 or whether an appellate Court has the responsibility of arriving at its own assessment of the merits of the case.10
[17] This is not an appeal against the imposition of a penalty. The Tribunal’s
decision here was of the sort described by the full Court in Sisson. It required an
7 Morton-Jones v Real Estate Agents Authority [2016] NZHC 1804 at [32]-[33].
8 Robinson v Real Estate Agents Authority (CAC 20006) [2014] NZHC 2613.
9 Kumandan v Real Estate Agents Authority [2013] NZHC 1528 citing Roberts v A Professional
Conduct Committee of the Nursing Council of New Zealand [2012] NZHC 442.
10 Sisson v The Standards Committee 2 of the Canterbury Westland Branch of the New Zealand
Law Society [2013] NZHC 349 at [14]-[15].
assessment of fact and degree and entailed a value judgment so, as was considered necessary by the full Court, “it is incumbent upon the appellate Court to reach its own view on both aspects”.
[18] I accept, consistent with the Supreme Court’s opinion in Austin Nichols, that it is appropriate to hesitate before contending that findings of fact or degree, by a Tribunal with special expertise, are wrong. The Tribunal here is of that sort.
[19] I also accept, as Lang J did, that, in applying the Act and rules, the Tribunal has primary responsibility for setting appropriate standards of conduct within the real estate industry so that the Court should not lightly substitute its own standards for those set and imposed by the Tribunal. I also acknowledge the advantage the Tribunal may have in assessing credibility, having heard and seen witnesses giving their evidence.
[20] Here, however, there were no real issues of credibility. The Tribunal had to and could make its assessment as to whether the respondent was a fit and proper person on the basis of what she had said was what she meant to say, both in her evidence and in the written material she had placed before the registrar and the Tribunal. For example, to assess future risk, the Tribunal needed to consider the extent to which the respondent acknowledged the nature and seriousness of her wrongdoing. In the hearing before the Tribunal, counsel for the registrar asked an open question of the respondent as to what it was she was remorseful for. The way she responded speaks for itself. She did not mention the harm she had done to her employees whose wages she had partly taken and used for gambling rather than for payment of PAYE. Nor did she mention the harm she had done to those employees through the way she had used some $8,000 for gambling which should have been paid to their Kiwisaver. She did not mention that she had been dishonest.
[21] The Tribunal had to decide what it should make of all the respondent said regarding the issues the Tribunal had to consider, not whether what she was saying was true or reliable. My task is the same and, in that, I am not at a disadvantage.
[22] Through the experience and expertise of its members, the Tribunal has the advantage of a detailed knowledge of what is involved in real estate work. That means they are well placed to reach a view as to whether the particular conduct of a licensee is either unsatisfactory or disgraceful in terms of the Act. Nevertheless, as to that and when it comes to determining whether a person is a fit and proper person to be licenced as part of a regulated profession which requires high standards of honesty and integrity, the legislation has recognised the ability of the High Court to make such an assessment and has made it responsible for doing so on an appeal. In its judgment in Leary v New Zealand Law Practitioners Disciplinary Tribunal, a full High Court demonstrates how it has done that.11
[23] Ultimately, with an appeal, by way of rehearing, the Court has to decide whether the Tribunal’s decision was wrong, bearing in mind it is the appellant who has the onus of establishing this. Despite the way he deferred to the role which the Tribunal had under the Act, this is what Lang J did in Robinson where he allowed the appeal and overturned the Tribunal’s decision.12
Submissions
[24] The specific grounds of appeal relied upon by the registrar were:
(a) The Tribunal erred by ascribing insufficient weight to both the seriousness and the recent nature of the respondent’s convictions for dishonesty offences, in light of the consumer protection focus and scheme of the Act.
(b) The Tribunal erred by failing to take into account or place enough weight on the limited amount of time between the respondent’s convictions for dishonesty offences and her application for a renewal of her licence given the need for significant rehabilitation on the respondent’s part in order to be properly assessed as a fit and proper person to hold a licence under the Act.
(c) The Tribunal erred by giving to much weight to factors such as the measures put in place by the agency where the respondent is presently employed given that the applicable test under the Act is the fitness and propriety of the respondent, and where the effect of holding a salesperson’s licence under the Act is that a licensee is not tied to a particular employer, but rather is free to work wherever they choose.
