notice of determination of complaints assessment committee

In the Matter of Part 4 of the Real Estate Agents Act 2008

And

In the Matter of Complaint No: CA4343358

In the Matter of Mark Harrison Licence Number: 10013781

Notice of Determination of Complaints Assessment Committee Dated this 3rd day of October 2011

Complaints Assessment Committee:

CAC10100

Chairperson: Paul Morten

Deputy Chairperson: Rob Crozier (not participating)

Panel Member: David Russell

CAC Decision – Unsatisfactory Conduct of 12

Complaints Assessment Committee Decision finding unsatisfactory conduct

1. The Complaint

1.1. Mr Jackman (the Complainant) is the Chief Executive of the New Zealand Registered Architects Board (the Board).

1.2. Mr Harrison (the Licensee) is a salesperson licensed under the Real Estate Agents Act 2008

(the Act). He works for Westerman Realty Ltd, a Taupo agency (the agency). The agency trades as Bayleys Taupo.

1.3. On 14 February 2011 Mr Jackman laid a complaint with the Real Estate Agents Authority

(the Authority). The Licensee is named as the agent for a property advertised for sale in Taupo. The advertisement states that:

"….The architect has made a real effort to design a character new home…."

1.4. The Complainant says that he spoke to Mr Harrison, and asked him who the architect was. Mr Harrison told them that the architects were "Seebeck Design". Seebeck Design is not an "architect", and is not listed on the New Zealand Architects' Register as a firm which employs architects. The register can be accessed at www.nzrab.org.nz.

1.5. The Complainant argues that the false reference to an architect is intended to add luster and therefore market value to the property. He asserts that in this way the Licensee is attempting to use misinformation to enrich himself and the vendor at the expense of a buyer.

1.6. He says the advertisement is a breach of rule 6.4 of the Real Estate Agents Act (Professional

Conduct and Client Care) Rules 2009 (the Client Care Rules), which prohibits licensees from misleading customers or clients, or providing false information, or withholding information that should by law or fairness be provided to a customer or client.

1.7. Seebeck Design is a firm of architectural designers. They are not, and have never been

registered as architects. Mr Seebeck designed the property. He does not have a degree in architecture either.

2. Material Facts

2.1. The Licensee accepts that Mr Seebeck is not a registered architect. 2.2. He states in his 9 June 2011 reply to the complaint that he was well aware of the distinction

between an architect and an architectural designer. 2.3. He was also aware that a number of licensees were being investigated regarding this

http://www.nzrab.org.nz/


matter. He says he questioned the vendors closely to establish whether or not the designer was in fact an architect. He was told that the designer was an architect. While he relied on that information, he accepts that a search of the NZRAB would have revealed that Mr Seebeck was not an architect. He accepts that he should not have made any reference to an architect in his advertising material.

2.4. As soon as he was aware that Mr Seebeck was not a registered architect, he immediately

removed all previous references to "architect" in the advertising material, and also advised parties who had shown interest in the property about the error.

2.5. He apologises unreservedly to Mr Jackman and to the Authority for the error. He hopes that

his previously unblemished track record will be taken into consideration by the Committee before it arrives at its decision.

2.6. The managing director of the agency has also written to the Authority. She states that Mr

Harrison acknowledges that the advertisement was a false reference under the Code of Professional Conduct and Client Care. She states that the agency carries out weekly training sessions, which focus on recent determinations highlighted in the Real Estate Journal, together with regular updates on the Authority’s website.

2.7. She says that since the complaint was brought to their attention, they have amended in-

office protocols to require research of the NZRAB, before any advertisement or marketing material can use the words "architect designed".

2.8. She offers her apology to the NZRAB, and the Authority, for what she states was an

unintended but unacceptable failure to meet the very high standards the company expects from individual licensees, and the agency as a whole.

3. Relevant Provisions

3.1. The Real Estate Agents Act 2008 Section 3 provides: 3 Purpose of Act (1) The purpose of this Act is to promote and protect the interests of consumers in

respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work.

(2) The Act achieves its purpose by— (a) regulating agents, branch managers, and salespersons: (b) raising industry standards: (c) providing accountability through a disciplinary process that is independent,

transparent, and effective.

Section 72 provides:

72 Unsatisfactory conduct


For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the Licensee carries out real estate agency work that-

(a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or

(b) contravenes a provision of this Act or of any regulations or rules made under this Act; or

(c) is incompetent or negligent; or

(d) would reasonably be regarded by agents of good standing as being unacceptable.

