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BEFORE THE REAL ESTATE AGENTS DISCIPLINARY TRIBUNAL
[2017] NZREADT 52
READT 061/16
IN THE MATTER OF Charges laid under s 91 of the Real Estate
Agents Act 2008
BROUGHT BY COMPLAINTS ASSESSMENT
COMMITTEE 403
AGAINST SHALENDRA GOUNDAR
Defendant
Hearing: 3 July 2017, at Auckland
Tribunal: Hon P J Andrews, Chairperson
Ms N Dangen, Member
Ms C Sandelin, Member
Appearances: Mr M Hodge and Mr J Simpson, on behalf
of the Committee
Ms S Lucas, on behalf of the defendant
Date of Decision: 5 September 2017
____________________________________________________________________
DECISION OF THE TRIBUNAL
____________________________________________________________________
Introduction
[1] Complaints Assessment Committee 403 (“the Committee”) has laid three
charges against Mr Goundar:
[a] Charge 1: a charge of misconduct under s 73(c)(i) and (iii) of the Real
Estate Agents Act 2008 (“the Act”) (wilful or reckless contravention of
provisions of the Act and Real Estate Agents Act (Professional Conduct
and Client Care) Rules 2012 (“the Rules”));
[b] Charge 2: (in the alternative to Charge 1), a charge of misconduct under s
73(b) of the Act (seriously incompetent or seriously negligent real estate
agency work); and
[c] Charge 3: (in the alternative to charges 1 and 2), a charge of unsatisfactory
conduct under s 72(b) of the Act (contravention of a provision of the Act
or Rules).
[2] The charges relate to Mr Goundar’s role in the sale of two properties to Mr
Khulbushan Joshi and Mrs Jeevan Joshi.1
Factual background
[3] All relevant events occurred during 2014.
[4] Mr Goundar is a licensed branch manager. He has owned and operated Main
Realty Limited (trading as Century 21 Main Realty) (“the Agency”) since 1996. We
will refer in this decision to three of Mr Goundar’s relatives. For convenience, we
will refer to them by their first names. Nalina Goundar (“Nalina”) and Regina
Goundar (“Regina”), are Mr Goundar’s sisters. Regina is also known as Regina
Dewan. Neither Nalina nor Regina holds a license under the Act. Sanjeet Goundar
1 For convenience, Mr and Mrs Joshi will be referred to as “the Joshis”, unless it is appropriate to
refer to them individually.
(“Sanjeet”), is Nalina’s husband. Sanjeet runs a pharmacy business. Salona Goundar
(also known as Priyasheel Goundar) (“Salona”), is Sanjeet’s sister.
[5] In February, the Joshis became interested in investing in property. They
discussed this with Sanjeet, whom they had met about a year before. Sanjeeet offered
to introduce them to Nalina, saying that she was experienced in buying and selling
property. Nalina told them that her brother, Mr Goundar, owned the Agency, and that
Regina was an accountant with connections at the Bank of New Zealand. The Joshis
accepted the assistance offered by Nalina.
The property at 2/48 Central Avenue, Papatoetoe
[6] On 8 April, Salona entered into an agency agreement with Mr Goundar to sell
the property at 2/48 Central Avenue, Papatoetoe (“the Central Avenue property”).
Nalina showed Mr Joshi the Central Avenue property. He only ever viewed it from
the outside, but decided to buy it, at Nalina’s suggestion.
[7] Mr Goundar prepared a sale and purchase agreement, which was dated 9 April.
The agreement was emailed to the Joshis on 11 April by a staff member at the
Agency.2 The Joshis signed the agreement and returned it to Nalina. Nalina arranged
for the Joshis to use a law firm in Papatoetoe. Regina assisted the Joshis with their
application for finance. In June, the Joshis met with their solicitor to sign transfer of
title documents.
The property at 1/137 Coronation Road, Papatoetoe
[8] On 7 October 2014, Regina entered into an agency agreement with Mr Goundar,
to sell the property at 1/137 Coronation Road, Papatoetoe (“the Coronation Road
property”). She is referred to as “Regina Dewan” on this agreement. In early
November 2014, Regina and Nalina approached the Joshis about buying the
Coronation Road property, and the Joshis agreed to buy it.
2 There were various references at the hearing to “the receptionist”, “the administrative team”, “the
Agency’s staff”, and “a staff member”. We will refer in this decision to “a staff member”.
[9] Mr Goundar prepared a sale and purchase agreement, which was emailed to the
Joshis by a staff member, on 6 November. The agreement recorded the vendor as “K
R Dewan”. The agreement did not include Mr Goundar’s name, or any reference to
the Agency. The Joshis signed the agreement and returned it to Regina. Regina sent
them a copy of the final agreement (signed by the vendor) on 11 November. This
agreement included a reference to the Agency and Mr Goundar on its final page.
[10] The Joshis used the same firm of solicitors that they had used for the Central
Avenue purchase, again at Nalina’s suggestion. After the transaction was settled, the
Joshis received the certificate of title, which recorded the previous owner was “Kamal
Ragina Dewan”.
The charges in detail
The Central Avenue property
[11] The Committee alleges that Mr Goundar’s work in respect of this transaction
was limited: he prepared the sale and purchase agreement, and his name and Agency
are set out in the “SALE BY” box on the agreement and on the final page, but he had
no other involvement, and the transaction was in all other respects brought about by
Nalina and Regina.