11 Leary v New Zealand Law Practitioners Disciplinary Tribunal [2008] NZAR 57.
12 Robinson v Real Estate Agents Authority, above n 8.
(d) The Tribunal erred by giving the respondent credit for being willing to disclose her convictions to clients to allow them to be fairly informed of the respondents offending in circumstances where a name suppression order has been obtained in the District Court which prevents consumers from being informed about the respondent’s offending other than at the discretion of the respondent.
(e) On the evidence before it the Tribunal was wrong to conclude that it was satisfied to the requisite standard that the respondent is a fit and proper person to hold a salesperson’s licence at the present time.
[25] Mr Hodge, for the registrar, addressed those grounds in his submissions in ways that are reflected in my decision.
[26] In his submissions for the respondent, Mr Withnall referred to the respondent having returned to the real estate industry in about 2010 but her continuing with a clothing business which she had become involved with in about 2000. She decided to carry on alone after other partners withdrew in 2010. Mr Withnall referred to the respondent’s evidence about how she struggled to juggle her real estate work while running the clothing business, how the business struggled financially and how she had to sell her home to prop it up. He said it was under these pressures she resorted to online gambling and became addicted.
[27] With regard to the Tribunal’s decision, Mr Withnall noted that no criticism was being made of the principles applied by the Tribunal, consistent with its earlier decision in Revill.13
[28] As to the time that had passed before matters were considered, Mr Withnall submitted the relevant gap should have been between the date of the offending and the date when the Tribunal made its decision, ie between September 2015 and 10
February 2017. He highlighted the steps the respondent had taken to accept responsibility for what she had done and to deal with her gambling addiction and shortcomings in managing business affairs.
[29] Mr Withnall submitted the fit and proper person test had to be applied having regard to the particular licence sought and the scope of work which the licence
authorised. A salespersons licence authorises a sales person to carry out real estate
13 Revill v Registrar of the Real Estate Agents Authority, above n 4.
agency work only “for and on behalf of an agent”, so that such work has to be carried out under the supervision and management of a branch manager or agent. He said the consumer interest, which the Act seeks to protect in the case of a sales person, is that of ethical conduct and competency by sales persons in the course of conducting real estate work. He suggested the respondent’s 29 year career in real estate, without any substantive complaint, indicated there was little risk for the consumer in this regard.
[30] Overall, Mr Withnall submitted the Tribunal had properly carried out its functions and had reached a conclusion which it was entitled to, so that the appeal should be dismissed.
Decision
The offending
[31] Judge Phillips records in his sentencing notes that the respondent was responsible for handling all financial matters for a company of which she was the sole director and shareholder.14 Until March 2013, she was paying and making six- monthly GST returns six monthly as required. After that, from September 2013 and until September 2015, there were no GST payments or returns. Between July 2013 and September 2015, she did not pay the PAYE or Kiwisaver contributions that she had deducted from her employees, money which, as the Judge said, belonged to them. She did not file PAYE returns. Associated with this offending, she did not pay the employer’s monthly contributions to Kiwisaver, assessed at $8,653.93.
[32] In her own history and in letters she wrote to the registrar in support of her application, the respondent spoke of real estate being her “only true interest and passion – apart from family and friends”, but said she had what she described as a “burn out break” from real estate. In a statement put before the Tribunal, she said she took “a sabbatical from real estate in 2001”. It was during this time she became involved in the clothing manufacturing business with her brother and a friend, and also began developing a coffee shop. In 2010, she began working as a residential
sales person for another real estate agency before she was asked to join the present
14 Commission of Inland Revenue v [A] [2016] NZDC 18527.
agency. She said that she continued her involvement with the business after beginning work in real estate again. She described this, with the wisdom of hindsight, as “probably the worst decision [she] could have made”. The business struggled. She said she had to sell her home to meet its needs for cash. She was under considerable stress and things got on top of her. She became depressed and turned to gambling. She became addicted to gambling and said she lost her “sense of values. Looking back, I can see that I was deluding myself in refusing to accept the seriousness of the situation I was in.”
[33] The respondent gambled using a debit card linked to an account which she used both for the business and for personal expenditure. She said she began using the combined account after the 2013 IRD proposed liquidation. Although she said that she used a combined account because she was contemplating shutting down the business and a prospective new purchaser wanted to use their own bank, the purchase never happened. She could not logically explain why she closed down the business account. She acknowledged using the debit card on the combined account for gambling but then qualified that saying, to a large extent, she always thought that her real estate income was covering what was happening but said she never checked.