3.2. Unsatisfactory conduct must relate to the carrying out of "real estate agency work". Real

estate agency work or agency work is defined in section 4 of the Act, and means any work or services provided, in trade, on behalf of another person for the purpose of bringing about "a transaction".

3.3. The word "transaction" is also defined in section 4. The definitions relate to the sale, purchase, or other disposal or acquisition of land, leasehold interests in land, transferable licences, occupation rights, and businesses.

3.4. The Committee finds that the placing of this advertisement comes within the definition of

"real estate agency work". 3.5. The Real Estate Agents Act ( Professional Conduct and Client Care) Rules 2009

Rule 6.2, 6.3 and 6.4 of the Client Care rules provide:

6 Standards of professional conduct

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 fairness be provided to a customer or client.

3.6. The Registered Architects Act 2005 Section 4 provides:

registered means registered under section 10

registered architect has the meaning set out in section 6

Section 6 provides:

6 Title of registered architect

A person is a registered architect if he or she—

(a) is registered; and


(b) holds a current certificate of registration.

Section 7 provides:

7 Protection of titles registered architect and architect

(1) No person, other than a registered architect, may use in connection with his or her business, trade, employment, calling, or profession—

(a) the title “registered architect” ; or (b) any words, initials, or abbreviations of that title that are intended to cause, or that

may reasonably cause, any person to believe that the person using those words, initials, or abbreviations is a registered architect.

(2) No person who designs buildings, prepares plans and specifications for buildings, or supervises the construction of buildings may use the title “architect” unless he or she is a registered architect.

(3) Despite subsections (1) and (2), a person may use the title “registered architect” or “architect” (or words, initials, or abbreviations of those titles), in accordance with the rules, in representing qualifications or titles awarded by overseas agencies.

(4) A person who contravenes subsection (1) or subsection (2) commits an offence, and is liable on summary conviction to a fine not exceeding $10,000.


10 Board to register applicant or decline application (1) If the Board is satisfied that an applicant is entitled, under section 8, to be registered

as a registered architect, the Board must— (a) register the applicant; and (b) notify the applicant that he or she is registered; and (c) issue to the applicant a certificate of registration; and (d) enter the applicant's name in the register.

4. Discussion

4.1. Section 7 of the Registered Architects Act 2005 prohibits a person who is not a registered architect in terms of that Act from describing themselves as a registered architect or architect.

4.2. While a licensee is unlikely to be prosecuted under section 7 of the Registered Architects

Act for labelling a third party as an architect when they are not, that does not mean that the Registered Architects Act's description of who may or may not describe themselves as an "architect" is irrelevant to the Committee's consideration of the Licensee's conduct in this case.

4.3. It is clear that dictionary definitions of the word "architect" are less specific than the

interpretation of the term "registered architect" in the Registered Architects Act. Consider, for example, this extract from Wikipedia:

"An architect is a person trained in the planning, design and oversight of the construction of buildings, and is licensed to practice architecture. To practice


architecture means to offer or render services in connection with the design and construction of a building, or group of buildings and the space within the site surrounding the buildings, that have as their principal purpose human occupancy or use. Etymologically, architect derives from the Latin architectus, itself derived from the Greek arkhitekton (arkhi-, chief + tekton, builder), i.e. chief builder.

Professionally, an architect's decisions affect public safety, and thus an architect must undergo specialized training consisting of advanced education and a practicum (or internship) for practical experience to earn a license to practice architecture. The practical, technical, and academic requirements for becoming an architect vary by jurisdiction (see below).

The terms architect and architecture are also used in the disciplines of landscape architecture, naval architecture and often information technology (for example a software architect). In most of the world's jurisdictions, the professional and commercial uses of the term "architect", outside of the etymological variants noted, is legally protected."

4.4. The Committee has considered whether the word "architect" in the advertisement ought to be given an "ordinary or natural meaning", which is simply "a person who designs buildings".

4.5. The Committee does not consider that the use of the word "architect" in the advertisement

could be interpreted as meaning that this is a building designed by a person who designs buildings. And the Licensee does not argue that is the case: he frankly says this was a mistake on his part. Even though founded on the information provided to him by the vendors, he refreshingly accepts that he should not have referred to the word "architect" in his advertising material or the advertisement. Some historical background gives this issue its proper context.

4.6. The Committee notes that in July 2009 (shortly before the Real Estate Agents Act 2008

came into force) the Real Estate Institute of New Zealand Inc (REINZ) advised its members in its journal "RE" that "architects" could be identified on-line.

4.7. The article, titled "Architects Identified On-line" begins by referencing the NZRAB website,

so that "a person described in marketing or advertising material as an ‘architect’ actually has the right to do so".