[12] The Committee alleges that in having only a limited involvement in the
transaction, and failing to inform the Joshis of that, Mr Goundar breached r 5.1 (by
failing to exercise skill, care, competence and diligence), and rr 6.2 (by failing to act
in good faith and deal fairly with all parties), r 6.3 (by engaging in conduct likely to
bring the industry into disrepute), and r 6.4 (by misleading the Joshis, or withholding
information as to his role).
[13] The Committee further alleges that Mr Goundar breached s 133 of the Act (by
failing to provide the Joshis with the Guide before they signed the sale and purchase
agreement), breached r 9.7 (by failing to recommend and give the Joshis the
opportunity to seek independent legal advice), and breached rr 12.2 and 12.3 (by
failing to ensure that the Joshis were aware of the Agency’s in-house complaints
procedure, and the opportunity to access the Authority’s complaints process).
The Coronation Road property
[14] The Committee alleges that Mr Goundar, in breach of s 136 of the Act, failed to
disclose to the Joshis, in writing, that the vendor of the Coronation Road property was
his sister, and would benefit financially from the transaction.
[15] The Committee again alleges that Mr Joshi had only a limited involvement in
the transaction, and repeats the alleged breaches of s 133, and rr 5.1, 6.2, 6.3, 6.4, 9.7,
12.2 and 12.3, as set out in respect of the Central Avenue property.
Evidence
The Central Avenue property
[16] The Joshis’ evidence was that they had no experience of buying property, and
were apprehensive about doing so. They believed that Nalina and Regina would help
them to get on to the property ladder. Mr Joshi said that Nalina took him around to
properties for sale, told him what to look for, what property values were around
Papatoetoe, and introduced him to the Central Avenue property. They had no contact
with Mr Goundar, either in person or by telephone, and dealt only with Nalina and
Regina. Mr Joshi said that he had never heard Mr Goundar’s voice before the
Tribunal hearing.
[17] They said that they received the sale and purchase agreement by email from the
Agency, and were told to sign it and return it. They signed it then gave it to Nalina.
[18] The Joshis also said that they were not advised by any licensee how the sale
process would work and their rights and entitlements, they were not provided with the
Guide, they were not recommended to obtain independent legal advice or given an
opportunity to do so, and they were not told about the Agency’s complaints
procedure, or the complaints procedure available from the Authority.
[19] Mr Goundar’s evidence was that Mr Joshi rang him to say that he wanted to
make an offer on the property, and he prepared the sale and purchase agreement on
Mr Joshi’s instructions. He said that Mr Joshi did not ask him any questions about the
property. He could not recall whether he had discussed the complaints procedure.
[20] He said that a staff member would, on his instructions, have provided the Joshis
with the Guide, and documents setting out complaints procedures. He also said that
the Joshis were experienced business people and knew what they were doing, and that
they had signed the sale and purchase agreement which contained an
acknowledgement that they had received the Guide, and a statement recommending
legal advice.
The Coronation Road property
[21] The Joshis’ evidence was that they were introduced to this property by Nalina
and Regina. They were doubtful about buying another property, but were assured by
Regina that she would sort out finance with the bank. They said that Regina said this
was a “hot property” and would not last long on the market. They never saw the
property, but relied on assurances from Nalina and Regina that it was right for them.
They said they did not become aware that Regina was the vendor of the property until
they received the title after the sale was settled.
[22] In his written statement of evidence Mr Joshi said that the previous owner’s
name on the title was “Regina Kamal Dewan Goundar”. He accepted in cross-
examination that the previous owner’s name is in fact recorded as “Kamal Ragina
Dewan”, but said that it was when they saw the title that they understood that the
vendor was Regina Goundar.
[23] As with the Central Avenue property, the Joshis’ evidence was that they had no
contact with Mr Goundar, in person or by telephone. They said that they were never
told by Mr Goundar, or anyone else at the agency, either orally or in writing, that
Regina was the vendor, or that the vendor was Mr Goundar’s sister. They also said
that they were not told by any licensed person how the sale process would work and
their rights and entitlements, not provided with the Guide, not recommended to obtain
independent legal advice or given an opportunity to do so, and not told about the
Agency’s complaints procedure, or the complaints procedure available from the
Authority.
[24] Mr Goundar’s evidence was that the Coronation Road property had previously
been marketed by another salesperson in the Agency, but that sale fell through. The
property was then bought by Regina and on-sold to the Joshis. It was not disputed
that Regina was the vendor of the Coronation property and would obtain a financial
benefit from the transaction, or that Mr Goundar was required to make written
disclosure under s 136 of the Act.
[25] Mr Goundar said that Nalina told him that the Joshis were keen to buy another
investment property. For that reason, he said, he was not surprised when Mr Joshi
telephoned him and arranged to collect keys so that he could view the property. He
said Mr Joshi telephoned him shortly afterwards and said that he and his wife wanted
to make an offer. He said Mr Joshi did not ask him any questions about the property,
or request any information about it.
[26] Mr Goundar said he prepared a sale and purchase agreement. He could not
recall specifically preparing a disclosure form to deal with the fact that the property
was being sold by his sister, but thought he would have. He said that it was possible
that he had asked a staff member to send “the form” to the Joshis. He had no doubt
whatsoever that the Joshis knew that Regina was his sister, and that she was the
vendor.
