A real estate agent abused his clients' trust and deceived them about their property's true value before buying it himself for $530,000 then on-selling it months later for $1.255 million, a court has heard.
It's alleged that former South Auckland Barfoot & Thompson agent Aaron John Hughes offered the family $100,000 after his windfall came to light in 2016.
The exchange was allegedly captured on a secret recording, in which Hughes also told the family he had no idea their house was worth so much or that he'd be able to flip it for a $720,000 profit.
But the Crown says this wasn't true.
A search of his agency emails authorised by his former employer later revealed he'd secretly obtained a valuation for the property 11 days before the purchase, Crown prosecutor Anna McConachy told Auckland District Court yesterday.
The valuation stated the Mt Wellington house was a "developer's dream" and "might sell well in excess of $1.2m-$1.5m".
The email was never disclosed to elderly Waikato vendors Jack and Walter Tata, which the Crown says was a breach of Hughes' professional duties and a criminal offence.
Hughes went on trial yesterday facing two counts of causing loss by deception.
The charges were originally brought by the Real Estate Authority but the case is being heard in the district court.
The allegations relate to two separate Auckland property deals between February and October 2015 in which companies controlled by Hughes allegedly bought clients' homes at significantly below market value.
He is accused of profiting through his deception by nearly $900,000 at the homeowners' expense.
"The Crown alleges Mr Hughes abused his position as a real estate agent to take advantage of his clients' trust," McConachy said in her opening address.
"As a real estate agent he owed duties to those vendors to act in their best interests."
However, Hughes' lawyer, David Jones, QC, cautioned the jury to keep an open mind.
Hughes did not set out to deceive the vendors and was not acting in his capacity as a licensed agent, Jones said.
"The status of Mr Hughes is very much at issue in terms of his relationship with the vendors. That's important in terms of what duties he did or did not owe. It feeds into the issue of whether there was any deception and the defence says there was not."
Jack Tata, 79, and his late brother, decided to sell their inherited family home at 51 Lynton Rd in late 2014.
Tata told the court a relative put them in touch with Hughes, who phoned and arranged to meet them in Ngaruawahia.
Though the property had a then CV of $630,000, the Tatas told Hughes they thought it was worth about $600,000. Hughes said he could find a buyer and would come back to the brothers with any offers, Tata told the court.
A few weeks later he met them again, with several offers of "around $600,000" but conditional on getting LIM reports, Tata said.
Hughes then offered to buy the property himself for $530,000 through his company Az-Iz Rentals.
"He told us to keep quiet. If we were prepared to take his deal he would deal with the lawyers. We wouldn't have to pay him commission. We were told not to let Barfoot & Thompson know about this.
"I suppose you could call it a little bit racist but I looked at him and said, 'He's a Maori boy, I'm a Maori boy'. I thought he was doing us a deal and I thought, 'That's fair enough'."
During cross examination, Jones suggested the Tatas were embarrassed by the state of the house and wanted to sell it without marketing and avoid the "formalities" and commission fees of a Barfoot listing agreement.
"Mr Hughes was simply confirming that it was a private sale, Barfoot & Thompson wouldn't be involved and there would be no commission payable."
Jones also asked Tata about the recorded 2016 meeting in which Hughes allegedly offered the family $100,000 - an amount labelled "laughable" by Tata's partner Pat.
"Was that an attempt by you and your brother to try and negotiate some sort of deal so that Mr Hughes would pay you some money?" Jones asked.
"Yes. It wasn't fair that he should treat us like that."
Tata said the brothers had only accepted Hughes' lower offer because of the "colour of his skin".
"I thought, 'Fair enough he was going to make $100,000 if he did the place up. I expected him to make a little bit of money but not to the extent that he did."
Had Hughes disclosed the valuation email, Tata said they would have demanded more money.
"I would have been asking for a hell of a lot more."
The trial continues today before Judge Allan Roberts.
Aaron John Hughes
• On trial in Auckland District Court.
• Faces two counts of causing loss by deception.
• The charges relate to two separate Auckland property deals in 2015.
• In one, Hughes is alleged to have bought 51 Lynton Rd, Mt Wellington, from his vendor clients for $530,000 then on-sold it months later for $1.255m.