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