[27] With regard to the other alleged breaches, Mr Goundar said, again, that the
Joshis were experienced business people and knew what they were doing. As with the
Central Avenue property, he said that he thought he had given a copy of the Guide,
and the Agency’s complaints procedures, to a staff member and would have thought
she would have sent them to the Joshis. He could not recall whether he had spoken to
the Joshis about the complaints procedures. He further said that the Joshis had signed
the sale and purchase agreement which contained acknowledgements as to receipt of
the Guide, and a statement concerning legal advice.
[28] Mr Goundar accepted in cross-examination that in both transactions he had only
a limited involvement. He also accepted that he did not explain this to the Joshis. He
went on to say that he assumed that the Joshis were keen to buy the properties and did
not want to ask questions about them. He acknowledged that the Joshis did not tell
him, in the course of either transaction, that they were “keen to buy” and that he did
not ask whether they had any questions about the properties or the process of buying
them.
[29] We record that in the course of his evidence to the Tribunal, Mr Joshi
mentioned a civil proceeding in the High Court at Auckland, and appeared to suggest
that further communications relating to the two purchases may have been disclosed in
that proceeding. Neither Mr Goundar nor the Agency are parties to the High Court
proceeding. At the conclusion of the hearing, the Authority was directed to make
inquiries as to whether any communications concerning the Joshis’ purchases of the
Central Avenue and Coronation Road properties were disclosed in that proceeding,
that are not already before the Tribunal.
[30] The Authority received a response from counsel for the Joshis in the High Court
proceeding, who has confirmed that there are no additional communications between
the Joshis and Mr Goundar, or anyone else employed at the Agency, beyond those
which have been presented to the Tribunal.
The allegations that Mr Goundar failed to provide information (including the
Guide), failed to recommend that they take independent legal advice, and failed
to advise as to complaints procedures
Submissions
[31] Mr Simpson submitted for the Committee that the Tribunal should accept the
Joshis’ evidence that they had no communication with Mr Goundar in relation to
either property, and that they never received any of the documents or advice Mr
Goundar was obliged to provide to them.
[32] In relation to the alleged breaches of s 133, and rr 9.7, 12.2, and 12.3, Mr
Simpson submitted that Mr Goundar’s evidence that the Guide (which includes
information concerning complaints procedures) “would” have been sent to the Joshis
is not supported by emails from the Agency (which refer only to sale and purchase
agreements), and should be rejected.
[33] Mr Simpson acknowledged that each of the sale and purchase agreements the
Joshis signed contained an acknowledgement that they had been given the Guide, and
a statement that “professional advice” should be sought concerning the agreement.
He submitted that in the light of their evidence that they had never met Mr Goundar,
or any other licensee from the Agency, and that they were not given the Guide, or any
recommendation to take independent legal advice, the Joshis’ signatures cannot be
taken as establishing either that they received the Guide, or that they were
recommended to take independent legal advice.
[34] Ms Lucas submitted that the evidence shows that Mr Goundar took steps to
comply with his obligations under the Act and Rules to provide the required
information.
[35] She referred to Mr Goundar’s evidence as to the provision of information to the
Joshis: in each case, that he gave a copy of the Guide to a staff member and asked for
it to be sent to the Joshis, and explained that she “would have sent it, it is her job”. In
respect of the Coronation Road property, Mr Goundar also said he thought he had
given the Joshis a copy of the Guide by email.
[36] Ms Lucas submitted that there was no reason to doubt that the staff member
would have followed Mr Goundar’s instructions. She further submitted that the fact
that the Joshis signed the sale and purchase agreements for each transaction was
evidence that the Joshis accepted that they had received the Guide, as each agreement
contained, immediately above their signatures, an acknowledgement that the parties
had received the Guide.
[37] Ms Lucas acknowledged that Mr Goundar accepted that he did not specifically
recommend to the Joshis that they seek independent legal advice in relation to each
transaction. However, she submitted that the fact that the Joshis had signed the sale
and purchase agreements for the two transactions, which contained a statement that
professional advice should be sought regarding the transaction, and that they had a
solicitor acting for them, was evidence that they were aware that they should seek
independent legal advice.
[38] Ms Lucas further submitted that if the Tribunal were to accept the Joshis’
evidence that they were not provided with the Guide, and that Mr Goundar did not
recommend that they take independent legal advice, the evidence of signed sale and
purchase agreements means that Mr Goundar cannot be found to have breached his
obligation to provide the Guide, and that Mr Goundar’s failure to make a specific
recommendation that they seek independent legal advice was not a wilful breach of
his obligation to do so.
[39] With respect to rr 12.2 and 12.3 (concerning the obligation to provide
information as to complaints procedures), Ms Lucas submitted (in relation to both
transactions) that while Mr Goundar said that given the passage of time he could not
recall whether he discussed complaints procedures with Mr Joshi, the Tribunal should
accept his evidence that he would have directed a staff member to send the relevant
information to the Joshis, and that he would have no reason to doubt that she had done
so.
Discussion
[40] Each of s 133 of the Act, and rr 9.7, 12.2, and 12.3 requires a licensee to provide
certain information, and to give certain advice, to a customer, before the customer
enters into a contractual document. They are mandatory.