[34] Nowhere in her correspondence with the registrar, the material provided to the Tribunal or in her evidence before the Tribunal did the respondent expressly acknowledge that she had been dishonest.
[35] Before the Tribunal, the respondent said she did not accept she had made a conscious decision not to pay PAYE. She told the Tribunal that she had not filed Kiwisaver returns for two years but was not deliberately avoiding doing that. However, at the same time, she said she did not pay the Kiwisaver contributions because she did not have the funds to pay it.
[36] She said she had been stupid in putting the employees ahead of everything else with her business when she should have just shut the business but, as pointed out through cross-examination, she had not put the employees first when she had failed to make their Kiwisaver contributions.
[37] Significantly, given the judgment which the Tribunal had to make, this offending involved dishonesty. The respondent was retaining employees’ money to pay PAYE. They trusted her to pay that PAYE tax to the IRD. Instead, it was paid into one account which she used for both business and personal spending. The funds were subsequently used and lost with gambling. In the course of trading, her company had charged its clients GST. That GST was paid to her company on the basis it would ultimately be returned to the IRD. As Judge Phillips noted, it was taxpayers’ money. In breach of the company and her obligations to the IRD, these funds were also paid into that same bank account and used for gambling. The Judge was correct to describe all this as tax fraud.
[38] As the Tribunal noted, this conduct did not occur when the respondent was immature or youthful. She had 29 years’ experience working in real estate. She had been involved in the ownership and running of the business, with which ultimately the tax frauds occurred, since 2005. The offending occurred over a sustained period.
[39] Section 37 of the Act states that people who have been convicted within 10 years preceding the application for a licence of a crime involving dishonesty, are not eligible to hold a licence. As referred to in the Act, “crime involving dishonesty has the same meaning as in s 2(1) of the Crimes Act 1961”. That offending includes corruption and bribery involving public officials, crimes against rights of property including theft, conversion, burglary, robbery, money laundering, receiving, forgery and counterfeiting, and offences under the Secret Commissions Act 1910. As Mr Hodge acknowledged, this offending did not come within that definition but it was of a similar nature. One of the purposes of the Act is to promote public confidence in the performance of real estate agency work and one of the ways the Act sets to achieve its purpose is by raising industry standards.15 Consistent with the scheme and purpose of the Act, on the face of it, this offending was likely to mean that the
respondent would not be considered a fit and proper person to hold a licence.
15 Real Estate Agents Act 2008, ss 3(1) and (2)(b).
Significance of the respondent’s fraud
[40] A feature of the assessments which have been made in this case, by the agency which employs the respondent, the respondent herself and indeed the Tribunal, is the inadequate recognition and regard they had for the fact the respondent had, in her offending, been found guilty of fraud. Rather, they have all treated the offending as simply involving non-payment of tax and gambling. Hence, the Tribunal’s emphasis on the steps the respondent had taken to address her gambling addiction, to remove herself from personal business involvement and the measures the agency put in place to reduce risks relating to the payment of tax.
[41] Correspondence produced before the Tribunal confirmed that the respondent had stood herself down from real estate work because of the charges she faced. The agency proposed that she return to work on certain conditions. Those conditions all related to the arrangements which were to be put in place to ensure the appropriate GST returns were filed and paid, and funds were available to pay her tax. The manager ended his letter setting out the terms on which she could continue in employment with the agency with the statement:
Ultimately we want to provide you with support and guidance, now and in the future, to ensure your ongoing success as a taxpaying member of society and we think your best chance of doing this is as a real estate sales person with our company.
[42] In making those arrangements, there was no acknowledgement that, in resorting to dishonesty, the respondent had exhibited frailties and risks which could impact on her real estate work generally and in respect of which she needed special support and oversight given the recentness of her offending.
[43] There was no evidence before the Tribunal as to how licenced agents, who she would be responsible to, would monitor the work she was doing as a real estate agent, or the way she would be dealing with both vendors and prospective purchasers and displaying the honesty and integrity required of a licenced sales person. There was no evidence from anyone in the agency as to their recognition that she had personality traits that might create a risk for people who had to rely on her honesty in dealings they might have with her.
