Auckland's biggest realty firm has fired an agent and refunded two vendors' commissions after an employee was found guilty of misconduct for "fundamental" breaches of his professional obligations.
Former Barfoot & Thompson Papatoetoe agent Deepak Goyal is now awaiting penalty and looking for a new job following a finding by the Real Estate Agents Disciplinary Tribunal in connection with his 2015 purchase of neighbouring Pakuranga homes.
Goyal sold the Grassways Ave properties to developer Manjit Grewal in late 2014 for a combined total of $2.508 million, receiving commission on both transactions.
He later transferred nearly $200,000 to Grewal's bank account, which investigators argued was to cover the deposits, before buying both properties himself through a nominee company, VAD Properties Ltd.
At a tribunal hearing in August, prosecutors argued the Goyal's actions constituted a serious conflict of interest and brought the industry into disrepute.
The developer was just a "front" for Goyal to purchase the development site himself, they argued, while sidestepping his professional obligations to both vendor clients.
Goyal had failed to disclose his financial interest or gain the required written consents. By earning commission on both sales he effectively bought the properties for a discount, prosecutors said.
Goyal ultimately developed the adjacent properties into an eight-lot subdivision, featuring its own access way which he named Goyal Lane.
During the hearing, Goyal argued he did not originally intend to buy the properties himself, and only lent money to Grewal because the developer had over extended himself.
He said it was common in Indian culture to lend large amounts of money to acquaintances, without formal documentation of the loans or agreed repayment plans.
Goyal said he only decided to buy the properties when it became obvious Grewal could not complete the transactions.
He had not understood his disclosure obligations, arguing the two purchases had essentially been private transactions between him and Grewal after the original sales had gone unconditional.
Goyal's lawyer Tim Rea argued his client's actions were not deliberate. He accepted falling short of his professional obligations but did so out of inexperience, as he'd only been licensed at the time for about 10 months.
Rea further argued the vendors were not financially disadvantaged by Goyal's actions, and his client was only guilty of unsatisfactory conduct.
However, prosecutor Michael Hodge said Goyal wilfully or recklessly breached his obligations by concealing his involvement in the purchases from his commission-paying clients.
"He submitted that Mr Goyal did nothing whatsoever to bring his purchase of the properties to the vendors' attention, or to identify and explain his conflicted position," the tribunal decision says.
"He submitted that Mr Goyal was aware of, at least, the risk of a conflict of interest arising out of his loans to Mr Grewal, and his concern as to Mr Grewal's inability to settle, but as he wanted to protect his investment, he went ahead anyway."
The tribunal ruled that Goyal had downplayed his financial interest and involvement in the two properties and breached fundamental consumer protection rules in the Real Estate Agents Act.
"Mr Goyal's evidence of 'inexperience' is considerably diminished by his evidence as to the number of his sales, and his significant success over a fairly short period of time," the decision says.
While Goyal's actions were not considered deliberate, his failures "can only be described as seriously incompetent or seriously negligent real estate agency work".
Goyal is now awaiting a tribunal penalty order, but his firm has already taken action.
Barfoot managing director Peter Thompson told the Herald the firm's original clients were immediately refunded their commission as soon as the company learned what had happened.
"The company decided to terminate Deepak's contract for services after reading the decision by REAA."
The Herald has approached Goyal for comment.