[41] Three preliminary points must be made. First, while counsels’ submissions
raised no doubt on the point, we are satisfied that even with the limited involvement
alleged by the Committee, Mr Goundar was carrying out real estate agency work, in
relation to the proposed sale of a residential property. He had an agency agreement
for each sale, he prepared sale and purchase agreements, and he held himself and the
Agency out as acting in the sales: the Agency sent the sale and purchase to the Joshis
for signing, and the Agency’s and his names were displayed on the agreements. The
Agency was paid commission on each sale. Accordingly, he was required to comply
with all of the licensees’ obligations under the Act and Rules.
[42] Secondly, we do not accept that because Mr Joshi was an experienced
businessman, experienced in matters of commerce, and familiar with commercial
contracts, he “knew what he was doing”, and Mr Goundar was not therefore required
to comply with his obligations under the Act and Rules. The evidence before the
Tribunal indicates that he did not “know what he was doing”: In an email to Nalina
on 11 April 2014, Mr Joshi said:
… Now that we have started in the property side of things I was just looking at
things trying to understand things. I will have questions that come up and I
will ask you.
Not to contest, just to know and understand. Some questions maybe
meaningless and some may need explaining. We are glad we have the right
guidance that’s all.
Seriously overwhelmed.
[43] Thirdly, whether or not Mr Joshi asked any questions of Mr Goundar is not
relevant to the issue as to whether Mr Goundar complied with his obligations. The
above email suggests that Mr Joshi believed (mistakenly) that Nalina was the
appropriate person to whom any questions should be addressed.
(a) The Guide
[44] Section 133 of the Act provides, as relevant:
133 Approved guide to be provided when contractual document
provided
(1) An agent must ensure that subsection (2) is complied with
before a person signs a contractual document if the contractual
document–
(a) relates to the proposed sale of a residential property in
respect of which the agent is carrying out real estate
agency work.
(b) …
(2) The agent or a licensee on the agent’s behalf must have–
(a) provided the person with a copy of the approved guide;
and
(b) received a signed acknowledgement from the person that
the client has been given the approved guide.
[45] While it may be that Mr Goundar’s memory has become clouded by the passage
of time, there is no evidence that he, himself, provided the Joshis with the Guide. At
its highest, his evidence was that he would have given the Guide to a staff member,
instructed her to send it to the Joshis, and had no reason to believe she did not do so.
[46] The best evidence as to what was sent to the Joshis is in the emails from the
Agency. These establish that the sale and purchase agreements were sent. The
agreement for the Central Avenue property was attached to an email sent to the Joshis
on 10 April 2014. It does not say that a Guide is attached. The agreement for the
Coronation Road property was attached to an email sent to the Joshis on 6 November
2014, at 4.15 pm. Again, it does not say that a Guide is attached. There are no emails
before the Tribunal which indicate that the Guide is being, or has been, sent to the
Joshis.
[47] It is reasonable to assume that the sale and purchase agreements were emailed to
the Joshis on Mr Goundar’s instructions. It is also reasonable to assume that if Mr
Goundar had instructed a staff member to send the Guide to the Joshis, it would have
been attached to an email, as were the sale and purchase agreements. As there were
no such emails before us, we conclude that Mr Goundar did not instruct a staff
member to send the Guide to the Joshis. In any event, Mr Goundar must “ensure” that
the Guide is provided. It is not sufficient to leave it to a staff member to carry out an
instruction.
[48] There is no evidence that Mr Goundar (or any other licensee) went through the
sale and purchase agreements with the Joshis, and pointed out the acknowledgement
as to receipt of the Guide.
[49] Accordingly we find that Mr Goundar did not comply with s 133(2)(a).
Accordingly, no weight can be given to the “acknowledgement” on the signed sale
and purchase agreements.
(b) Recommendation to seek legal advice
[50] Rule 9.7 provides, as relevant:
9.7 Before a prospective … customer signs a … sale and purchase
agreement, or other contractual agreement, a licensee must–
(a) recommend that the person seek legal advice; and
(b) [Not relevant]
(c) allow that person a reasonable opportunity to obtain the advice
referred to in paragraphs (a) and (b)
[51] Mr Goundar acknowledged that he did not specifically recommend that the
Joshis seek independent legal advice in relation to each transaction. There is no
evidence that any other licensee did so. The issue is, therefore, whether the Tribunal
should accept Ms Lucas’s submission that on the facts, the Joshis knew that they
should seek independent legal advice.
[52] For the purposes of the alleged breach of r 9.7, Ms Lucas’s submission requires
the Tribunal to accept that if, by way of the sale and purchase agreement, and the fact
that solicitors acted for them, the Joshis were aware that they should seek independent
legal advice, then it follows that Mr Goundar recommended that they do so.
[53] We have noted, above, that Mr Goundar does not claim to have recommended
to the Joshis that they seek independent legal advice. There is no evidence, or
suggestion, that another licensee made the recommendation on behalf of Mr Goundar.
