A Blenheim property sale resulted in two licensees being ordered to pay compensation in what the Real Estate Agents Disciplinary Tribunal, Ray White and a barrister say is an unusual case.
Real estate agents Stewart McLean and Clayton Knowles were ordered to pay $35,000 after a $73,000 loss on thatsale.
In the tribunal’s March 28 decision, the complainant’s name was suppressed, expressed simply as OQ, and the property was not identified.
The agents were found guilty of unsatisfactory conduct over dealings with the property, used as backpacker accommodation and approved for seasonal workers.
The buyer claimed a breach of warranty resulting in the vendor OQ paying them $60,000, the tribunal said.
Details were cited about the sale and purchase agreement in the Blenheim case.
That amount was deducted from the purchase price of $730,000 on the basis that the property was to be sold as a going concern, which would be zero-rated for GST.
OQ also agreed to pay the purchaser’s legal costs in dealing with the GST issue. The vendor also incurred legal and accounting costs so complained about the licensees.
The tribunal said Knowles failed to ensure that the property was sold as a going concern and also failed to include in the agreement for sale and purchase that OQ was registered for GST.
McLean failed to supervise Knowles, resulting in the parties signing an incomplete and incorrect agreement, the tribunal decided.
The licensees, in their defence, claimed OQ contributed to her own loss. She failed to insert her GST number into the agreement, failed to provide Knowles with that number and failed to get legal or accounting advice on the agreement before signing it.
So they claimed she failed to exercise reasonable care to safeguard her own interests.
Higher interest rates have curbed house price growth in New Zealand. Photo / Fiona Goodall
But the tribunal found the licensees’ unsatisfactory conduct was more than minor or technical.
The case was important because it was one of the first concerning compensation, the tribunal said.
“This is the first referral to proceed to a substantive hearing and determination,” said the decision from the tribunal, headed by deputy chairperson Catherine Sandelin.
A Ray White spokesperson said McLean and his company were not current members of that agency group but Knowles still worked for Ray White.
However, the current ownership of Ray White Blenheim was unconnected to the events ruled on by the tribunal.
Knowles had been relatively new to the industry and had since undertaken more training and development, the Ray White spokesperson said.
“This case marks one of the first applications of the tribunal’s new compensation powers under the Real Estate Agents Act, setting an important precedent for future professional standards in the industry.”
Real estate barrister John Waymouth.
John Waymouth, a barrister specialising in real estate, said this is one of the very rare and possibly unique situations to date where the tribunal had had a complaints assessment committee refer a case to it which was not an appeal and not a misconduct case.
The case was for determination of compensation for unsatisfactory conduct, he noted.
“The tribunal has stressed that compensation for losses must be where the losses were either closely connected to the salesperson’s conduct, or were at least by reason of his conduct.
“That is a very narrow definition and the CAC when referring it to the tribunal must be satisfied that the unsatisfactory conduct involves more than a minor or technical breach of the act or rules,” Waymouth noted.
Knowles told the Herald he did not have to pay any money himself. McLean did not want to comment when contacted.
Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.