[44] Consistent with this, one of the submissions made for the respondent in support of her application to the registrar and by the agency in support of her application was that the business in which the offending occurred was not “related at all to operations as a real estate sales person”.
[45] In a letter of support dated 9 December 2016, the manager of the agency wrote “I can assure you that [the respondent] is deeply shamed by the failed business venture and her subsequent gambling”.
[46] In a letter the respondent wrote to the registrar of 27 September 2016, she said “the background to the offending comes from my persevering with a failed business in the clothing manufacturing industry. Contributing to this also was my online gambling.” That comment indicates that, in seeking her salespersons licence in her dealings with the Real Estate Agents Authority, the respondent was attributing her offending to a poor business decision rather than to her gambling addiction, a minimisation and transference in the same way was identified by the sentencing Judge. In that letter, she said she took full responsibility for the offending but she wrote of her offending and what she was doing to avoid any reoccurrence as if it was on the basis the offending raised concerns about only her tax dealings. She also said that, in her role as a sales person, there was no opportunity to handle or influence any financial dealings in a dishonest way.
[47] When asked what she would tell people about her offending, the respondent said that she would tell them she had been convicted and pleaded guilty to tax charges and that she was sentenced and “I did my five months and full reparations and community service”.
Minimisation of her offending
[48] In making its assessment of whether the respondent was a fit and proper person to hold a salesperson licence, I accept the Tribunal’s focus had to be looking forward. There is also some force in Mr Withnall’s submission that care had to be taken not to place too much emphasis on the sentencing Judge’s assessment as to the nature and seriousness of the respondent’s offending. Because the Sentencing Act
2002 required him to consider issues of accountability and promote a sense of
responsibility, denunciation and deterrence, his focus had to be more on what she had done rather than how the respondent might conduct herself in the future.
[49] Looking forward, the Tribunal had to make a value judgment and assess the risks, taking into account what had happened in the past. The way the respondent had taken responsibility for her offending and all that had led to that offending, was highly relevant to the assessment they had to make.
[50] On reading the Judge’s notes, I consider there were matters which were highly relevant in this regard but which were not mentioned in the Tribunal’s decision and/or given the appropriate weight.
[51] In his sentencing remarks, the Judge noted the considerable amount of information that had been put before him and the submission made through all that information and through her counsel that the overall position of the company was because of the respondent’s inability to manage the company properly. The Judge said “there were all these financial issues you put forward”. With all the information that was before him, the Judge said that, in reality, the financial issues arose when the respondent began gambling. He said it was as a result of the online gambling for her own greed that the company suffered and went into “terminal free fall”. He said an aggravating feature of the offending was that it occurred when the company and business was solvent.16 A significant feature of the Judge’s sentencing remarks was his assessment that she had minimised the seriousness and nature of what she had done and transferred blame for it. He said that, in her interview with the probation officer, she had “totally minimised [her] criminal conduct”. He referred to the significant amount of information which he had been given and read in relation to the sentencing and said “what really sticks out in all of this is that probably the most unconcerned person throughout the process is you”, referring to the respondent.
[52] The Judge’s comments were made at the sentencing which occurred on 2
September 2016, after she had acknowledged her offending through guilty pleas.
The Judge’s assessment as to the limited extent to which she was then
16 Consistent with the Judge’s observation, at the hearing before the Tribunal, the respondent said the business that she had been involved with continued to operate with new owners.
acknowledging the true nature and seriousness of her offending should rightly have been important factors for the Tribunal to consider when considering the fit and proper test for a sales person.
[53] The sentencing Judge did not consider she had demonstrated real remorse for what she had done, rather that she was sorry for the situation she was in.
[54] In a letter of 6 October 2016 to the registrar, the respondent said she took exception to the observations that had been made by the Judge with regard to a lack of remorse. She said “I do take exception with that, as he has not seen the upset and shame this has caused my family, friends and work colleagues – I have caused this and that is mine alone to bear.” That comment, made after the sentencing, was consistent with the Judge’s comments in this regard.
[55] The way the respondent answered the question as to what she was remorseful for, when asked this before the Tribunal, was also consistent with the assessment made by the Judge at her sentencing.
[56] In explaining her offending, the respondent emphasised that it resulted from poor decisions which she said were made in the best interests of her employees. In saying that, I consider there was the element of self-deception that must have been a significantly contributing factor in her original offending.