[54] The statement as to professional advice on each sale and purchase agreement is
on the final page of the agreement, under the heading “BEFORE SIGNING THE
AGREEMENT”:
THE ABOVE NOTES ARE NOT PART OF THE AGREEMENT AND ARE
NOT A COMPLETE LIST OF MATTERS WHICH ARE IMPORTANT IN
CONSIDERING THE LEGAL CONSEQUENCES OF THIS AGREEMENT.
PROFESSIONAL ADVICE SHOULD BE SOUGHT REGARDING THE
EFFECT AND CONSEQUENCES OF ANY AGREEMENT ENTERED INTO
BETWEEN THE PARTIES.
There is no evidence that Mr Goundar, or any other licensee, took the Joshis through
the sale and purchase agreements, and pointed them to the statement as to professional
advice. Further, the statement does not reflect the requirement in r 9.7 that a licensee
must recommend “independent legal advice”.
[55] Accordingly, we can put no weight on the fact that the Joshis signed agreements
which contained a reference to professional advice, or that solicitors acted for them.
They do not establish that Mr Goundar recommended that they seek independent legal
advice. We find that Mr Goundar failed to comply with r 9.7.
(c) Information as to complaints procedures
[56] Rules 12.2 and 12.3 follow r 12.1, which requires an agent to develop and
maintain in-house procedures for dealing with complaints and dispute resolution.
They provide, as relevant:
12.2 A licensee must also ensure that prospective … customers are aware of
these procedures before they enter into any contractual agreements.
12.3 A licensee must also ensure that prospective … customers are aware that
they may access the Authority’s complaints process without first using
the in-house procedures; and that any use of the in-house procedures
does not preclude their making a complaint to the Authority.
[57] Mr Goundar’s evidence was, at best, that he may have instructed a staff member
to advise the Joshis about complaints procedures. There is no evidence to support a
finding that the Joshis were in fact advised as to complaints procedures. We find that
Mr Goundar failed to comply with rr 12.2 and 12.3
Alleged failure to comply with s 136 of the Act (Coronation Road property)
Submissions
[58] Mr Simpson submitted that the Tribunal should accept the Joshis’ evidence that
they did not receive any disclosure (written or oral) that the vendor of the Coronation
Road property was Mr Goundar’s sister, and that they did not learn this until after
settlement.
[59] He submitted that neither Mr nor Mrs Joshi were cross-examined on that
evidence, and that Mr Goundar had, in essence, accepted that written disclosure had
not been made. He further submitted that even if the Tribunal were to accept Mr
Goundar’s evidence that he had given “the form” to a staff member to send out, there
was no evidence that that had occurred.
[60] Mr Simpson further submitted that even if Mr Goundar’s evidence that he
prepared the written disclosure and gave it to a staff member to send to the Joshis
were accepted, it was his obligation as a licensee to give written disclosure, and it
cannot be left for another person to comply with. He submitted that Mr Goundar’s
failure to make any disclosure regarding his sister’s position as vendor of the
Coronation Road property makes this a serious breach of s 136.
[61] He further submitted that even if Mr Goundar’s evidence that the Joshis were
aware that Regina was the vendor were accepted, he was still required to provide
written disclosure under s 136. Awareness of a relationship would not excuse a
licensee from compliance.
[62] Ms Lucas noted that Mr Goundar accepted that s 136 was triggered by the
Coronation Road property being sold by his sister, Regina. She referred to his
evidence that he had prepared a disclosure form, had given it to a staff member to be
emailed to the Joshis, and had no reason to think that she would not have followed his
instructions. Ms Lucas also referred to Mr Goundar’s evidence that he knew that the
Joshis were aware that Regina was his sister, and that they were buying from Regina,
[63] Ms Lucas submitted that the weight of Joshis’ evidence that they were not
aware that Regina was the vendor had to be considered in the context of evidence that:
[a] the solicitors acting for them on the purchase were aware of the position,
and the Joshis knew that the solicitors were acting for both them and the
vendor;
[b] in the Central Avenue transaction the solicitors advised the Joshis about
the identity of the vendor, and there was no reason to suggest that the
solicitors would not have done so in the Coronation Road transaction; and
[c] Mr Joshi’s evidence as to the record of the previous owner on the title
was wrong.
[64] She further submitted that the Tribunal could not be confident, as a result of Mr
Joshi’s evidence, that they had made all their communications in relation to the two
transactions available to the Tribunal.3
Discussion
[65] As noted earlier, it was not disputed that the fact that Mr Goundar’s sister
Regina was the vendor of the Coronation Road property triggered the requirement in s
136 of the Act which provides, as relevant:
136 Disclosure of other benefits that licensee stands to gain from
transaction
(1) A licensee who carries out real estate agency work in respect
of a transaction must disclose in writing to every prospective party to the
transaction whether or not the licensee, or any person related to the
licensee, may benefit financially from the transaction.
…
[66] Mr Goundar’s evidence was that he could not recall specifically preparing a
disclosure form to deal with the fact that the property was being sold by his sister (but
thought he would have), and that it was possible that he had asked a staff member to
send the form to the Joshis. He said he had no doubt whatsoever that the Joshis knew
that Regina was his sister, and that she was the vendor.
[67] We accept Mr Simpson’s submission that there is no evidence that a “form” was
sent by a staff member to send to the Joshis. We also accept his submission that, in
any event, s 136 required Mr Goundar, himself, to give written disclosure. It is not an
obligation that can be delegated. We find that Mr Goundar did not give written
disclosure to the Joshis that his sister would benefit financially from the sale of the
Coronation Road property.
