A real estate agent who sold two neighbouring homes to a developer is accused of secretly paying him at least $100,000 to cover the deposits, then buying the properties himself through a newly formed company.
The vendors were oblivious their agent, who earned commission on both sales, had bought their homes until the developer alerted one of them after a falling out, a tribunal heard yesterday.
Barfoot & Thompson agent Deepak Goyal appeared before the Real Estate Agents Disciplinary Tribunal charged with wilful or reckless misconduct.
Goyal admits unsatisfactory conduct but denies the most serious charges. He argues there was "nothing calculated or sinister" about his actions and the vendors suffered no actual loss. His lawyer argued there was no intention to deceive and that he loaned money to the developer because he was in financial difficulty. If found guilty, Goyal could be struck off.
Real Estate Agents Authority prosecutor Jeff Simpson told the tribunal Goyal had committed a gross breach of fiduciary duty to Barfoot's two original clients.
Goyal failed to disclose his financial interest in the properties or gain the required written consents. By earning commission on both sales he had effectively bought the properties for a discount, Simpson said.
"Mr Goyal was fundamentally acting in a conflicting position with his duty and loyalty to his vendor clients. That raises issues around his fiduciary obligations. It raises questions about whether he was acting in his own interests to secure properties contrary to the best interests of his clients."
The tribunal heard Papatoetoe-based Goyal introduced developer Manjit Grewal to a property at 11 Grassways Ave in Pakuranga when it was listed for sale in November 2014 through Barfoot's Pakuranga office.
Grewal purchased the property at auction on November 29 for $1.16 million through his company HP & MP Properties Ltd.
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Two days later, on December 1, Goyal deposited $40,000 into HP & MP Property Ltd's bank account, from which Grewal paid $58,000 deposit on the same day.
In March 2015 Goyal formed a company called VAD Properties Ltd with two fellow directors, both of whom were later removed.
The next day, Grewal transferred legal ownership of the property to Goyal's company. Settlement occurred three days later.
Some time within the next two months, the house was removed and development work commenced on the site.
The tribunal heard that in mid-December 2014, Goyal approached the neighbouring property's owners about Grewal's interest to buy.
The developer signed a sale and purchase agreement for 13 Grassways Ave for $1.348 million on December 18. The listed purchaser was HP & MP Properties Ltd.
Within 11 days, Goyal made six deposits into the company's bank account, totalling $60,000.
Grewal paid the $80,000 deposit into Barfoot's trust account on December 23.
In March 2015, Grewal transferred legal title to Goyal's company, VAD Properties Ltd. Settlement occurred three months later.
Simpson suggested Goyal deliberately set out to deceive the vendors and that Grewal and his company were simply "a front" to sidestep the agent's professional obligations.
"Mr Grewal's evidence is that Mr Goyal was always the intended purchaser of these two properties right from the outset.
"By putting funds to Mr Grewal to pay the deposits on these two properties, Mr Goyal was no longer acting at arm's length ... he was fully invested."
Goyal's lawyer, Tim Rea, argued there was no intention to deceive.
Goyal loaned money to Grewal because the developer was in financial difficulty.
He had not originally intended to buy the properties himself, and only did so to avoid Grewal defaulting.
"This was not a device to avoid compliance with any obligations, and it was only done because Mr Grewal was unable to arrange finance to complete the transactions himself," Rea's opening submissions state.
Goyal was concerned Grewal would be unable to repay his loan if the deposits were forfeited, and "reasonably believed" he was acting in the best interests of all parties by taking over the transactions, Rea said.
He added there were "serious credibility issues" about Grewal's evidence.
The two men's relationship "turned sour" when Goyal refused to transfer the properties back into Grewal's name, Rea alleged.
A private way lined with houses called Goyal Lane now sits at the site across 11-13 Grassways Ave.
The hearing continues.