Suppression of names in the proceedings before the District Court
[57] The Tribunal noted that they had made their decision based on the assurance from the agency that the various measures it had put in place to avoid a recurrence of tax issues, together with support and monitoring of the respondent, would continue and the respondent would continue to take the steps required of her with regard to her addiction, monitoring of her bank accounts and disclosure of convictions.17
[58] One of the submissions made for the respondent before the Tribunal was that she would continue to make disclosure of her convictions to vendor clients and
appreciated she had duties in this regard to purchasers as well, although the Tribunal
17 [A] v Registrar of Real Estate Agents Authority, above n 3, at [41]
noted she had not previously considered this. The Tribunal had also referred to the manager’s evidence that they would monitor “the [respondent’s] commitment to disclosing the convictions to clients”. The Tribunal obviously thus considered such a commitment from both the respondent and the agency was of importance with the judgment they ultimately had to make.
[59] The respondent was working for the agency at the time of her sentencing. The prospect of people in Dunedin knowing of the respondent’s convictions would have been significantly enhanced if her name had been published in connection with her admitted offending.
[60] It is apparent from the Judge’s sentencing notes that in September 2016 the respondent made a determined application for her name to be suppressed because of the hardship she said she would suffer with publication. With her efforts in that regard, it is difficult to see why a few months later the Tribunal should have obtained some reassurance from what they said was her commitment to disclose her convictions to vendor clients, especially so when she told the Tribunal that she had not previously thought about whether or not purchasers were entitled to know about the convictions.
[61] It is also difficult to see how the Tribunal could have been assured by the commitment which the manager of the agency had given to monitor that there would be continuing disclosure when set against the agency’s views about how disclosure of this offending could affect their reputation. In his sentencing notes, the Judge considered carefully the application that had been made by the agency for suppression of its name and the risks the agency would face if the respondent’s name was published because of the way, in the public perception, the agency would be aligned with the respondent as a company which itself had been involved in this type of fraud. The Judge did grant suppression of the agency’s name and details that might lead to its identification. The Judge said this necessarily also required the suppression of the respondent’s name. An important factor in allowing such suppression was that, on the submissions made for the agency, he had been persuaded this was necessary for the respondent to be able to work as a sales person and thus pay the reparation required of her.
[62] The fact both the respondent and the agency went to such lengths to ensure their names were suppressed in relation to the offending which the respondent acknowledged was relevant in several ways to the assessment which the Tribunal had to make.
[63] Firstly, those efforts should have resulted in the Tribunal attaching little weight to assurances that the agency and the respondent gave as to ensuring people the respondent was dealing with would be aware of her previous offending.
[64] Not only did the respondent tell the Tribunal she had not thought about whether or not purchasers needed to be informed of her offending but, in saying that she would tell people, she said that it would be “very important for vendors” but, for purchasers, she would deal with it on a “case by case basis”.
[65] Secondly, the respondent’s own application for suppression of her name was not consistent with her, at the time of her sentencing, acknowledging the true nature of her offending and her acceptance of the consequences that would normally flow from that. Nor was it consistent with her later acceptance before the Tribunal that vendor clients needed to know about this offending. Had she accepted there would be publication of her name in association with the offending, there would have been information then in the public domain as to the nature of that offending.
[66] Thirdly, it is significant that the agency considered, given public perceptions, it would be damaging for their business if they were to be associated with someone who had been convicted of tax frauds in the way the respondent had been. That indicates that members of the public dealing with real estate agents would have less confidence in someone who had convictions for such offending and would be less inclined to deal with them as a result. The agency’s desire for suppression suggests that, within the industry, this offending would not have been consistent with someone being a fit and proper person to hold a salespersons licence.
[67] The agency’s desire for suppression, in connection with the sentencing and the respondent’s offending, is also more significant given the submission made by Mr Withnall to the registrar when she was considering the respondent’s application
that the business in which the offending occurred was not “related at all to operations as a real estate sales person”.
Inadequate consideration of the respondent’s underlying psychological
vulnerabilities in the assessment
[68] The steps taken by the respondent to deal with her gambling addiction need to be acknowledged and commended. However, in emphasising the way risks for the public had been reduced through the way the respondent dealt with that addiction, the Tribunal inadequately considered the risks that consumers might face in dealing with sales persons because of the financial pressures and incentives that might put consumers at risk in their dealings with the respondent as a sales person.