3 This point has been resolved and the Tribunal accepts that there are no communications that have
not been put before it. See paragraphs [29] and [30], above.
[68] There is a conflict in the evidence as to whether the Joshis knew that they were
buying the Coronation Road property from Regina, and that she was Mr Goundar’s
sister. As noted above, Ms Lucas submitted that the Joshis’ evidence that they were
not aware of that should be given little weight, for a number of reasons. However,
whether or not the Joshis knew that Regina was the vendor, and Mr Goundar was
aware that they knew, Mr Goundar was still required to give written disclosure
pursuant to s 136. It does not allow for any exceptions. A known relationship will
not absolve a licensee from complying.
[69] We have found that Mr Goundar did not give the required written disclosure.
We therefore find that he breached s 136 of the Act.
Alleged failure to disclose Mr Goundar’s limited role
Submissions
[70] Mr Simpson referred to Mr Goundar’s acceptance that he played only a limited
role in the transactions. He submitted that such limited involvement gave rise to an
obligation to explain the extent of his obligations to the Joshis. He submitted that the
“obligation to explain” results from a combination of the general obligations set out in
rr 5.1, 6.2, 6.3, and 6.4, and compounds the alleged specific breaches of ss 133 and
136 of the Act, and rr 9.7, 12.2, and 12.3.
[71] He submitted that there must be at least some engagement with a customer in
order for licensees to meet the obligations imposed by the Act and Rules, to provide
information and to give advice. In this case, Mr Goundar had only limited
involvement in the transactions, and this resulted in his not being in a position to meet
his obligations. He submitted that Mr Goundar had an obligation to explain to the
Joshis that he would have only a limited role in the two transactions, and that his
limited involvement would restrict his ability to comply with his obligations under the
Rules.
[72] Mr Simpson acknowledged that beyond this limited level of engagement, a
“limited retainer” may be compatible with the Act and Rules. However, he submitted,
even with a limited retainer, Mr Goundar was still undertaking real estate agency
work, as he had an agency agreement for each transaction, and he held himself and the
Agency out as acting in the transactions: the Agency sent through the sale and
purchase agreements for signing, the Agency’s and his names were displayed on the
agreements, the Agency was paid commissions, and (on Mr Goundar’s account)
required information was sent to the Joshis.
[73] Mr Simpson submitted that in order for a limited retainer to meet the Act’s
overriding purpose of consumer protection, as set out in the Act,4 Mr Goundar was
required to make direct contact with the Joshis and to explain the extent of his
(limited) involvement, give them the opportunity to ask him any questions about the
process, and recommend that they seek further advice, if there were any matters he
could not answer. He submitted that Mr Goundar had done none of these.
[74] Mr Simpson submitted that Mr Goundar’s failure to give such an explanation
left the Joshis “none the wiser about their rights, obligations, and entitlements when
purchasing property”.
[75] Ms Lucas submitted, first, that on the facts, no question of an obligation to
advise the Joshis of a limited involvement arose. She referred to Mr Goundar’s
evidence as to marketing the Coronation Road property, preparing sale and purchase
agreements for both properties, and communicating with the Joshis about the
agreements, and to Mr Goundar’s evidence that if the Joshis had asked him to take
further steps, he would have done so.
[76] She also submitted that the question of Mr Goundar’s involvement had to be
considered in the light of the following:
[a] Mr Joshi’s commercial experience (as a company director, running
businesses in numerous locations in New Zealand and overseas), and his
familiarity with contracts and commercial documents, and that purchasing
property was a significant commitment;
4 Real Estate Agents Act 2008, s 3(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 or real estate agency work.”
[b] When they decided to invest in property, the Joshis had sought advice
from Sanjeet and Nalina (knowing that they were involved in a pharmacy
business), and they did not approach the Agency (or Mr Goundar in
particular);
[c] At the very least, Mr Joshi was aware of the Agency’s involvement and
contact details, from details on the sale and purchase agreements and
emails from the Agency;
[d] Mr Joshi accepted that he did not raise any questions in respect of either
property with Mr Goundar despite (on Mr Goundar’s evidence) having
had telephone discussions with him, with the result that Mr Goundar was
not aware of any questions Mr Joshi might have, or any further
information he might want;
[e] The Joshis realised a “significant profit” on the Central Avenue property
when they re-sold it.
[77] Ms Lucas described Mr Joshi as a relatively sophisticated purchaser, who chose
to seek advice from friends, rather than a real estate agent.
[78] Secondly, Ms Lucas submitted that even if the Tribunal were to accept that Mr
Goundar had only the limited involvement alleged by the Committee, there was no
authority to support the Committee’s submission that he was obliged to disclose that
to the Joshis. She submitted that the authorities cited as supporting the Committee’s
submission went no further than stating a general principle that where a licenced real
estate agent is involved in a transaction, a party is entitled to expect that the
transaction will be conducted in a professional way.
[79] Ms Lucas further submitted that in the absence of a clear obligation to disclose a
limited involvement, there cannot be either a wilful or reckless breach of the Act or
Rules, or seriously negligent or seriously incompetent real estate agency work, or
“mere negligence” under s 72 of the Act. She further submitted that if the Tribunal
were to impose an obligation to disclose a limited involvement, the threshold test as to
whether the obligation arose must be high.