4.8. The article refers to the fact that some real estate agents had come under fire from the

Board for inaccurately naming a person as the architect that designed the house being sold "when in reality, the person named isn’t, or wasn’t an architect".

4.9. The article stated that the Board was concerned that such advertising misled potential

buyers; and suggested that it threatened the interests of architects and that it degraded the "brand". The chairman of the Board was quoted as saying that claiming a property was designed by an architect could push up its price or create a false expectation about quality which was unfair on buyers.

4.10. The article stated that the problem of not being able to work out whether designers' names

http://en.wikipedia.org/wiki/Architecture

http://en.wikipedia.org/wiki/Landscape_architecture

http://en.wikipedia.org/wiki/Landscape_architecture

http://en.wikipedia.org/wiki/Naval_architecture

http://en.wikipedia.org/wiki/Information_technology

http://en.wikipedia.org/wiki/Software_architect


on plans or in council records were or were not the names of architects was resolved by the new website, which had a "find a former architect" facility, as well as listing all current architects.

4.11. As a result, real estate agents, writers of advertising copy, newspapers and potential buyers

could now quickly check if a person whose name was on a building's plans or in the council records is or was an architect.

4.12. Mr Elford, the REINZ president, said in the article that he was sure the website would go a

long way towards educating people as to who could be described as an architect, or when a building could be described as architecturally designed. He encouraged members to make use of the website.

4.13. Judging by the volume of complaints to be considered by this Committee, Mr Elford's

optimism was somewhat misplaced. 4.14. In May 2010, the REINZ published a feature article by Mr Jackman in its journal. The title of

the article was "Was the architect an architect?" 4.15. The article referred to the "deep frustration" felt by architects at real estate advertisements

claiming properties for sale were designed by architects when actually the person named was not an architect at all. It referred to the fact that about 5% of New Zealand's residential properties were designed by architects, the rest being designed by others, sometimes called architectural designers, who either were trained in drafting, or were self-taught.

4.16. Referring to rule 6.4 and relevant provisions under the Registered Architects Act, Mr

Jackman suggested that real estate agents needed to check before placing advertising claiming that a named person was an architect. Mr Jackman referred to the website, and the ability to check current and former architects.

4.17. He warned that real estate agents should take the matter seriously, because the Board had

laid complaints with the Advertising Standards Authority, and the Commerce Commission. He said that the Real Estate Agents Authority was also investigating a breach.

4.18. He made it clear that the Board would lay further complaints whenever more breaches

were detected. 4.19. In September 2010, Complaints Assessment Committee 10040 found a licensee, Robert Mosen,

guilty of unsatisfactory conduct for describing a property as "architect designed" when it was not. The decision received widespread print and voice media coverage.

4.20. In March 2011, the REINZ published in its journal "the Hub" an e-mail dated 17 February

2011 from Angela Sutton, Advisory Services Manager of the REINZ. In light of media publicity on 16 February 2011, following this Committee's decision to inquire into a large number of complaints that Mr Jackman had already laid against licensees, she offered advice to members on the use of the words "architect" and "registered architect" in any advertising. The e-mail stated that prohibitions on the use of the words "architect" and "registered architect" extended to the misuse of those terms in marketing and advertising material.


4.21. Ms Sutton referred to the July 2009 article published in the Journal, which touched on the

issue and set out the position quite clearly. The full text of the July 2009 article was attached to a link. Ms Sutton concluded by saying:

"In the meantime if you are intending to describe the building in terms involving use of the word "architect" in any form, we strongly recommend that you first check that the designer of the building is named on the NZRAB register—see the link above."

4.22. The Committee considers the purpose of the Act is highly relevant to this issue. 4.23. As section 3 of the Act makes clear, the purpose of the Act is to promote and protect the

interests of consumers in respect of transactions that relate to real estate, and to promote public confidence in the performance of real estate agency work.

4.24. What would a hypothetical consumer make of this advertisement? The Committee

considers that a hypothetical consumer might not have the precise terminology of the Registered Architects Act in his or her mind; but the consumer would consider the use of the word "architect" in the advertisement meant something very different from a home that had been designed by a builder or draughtsperson or an architectural designer.

4.25. The Committee agrees with the Complainant: the fact that the advertisement uses the word

"architect" adds a degree of luster and therefore market value to the property. 4.26. We also agree with what the chairman of the Board said in the July 2009 article published

by the REINZ: claiming a property was designed by an architect could push up its price or create a false expectation about quality which was unfair on buyers.

