In what could become a precedent-setting outcome for the real estate industry, senior business reporter Simon Hartley looks at seven years of litigation, a recent Real Estate Agents Authority disciplinary tribunal decision and an imminent fresh appeal to the High Court.
A recommendation has been made that charges be brought by the Real Estate Agents Authority against three members of Dunedin's Sievwright real estate family and their employer, Edinburgh Realty, in a property dispute.
Effectively, Edinburgh and the Sievwright family have just lost an appeal they instigated, and the earlier censure they faced could potentially be replaced by tougher penalties if charges are laid and they are found guilty.
The dispute is over an allegedly leaky house sold by the Sievwright Family Trust in 2009. Edinburgh and the Sievwrights have decided to take an appeal about the tribunal's recommendation to the High Court.
In the January 28 decision by the REAA's Disciplinary Tribunal, obtained by the ODT, the tribunal recommends the lesser Complaints Assessment Committee of the REAA should revisit and ‘‘formulate an appropriate charge or charges'' against Barclay Sievwright and his sons, Lane and Clayton, and Edinburgh Realty; which would then be heard by the higher tribunal.
‘‘We think that there is a prima facie case that their conduct would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful; or constitute seriously incompetent or seriously negligent real estate work; or consists of a wilful or reckless contravention of the Act and/or of its regulations or rules,'' the tribunal said.
When Edinburgh Realty general manager Mark Miller was asked to comment on the tribunal's recommendation, he said Edinburgh and the Sievwrights were ‘‘extremely disappointed''.
‘‘This matter has been dragging on for more than seven years and the decision of the tribunal to remit the case back to the [REAA's] Complaints Assessment Committee means it is no closer to resolution now than it was six years ago,'' Mr Miller said.
Legal advice was was that the tribunal's decision was ‘‘unsupported by and contrary to the evidence''.‘‘It is based on serious errors of law which if allowed to stand would have serious repercussions for the real estate industry generally,'' Mr Miller said.
He said given the circumstances, Edinburgh and the Sievwrights were ‘‘left with no option'' but to appeal the tribunal decision in the High Court.
An appeal was in the process of being lodged, with expectations it would be several months before a hearing was set down.
Mr Miller said until there was a decision from the High Court appeal, he would not be commenting further on the matter.
The tribunal's January decision said that because the evidence before it was ‘‘far more extensive'' than the evidence heard earlier by the committee, the tribunal would quash the committee's earlier finding.
The tribunal said ‘‘The most just course'' now was for the complaint to be referred back to the tribunal ‘‘by way of an appropriate charge''.
In February last year the Sievwrights and employer Edinburgh were censured and collectively fined more than $17,000 for ‘‘unsatisfactory conduct'' by the REAA; prompting their November appeal to the higher tribunal.
The Sievwright Family Trust bought a Sim St property as a rental investment in September 2006.
It was sold to the complainant in November 2009, and she moved in, but she sold it in July 2011 ‘‘at a significant loss''.
A complaint was filed in July 2012, which was not heard until February 2015.
Evidence for the complainant, at the November tribunal hearing, said the buyer felt the state of the property ‘‘had seriously affected her health''.
Evidence also included an estimate the house's under-floor rot would cost $120,000 to repair. The complainant sold the house for $237,000, in October 2011.
She had ‘‘a view to seeking compensation'' of $133,466, plus compensation for impacts on her physical and mental health.
Evidence to the tribunal from an architectural designer concluded the house suffered from ‘‘a long-standing problem of moisture ingress into the sub-floor which contributed to serious deterioration to bearers, joists and piles''.
In February last year, the REAA upheld the complaint that it was not disclosed to her that agents carrying out the work might benefit from the transaction, but the REAA dismissed other complaints over the house's condition, a building inspection and that Edinburgh had failed to adequately deal with the complainant's concerns.
The REAA found Edinburgh Realty in breach of rule 9.5, in failing to obtain an appraisal of the property for the family trust.
Similarly, the REAA found the Sievwrights and Edinburgh Realty breached rule 9.15 in that they actively marketed the property without holding an agency agreement, signed by the family trust.
The tribunal's recent January decision said ‘‘We do not find it credible that the Sievwright licencees were unaware of the state of the property at material times.''
The complainant's legal counsel, Brett Gray, said in evidence there was ‘‘overwhelming evidence of leaky building syndrome''.
He said the complainant suffered ‘‘significant loss'' of more than $133,000, and was seeking compensation.
‘‘The trust caused significant leaky building repairs to be done on the property, which provides a strong inference that the trust knew or was likely to have known of the leaky building problem with the property,'' Mr Gray submitted to the tribunal.
Legal counsel for Edinburgh and the Sievwrights, Colin Withnall QC, submitted it had not been proved his clients knew of defects to the property, noting all maintenance work had been done by tradesmen as contractors to the Sievwright Family Trust, so the Sievwrights had no personal knowledge of the state of the property.
Mr Withnall submitted to the tribunal it did not have jurisdiction to send the matter back to the REAA's Complaints Assessment Committee or to raise a charge against the Sievwrights. The tribunal's decision noted ‘‘We disagree on that point''.