Discussion
[80] We record our concern that the concept of a licensee explaining a limited role,
and the consequent restriction on the licensee’s ability to comply with the obligations
under the Act and Rules, may be seen as allowing some form of “contracting out” of
those obligations. However, we do not consider we need to explore whether there is a
distinct obligation to explain a limited involvement exists. In this case it is more
appropriate to consider whether, in fact, Mr Goundar breached the four Rules referred
to.
[81] Rule 5.1 requires a licensee to “exercise skill, care, competence, and diligence at
all times when carrying out real estate agency work”. As the commentary to r 5.1 in
the Real Estate Agents Handbook 2013 states, “this rule sets out the basic standard of
professional competence required of a licensee”. Having regard to our findings of
breaches of provisions of the Act and Rules, we are in no doubt that Mr Goundar
failed to exercise the required skill, care, competence, and diligence. He, personally,
did not comply with them, and (in the case of the obligations under s 133 of the Act
and rr 12.2 and 12.3) he did not take any steps to ensure that the obligations were
complied with. We find that he breached r 5.1.
[82] Rule 6.2 requires a licensee to “act in good faith and deal fairly with all parties
engaged in a transaction”. We find that Mr Goundar’s failure to comply with
provisions of the Act and Rules designed to “promote and protect the interests of
consumers”5 is incompatible with his obligation to “act in good faith and deal fairly
with” the Joshis, and is therefore a breach of r 6.2.
[83] Rule 6.3 provides that “a licensee must not engage in any conduct likely to
bring the industry into disrepute”. Rule 6.3 was discussed briefly in the case Jackman
v CAC 10100,6 where the Tribunal approved of a Complaints Assessment
5 Real Estate Agents Act 2008, 3(1).
6 Jackman v CAC 10100 [2011] NZREADT 31, at [65].
Committee’s discussion of r 6.3 in Re Raos.7 In that case the Committee described
conduct that would justify a finding of a breach of r 6.3 as conduct that:
… 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.
[84] We find that Mr Goundar’s breaches of provisions of the Act and Rules can
only be seen as conduct that was likely to bring the industry into disrepute. His
conduct was conduct that if known by the public generally, was more likely than not
to lead members of the public to think that licensees should not condone it or find it to
be acceptable. Mr Goundar’s conduct was also incompatible with the purpose of the
Act to “promote public confidence in the performance of real estate agency work”.8
Accordingly, we find the Mr Goundar breached r 6.3.
[85] Rule 6.4 provides that “a licensee must not mislead a customer or client, nor
provide false information, nor withhold information that should in law or by fairness
be provided to a customer or client”. In the present case we have accepted the Joshis’
evidence that they had no contact, at all, with Mr Goundar. The breaches we have
found are by way of “omission”, rather than “commission”: that is, he simply did not
do what the Act and Rules required him to do. However, as he had no contact with
the Joshis, we have difficulty in finding that he “misled” them, or “provided false
information”, or “withheld information that he should have provided”. He did not
turn his mind to providing any information, at all.
[86] Rules 5.1, 6.1, 6.2, and 6.3 set out general standards of professional competence
and professional conduct. The breaches of those general standards arise out of the
specific breaches of ss 133 and 136 of the Act, and rr 9.7, 12.2, and 12.3. That is,
they are the effect of the breaches of the specific provisions. In turn, the specific
breaches arose out of Mr Goundar’s having allowed the majority of what was done to
bring about the two transactions to be done by his sisters, Nalina and Regina.
7 Re Raos Complaint No. CA4315602 [2011] NZREAA 159, at 4.39 (in that case, the Committee
concluded that the relevant conduct did not breach r6.3). 8 Real Estate Agents Act 2008, s 3.
[87] Our findings of breaches of the general standards do not duplicate the findings
of specific breaches of the Act and Rules. Rather, they underline the significance of
the specific breaches in assessing Mr Goundar’s conduct in the context of the
purposes of the Act.
The alternative charges
[88] In the light of the findings set out above, we must now consider whether those
findings justify a finding of misconduct under s 73(c)(i) and (iii) of the Act (Charge
1), misconduct under s 73(b) (Charge 2, alternative to Charge 1), or unsatisfactory
conduct under s 72(b) (Charge 3, alternative to Charges 1 and 2).
[89] Charge 1, alleging a breach of s 73(c)(i) and (iii), requires the Tribunal to be
satisfied that Mr Goundar’s breaches were wilful or reckless. Mr Simpson submitted
that in order to establish misconduct for Charge 1, the Committee does not have to
prove that Mr Goundar had a dishonest intention to act in a manner that was contrary
to professional standards. He submitted what is required is evidence that satisfies the
Tribunal, on the balance of probabilities, that Mr Goundar foresaw the possibility that
his conduct might breach professional standards, then proceeded regardless. Mr
Simpson referred to the Tribunal’s decision in Real Estate Agents Authority (CAC
20004) v Clark,9 in which the Tribunal quoted from the judgment of Phillips J in the
Supreme Court of Victoria in Zaitman v Law Institute of Victoria:10
… while the solicitor, who does not knowingly act in contravention, must be
shown to have foreseen that what he was doing might amount to a relevant
contravention, there is no need to go further and establish that the solicitor
foresaw the contravention as “probable” … it will be enough if the solicitor …
is shown to have been aware of the possibility that what he was doing or failing
to do might be a contravention and then to have proceeded with reckless
indifference as to whether it was so or not.