4.27. If the use of the word architect has no value, as some licensees suggest in response to

complaints by Mr Jackman, then why bother to use the word "architect" in the advertisement? Advertisements often use puffery but the Committee does not consider that the use of the word "architect" could properly be described as advertising "puffery".

4.28. The Committee considers that it would be contrary to the consumer protection purpose of

the Act to allow properties to be advertised as "architect designed", when the design of such properties had nothing to do with work done by an architect.

4.29. In a professional conduct context, where the Committee is required to consider whether or

not a licensee is guilty of unsatisfactory conduct (or worse), the Committee considers that the absence of evidence that a customer has in fact been misled is not relevant to the issue of a licensee's liability for breach of professional rules. That point may or may not be relevant to mitigation and penalty, if the Licensee is able to show that nobody was in fact misled by the conduct in issue.

4.30. This issue arose in Complaints Committee No 1 of the Auckland District Law Society v P 18

PRNZ 760, where Duffy J was dealing with an application to allow fresh evidence to be introduced on an appeal. The prosecutor wanted to adduce fresh evidence that showed that a third party bank was in fact misled by solicitor's certificates. The judge considered that the new evidence was neither cogent nor material. Whether or not the victim of


alleged misleading conduct was in fact misled did not go to the nature of the offence itself, but rather to the gravity of the offending, the judge found. At page 762, her Honour said:

"The extent to which misleading conduct achieves its intended effect cannot be relevant to whether the conduct justifies being categorised as professional misconduct."

4.31. We adopt that reasoning in this case. The fact that a property may not have been under contract before the advertisement was amended to delete the reference to the word "architect" is irrelevant.

4.32. Whether or not the complaint to the Authority is by a client or by a customer is also

irrelevant to the Committee's consideration of whether the conduct by the Licensee breaches the provisions of the Act. Any person may complain to the Authority about the conduct of a licensee: section 74(1). The Authority must refer any such complaint to a Complaints Assessment Committee: section 74(2). The function of each such Committee is to enquire into and investigate complaints made under section 74 & section 78(a). Significantly, on its own initiative, a Committee may inquire into and investigate allegations about any licensee: section 78(b).

4.33. The Committee notes that the Licensee states this advertisement was a mistake on his part,

caused in part by representations made to him by the vendors. 4.34. The Committee notes that conduct under section 9 of the Fair Trading Act 1986 may be

misleading, despite the absence of any element of intention: Bonz Group Pty Ltd v Cooke (1996) 7 TCLR 206, 213 (CA). The Court of Appeal decision is a helpful one. The Committee considers that a licensee's conduct may similarly breach the provisions of the Act, despite the absence of any element of intention.

4.35. The submission by the REINZ that section 72 of the Act, and/or rule 6.4 of the Client Care

Rules contemplate situations where a licensee has acted knowingly, recklessly or negligently—but not innocently—is rejected.

4.36. The Licensee's argument that he acted in reliance on the information given to him by the vendors, and is therefore absolved from any possible finding of unsatisfactory conduct, is similarly rejected.

4.37. The REINZ had been telling its members that this was a real issue since at least July 2009.

There was a follow-up article in May 2010, just after the Licensee placed the first advertisement. This advertisement was placed after the media coverage about the Mosen decision. We accept that the advertisement appears to have been placed before the February 2011 publicity about this Committee inquiring into the numerous complaints laid by Mr Jackman.

4.38. Even so, the Committee considers that the Licensee ought to have been aware of this issue,

and of the need to take real care in the wording of his advertisement. The Licensee must take full responsibility for that.

4.39. Does a licensee have an obligation to check whether a person he has been told by vendors


is an architect is in fact an architect? The Committee considers that a licensee has such an obligation (particularly in light of the background material published about this issue, described above).

5. Conclusion

5.1. In terms of section 72 (a) of the Act, does the conduct of the Licensee fall short of the standard of conduct that a reasonable member of the public would expect from a reasonably competent licensee? In this case, the Committee considers that the answer to that question is "yes".

5.2. The Committee notes that it would have come to the same conclusion whether or not the Licensee was aware of the July 2009, and May 2010 articles by the REINZ.

5.3. In terms of section 72 (b), does the conduct contravene any rules made under the Act? Again, the Committee considers that the answer is "yes", for the reasons set out in the previous section of this decision.

5.4. The advertisement is misleading; and it also provides "false information" about the status of the person who designed the home. That is a breach of rule 6.4.

5.5. The Committee also considers that this is conduct which is likely to bring the industry into disrepute, a breach of rule 6.3. This is conduct which, if known by the public generally, would lead them to think that licensees should not condone it or find it to be acceptable. Acceptance that such conduct is acceptable would tend to lower the standing and reputation of the industry. See for instance, in a different professional context, Complaints Committee of the Canterbury District Law Society v W (CIV 2007-485-2648, Wellington High Court, 13 October 2008, at paragraph [91]).