[69] I accept Mr Hodge’s submission that all people dealing with agents have to rely on their honesty and integrity. This will not be just in relation to the securing of monies that might be paid to an agent on account of the purchase price. Disclosures may have to be made about negative aspects of a property or its value where such disclosure might reduce the selling price or make the property more difficult to sell. When someone has a trait of ignoring matters that become a problem, as for instance in not filing tax returns, not paying tax and just thinking it will get better, that should raise a concern that this conduct could flow into real estate practice.
[70] Although it was not discussed at any length before the Tribunal, this Court can take judicial notice of the commercial pressures that agents and sales people have to work under in the real estate industry. Remuneration by way of commission is usually dependent upon obtaining listings and achieving sales. Success for the vendor client is ultimately determined by whether the sales person is able to negotiate a sale. A sales person has to be able to cope with those pressures but retain their honesty and integrity to meet the ethical obligations which are required by the Act and its rules.
[71] The standards of conduct required of a licenced sales person are summarised in r 6 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules
2012:
6 Standards of professional conduct
6.1 A licensee must comply with fiduciary obligations to the licensee's client.
6.2 A licensee must act in good faith and deal fairly with all parties engaged in a transaction.
6.3 A licensee must not engage in any conduct likely to bring the industry into disrepute.
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.
They are further detailed in the rules as to client and customer care.
[72] The fact the respondent was involved in tax fraud over two years, had a gambling addiction and resorted to dishonesty to facilitate that gambling would suggest that she has some inherent fundamental traits in her character which would mean that she could have difficulty in meeting those standards.
[73] Relevantly, a sales person has to meet their fiduciary obligations to clients, act in good faith, deal fairly with all parties to a transaction and meet full disclosure obligations in the context of the considerable person-to-person contact that is inherent in a sales person’s work. Although a sales person can carry out real estate agency work only for or on behalf of an agent,18 much of that work is likely to be carried out by the respondent independently. There was no evidence before the Tribunal as to any particular monitoring or support that would be provided to her in this aspect of her work. The agency manager who gave evidence before the Tribunal and who wrote letters of support to the registrar is not a real estate agent.
[74] The respondent’s personality or psychological weaknesses were identified, albeit incidentally, in the hearing before the Tribunal but were not commented on by
the manager of the agency or the Tribunal.
18 Real Estate Agents Act 2008, s 48(1).
[75] In her letter of 6 October 2016 to the registrar, explaining why she disagreed with the Judge’s conclusion that she showed a lack of remorse, the respondent explained why she had used the term “chronic avoidance” to the probation officer who had prepared her pre-sentence report. She said this came from her appointments with:
… the psychologist to whom I was meeting for an assessment. He observed this was the pattern of my whole life, and he thought had enabled me to cope with my cancer diagnosis and other business related activity difficulties.
[76] In that letter, she also mentioned that her sessions with the psychologist highlighted that her personal “coping mechanism, was effectively to keep her head in the sand re problems”.
[77] A Justice of the Peace, who provided a personal reference for the respondent, referred to her being a close family friend and of the trust he placed in her. The reference said she had “acknowledged her mistakes to the Court and recognises that she has some longstanding life issues to repair her fragile self-esteem”.
[78] A reference from another close friend and client, who attended the final hearing and sentencing, said the person the Judge described was not the person she knew. She described the respondent as “incredibly honest, hardworking, honest and reliable person” but went on to say:
She is the first person to help someone in need and, despite the charges, she put the welfare of her staff and clients ahead of her own needs. In a very difficult market she struggled to keep the business running when it would have made more sense for her to close the business and terminate all employment – a prospect she found daunting knowing the limited opportunities her staff faced. Her kind and caring nature put her in a very difficult position.
[79] In evidence before the Tribunal and in response to questions from the chair and another member of the Tribunal, she said that a psychologist had referred to her having a personality trait across several aspects of life. That was a trait of not facing up to her issues, her problems. She said this meant that “if there is a problem, I just carry on, put it inside me and keep going”. To the chair, she acknowledged that her trait was not to deal with issues and this affected all facets of her life.
[80] Before the Tribunal, the respondent explained how she had not filed or paid Kiwisaver returns by referring again to this personality trait of avoidance as being how she lived her life and that she had “a people pleaser personality where she tried to keep everybody happy and too many things might be going wrong”.