[90] Mr Simpson submitted that Mr Goundar must have been aware of his
professional obligations, and that his decision to proceed with his limited involvement
in each transaction was a wilful, or at least reckless, breach of provisions of the Act
and Rules.
9 Real Estate Agents Authority (CAC 20004) v Clark [2013 NZREADT 62, at [70].
10 Zaitman v Law Institute of Victoria, [1994] VicSC 778 (9 December 1994), at [52].
[91] Ms Lucas submitted that Mr Goundar’s conduct was not deliberate, and
therefore not a breach of s 73(c). In support of this submission, she referred to the
judgment of his Honour Moore J in the High Court, on appeal from the Tribunal’s
decision in Clark, referred to above:11
… the Tribunal in a full and detailed decision found that … there had been a
breach of s 136 of the Act but that it was not deliberate and thus misconduct in
terms of s 73(c) was not made out.
[92] His Honour was paraphrasing the Tribunal’s decision, he was not defining the
requirements for a finding under s 73(c)(i) and (iii). In fact, the Tribunal found that
the charged conduct was “careless…, but not sinister”, and that “there was nothing
wilful or reckless in that conduct”,12 and his Honour upheld that finding.
[93] That said, while he acknowledged that he was aware of his obligations under the
Act and Rules, the evidence points to Mr Goundar having not given any thought to
them, at all, at the time of the two transactions. In the circumstances, we are not
satisfied that he wilfully breached the Act and Rules, or that he foresaw that what he
was doing (or rather, not doing) would be breaches. Accordingly, we do not find him
guilty of misconduct under s 73(c)(i) and (iii) on Charge 1.
[94] We are, however, satisfied that cumulatively, Mr Goundar’s breaches can only
be regarded as seriously incompetent and seriously negligent real estate agency work
under s 73(b) of the Act.
[95] Both Mr Simpson and Ms Lucas referred us to Complaints Assessment
Committee 20003 v Jhagroo, in which her Honour Thomas J said:13
The words of s 73(b) must be given their plain meaning. Whether serious
negligence or serious incompetence has occurred is a question to be assessed in
the circumstances of each case. … the Tribunal is well placed to draw a line
between what constitutes serious negligence or incompetence, or mere
negligence or incompetence, the Tribunal having considerable expertise and
being able to draw on significant experience in dealing with complaints under
the Act.
11
Clark v Real Estate Agents Authority (CAC 20004) [2014] NZHC 1611, at [19]. 12
Real Estate Agents Authority (CAC 20004) v Clark, above n 8, at [78]. 13
Complaints Assessment Committee 20003 v Jhagroo [2014] NZHC 2077, at [49].
[96] We note that in Wang v Real Estate Agents Authority, his Honour Toogood J
adopted Thomas J’s analysis of s 73(b).14
[97] Ms Lucas submitted that the circumstances of the present case did not support a
finding of misconduct under s 73(b). She referred to Mr Joshi’s “commercial
experience and expertise”, and Mr Joshi’s acknowledgement that he gained a
“significant increase in value” when he later sold the Central Avenue property.
[98] The matters referred to do not ameliorate Mr Goundar’s conduct from “serious
incompetence or negligence” under s 73 to the extent of being “incompetent or
negligent” under s 72(c). Whatever a customer’s commercial experience and
expertise (and we note that this did not extend to real estate transactions: see [42],
above), that does not excuse a licensee from completely neglecting his obligations
under the Act and Rules, as we have found him to have done. Further, the fact that
Joshis had the benefit of an increase in value when the Central Avenue property was
re-sold does not in this case lessen the seriousness of Mr Goundar’s failings.
[99] Accordingly, we find Mr Goundar guilty of misconduct under s 73(b) of the
Act. Given that finding, it is not necessary to consider the further alternative Charge
3.
Observation
[100] We record the Tribunal’s concern as to Mr Goundar’s allowing his sisters to
market the two properties to the Joshis, and do work for the purpose of bringing the
sales about. He allowed them to carry out real estate agency work, when neither is
licensed to so. Their doing so appears to be in breach of s 6 of the Act. However, the
Tribunal has not taken the point further.
Outcome
[101] We find Mr Goundar guilty of misconduct under s 73(b) of the Act.
14
Wang v Real Estate Agents Authority [2015] NZHC 1011, at [60].
[2017] NZREADT 52 - Goundar
[102] The Case Manager is to arrange a telephone conference in order to set a
timetable for filing submissions as to penalty. Counsel are directed to advise the
Tribunal if a hearing is required.
[103] Pursuant to s 113 of the Real Estate Agents Act 2008, the Tribunal draws the
parties’ attention to s 116 of the Real Estate Agents Act 2008, which sets out appeal
rights. Any appeal must be filed in the High Court within 20 working days of the date
on which the Tribunal’s decision is served. The procedure to be followed is set out in
part 20 of the High Court Rules.
____________________
Hon P J Andrews
Chairperson
___________________
Ms N Dangen
Member
____________________
Ms C Sandelin
Member
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