5.6. Is there a breach of rule 6.2? The Licensee was not aware, when the advertisement was published, that the property was not architect designed. The Licensee was aware of the distinction between the word "architect" and the word "architectural designer". He asked the property owner whether the property was architect designed, and unfortunately acted on the incorrect information the owner provided. The Committee accepts that this was an inadvertent error, and definitely not an attempt to mislead. There is no breach of rule 6.2.

5.7. The Committee does not consider that there is any evidence suggesting the Licensee is either incompetent or has acted negligently. There is no breach of section 72(c) of the Act.

5.8. That leaves section 72(d). A licensee is guilty of unsatisfactory conduct if the Licensee carries out real estate agency work that would reasonably be regarded by agents of good standing as being unacceptable. The Committee considers that agents of good standing would regard an advertisement stating that a property was designed by an architect, when it was not, as "unacceptable."

5.9. The Licensee had an obligation to ensure the advertisement was accurate. It was not. A breach of section 72(d) of the Act has also been established.


6. Decision

6.1. After conducting an inquiry into the complaint, pursuant to section 89(1) of the Act, the Committee held a hearing with regard to that complaint. In accordance with section 90(1) of the Act, the Committee conducted the hearing on the papers, and pursuant to section 90(2) the Committee’s determination was made on the basis of the written material before it.

6.2. The Committee has determined under section 89(2)(b) of the Act that it has been proved,

on the balance of probabilities, that the Licensee has engaged in unsatisfactory conduct.

7. Orders

7.1. The Committee will conduct a separate hearing on the papers to decide what orders, if any, should be made under section 93 of the Act.


93 Power of Committee to make orders

(1) If a Committee makes a determination under section 89(2)(b), the Committee may

do 1 or more of the following: (a) make an order censuring or reprimanding the Licensee: (b) order that all or some of the terms of an agreed settlement between the

Licensee and the Complainant are to have effect, by consent, as all or part of a final determination of the complaint:

(c) order that the Licensee apologise to the Complainant: (d) order that the Licensee undergo training or education: (e) order the Licensee to reduce, cancel, or refund fees charged for work where

that work is the subject of the complaint: (f) order the Licensee—

(i) to rectify, at his or her or its own expense, any error or omission; or (ii) where it is not practicable to rectify the error or omission, to take

steps to provide, at his or her or its own expense, relief, in whole or in part, from the consequences of the error or omission:

(g) order the Licensee to pay to the Authority a fine not exceeding $10,000 in the case of an individual or $20,000 in the case of a company:

(h) order the Licensee, or the agent for whom the person complained about works, to make his or her business available for inspection or take advice in relation to management from persons specified in the order:

(i) order the Licensee to pay the Complainant any costs or expenses incurred in respect of the inquiry, investigation, or hearing by the Committee.

(2) An order under this section may be made on and subject to any terms and conditions that the Committee thinks fit.

7.2. The Committee requires the case manager authorised to assist the Committee with its

inquiry to obtain a record of any previous disciplinary decision in respect of the Licensee


under either the Real Estate Agents Act 1976 or the Real Estate Agents Act 2008, if any such decision exists, and provide it to the Committee and the Licensee and the Complainant.

7.3. The Licensee and the Complainant may file submissions on what orders, if any should be

made. 7.4. The Complainant may file submissions within 5 working days from the date of the decision.

These submissions, if any, will then be provided to the Licensee, with a timeframe for filing final submissions.

8. Publication

8.1. One of the Committee’s functions pursuant to section 78(h) of the Act is to publish its decisions.

8.2. The Committee directs full publication of its decision. 8.3. Publication is deferred for 20 working days from the date of notice of this determination, to

enable the Licensee or the Complainant to exercise any appeal rights under section 111 of the Act.

9. Right of Appeal 9.1. A person affected by a determination of a Complaints Assessment Committee may appeal

by way of written notice to the Real Estate Disciplinary Tribunal against a determination of the Committee and must do so within 20 working days from the date of the notice of the determination.

9.2. Appeal is by way of written notice to the Tribunal. Further information on lodging an appeal is

available by referring to the Guide to Lodging an Appeal at www.justice.govt.nz/tribunals. Signed

Paul Morten Chairperson Complaints Assessment Committee Real Estate Agents Authority Date: 3 October 2011

http://www.justice.govt.nz/tribunals

notice of determination of complaints assessment committee

Documents