[81] Here, there was some evidence that the respondent had a fundamental weakness in her character which, given her history of offending, was likely to create risks for consumers dealing with her as a real estate sales person. There was really no evidence as to how she was attempting to address those weaknesses. She did not provide the psychologists report to the Tribunal.
[82] Given the brevity of the period between her offending and consideration of her application, there had been little opportunity and no evidence as to how she had set about changing her life so as to show that, if tempted, she would now have the strength of character to display the integrity and honesty required of a sales person. Nor did the evidence show she had acknowledged the true nature of the offending and her own frailties that had made the offending possible or demonstrate how she was overcoming those weaknesses.19
[83] This case contrasts with that of Revill v Registrar of the Real Estate Agents Authority.20 There, the applicant for a salespersons licence had a number of criminal convictions, largely historic. Of importance to the Tribunal, in overturning a decision of the registrar and agreeing to grant him a licence, was his evidence as to how, over the past 15 years, he had concentrated on “totally turning [his] life around” and of how he had “grown and matured” over at least the previous seven years. To the Tribunal, it was important that, in the intervening years after his criminal offending, the appellant had “set about changing his approach to life and, seemingly, has been rather successful at that”.
[84] In Leary v New Zealand Law Practitioners Disciplinary Tribunal, a full High
Court overturned a tribunal’s refusal to allow Mr Leary to practice again as a
19 There may be a point in the future where she is able to do this.
20 Revill v Registrar of the Real Estate Agents Authority, above n 4.
barrister 20 years after he had been struck off.21 The Court attached significant weight to references as to the way he had demonstrated “probity, honesty, intelligence and industry, sometimes in situations where others may have been tempted not to act honestly” in the 20 years since his original misconduct. It also referred to his evidence as to how he was far stronger in his character than he was at the time of his original misconduct.
[85] The High Court acknowledged that the views of an experienced tribunal were deserving of certain deference but considered such deference needs to be displaced if a court of appeal reaches the view the Tribunal’s conclusions were wrong. The Tribunal emphasised that the focus of a restoration application is prospective. The Court concluded:22
The evidence demonstrated Mr Leary’s acceptance of his past wrongdoing. More importantly, it demonstrated his acceptance of his need for reform and his efforts in achieving that reform in difficult circumstances over 20 years.
Overall assessment
[86] A number of references were provided by people who had used the respondent as a real estate agent. They valued the assistance she had provided to them and spoke of their wish that she be able to continue with this work in the future.
[87] Mr Withnall’s submission was that the risk of her being involved in a misrepresentation in her work as a real estate agent has to be assessed as minimal given her 29 years’ experience in real estate without any significant complaint as to her conduct. He also submitted that, because it was only through real estate that she had any prospect of making anything of the rest of her working life, there was very compelling motivation for her to take every possible care, step and precaution to
ensure that she is beyond approach.
21 Leary v New Zealand Law Practitioners Disciplinary Tribunal, above n 11.
22 At [55].
[88] I have had careful regard to that submission. The respondent’s tax frauds were not associated with her work in real estate but, at the time of that offending, one of the standards required of her as a licenced sales person was that she “must not engage in any conduct likely to bring the industry into disrepute”. This offending was of that sort, as acknowledged by the agency who did not want their name to be associated with her offending, hence their application for suppression. In evidence before the Tribunal, the respondent said that her family would not allow her to be in business on her own again. The references provided to the Tribunal by people who had used and valued the service which she had provided shows that she could be successful as a real estate agent. Balanced against that, however, was her recent involvement in serious offences of dishonesty. On all the evidence that was before it, I consider the Tribunal was wrong to conclude that she had established that she was a fit and proper person to be licenced as a sales person, able to uphold the standards required of her under the Act.
[89] I accordingly allow the appeal, cancel the order made by the Tribunal approving her licencing as a sales person under the Act and reinstate the decision made by the registrar declining her application.
[90] As the successful party, the appellant would normally be entitled to an order for costs. If no agreement can be reached over this, a memorandum on behalf of the appellant is to be filed by 13 December 2017. A response on behalf of the respondent is to be filed by 22 December 2017. The memoranda are each to be no longer than four pages. I will deal with the issue of costs, if required, on the basis of those memoranda.
Solicitors:
Meredith Connell, Auckland
C S Withnall QC, Barrister, Dunedin.
6
0