Tribunals Powers and Procedures

 

Tribunals Powers and Procedures Legislation Bill 
The Tribunals Powers and Procedures Legislation Bill (Tribunals Bill) was introduced into Parliament at the beginning of August. The Bill has now had its first reading and has been referred to the Justice and Electoral Select Committee. No dates have been given yet for making submissions on the Bill.

You can access a copy of the Bill here​.

Clauses 216–238 set out the proposed changes to the Real Estate Agents Act 2008.

What does the Bill do?
The Bill amends and standardises the powers and procedures of a number of Tribunals with the overall goal of increasing the efficiency and effectiveness of the courts and tribunals system. The Bill is significant for the real estate industry because it amends the Real Estate Agents Act in several important ways:
  • The Bill allows the Registrar to decide not to refer a complaint to a Complaints Assessment Committee if the complaint is inconsequential, frivolous or vexatious or should be referred to another agency.
  • It introduces the ability for the Real Estate Agents Disciplinary Tribunal to make an order for compensation of up to $100,000 on findings of unsatisfactory conduct.
  • It allows the Tribunal to award costs against parties to a proceeding.
  • It creates a fine of $3,000 for breaching Tribunal suppression orders.
  • It introduces a $30 filing fee for appeals to the Tribunal.
Other more minor and procedural amendments are also made to the Tribunal’s powers.

REAA’s position on the proposed changes
Overall, we believe that the changes to the Act are positive and the majority of the changes will assist the Tribunal and us to operate more efficiently. The introduction of compensation on unsatisfactory conduct findings also increases the amount of consumer protection provided by the Act and will help increase professionalism within the industry. However, we do want to ensure that the addition of compensation orders for unsatisfactory conduct does not have unintended consequences.

As the Bill is currently structured, only the Tribunal can make orders of compensation. This means that, if a CAC makes a finding of unsatisfactory conduct but it considers that compensation should be awarded, it has to refer the complaint to the Tribunal to consider and make the order, no matter how small the amount of compensation is.

Licensees and complainants will therefore not only have to go through the CAC process, but they will also have to engage with the Tribunal process as well, which will more than likely involve an in-person hearing. If only the Tribunal can award compensation we, we think this will lead to:
  • an increase in the overall length of disciplinary proceedings
  • an increase in the costs to consumers and licensees of pursuing and defending a complaint
  • an increase in the number of complaints made to REAA as consumers seek compensation through a relatively informal process compared with a civil court case
  • an increase in appeals from CAC decisions by consumers whose claims for compensation are not referred to the Tribunal
  • a decrease in efficiency, as CACs will first have to engage in whether a complaint raises issues of compensation and then, on referral to the Tribunal, the Tribunal will also have to engage in those same matters. The Tribunal will also have to familiarise itself with the facts of the complaint, not having been involved in making the substantive finding.
We believe that a more efficient and cost-effective approach to making compensation available to consumers for unsatisfactory conduct is to have a lower-level compensation order available for CACs to make, up to a maximum of $30,000. The Bill is providing for the Disputes Tribunal to operate up to this same level. This would allow the disciplinary process to work as it currently does without the duplication and delay involved in both a CAC and the Tribunal handling the same case. While this would not do away with the likely increase in complaints that will be made once compensation becomes available, we consider that it will address our other concerns.

CACs already have the power to order a refund of commission and to order a licensee to rectify an error or omission at their own expense or to provide relief in whole or in part from the consequences of their error or omission under the Act (see section 93(1)(e) and (f)). CACs can also order that licensees pay complainants any costs or expenses incurred in respect of a complaint (section 93(1)(i)). There is no monetary cap on these orders. The table below sets out the 10 highest orders made under these sections. As can be seen, the majority of the orders sit between $10,000 and $13,000. 

10 highest monetary orders made on unsatisfactory conduct findings
​Order Type Monetary Value
Rectify error or omission at own expense ​$137,607.00
Reduce, cancel or refund fees $28,750.00​
​Reduce, cancel or refund fees ​$18,000.00
​Rectify error or omission at own expense ​$13,000.00
​Reduce, cancel or refund fees ​$12,680.00
​Pay costs or expenses incurred to complainant ​$11,500.00
​Rectify error or omission at own expense ​$11,500.00
​Rectify error or omission at own expense ​$11,500.00
​Reduce, cancel or refund fees ​$10,453.50
​Pay costs or expenses incurred to complainant ​$10,431.95
 

CAC members receive extensive training on the Act, the Code of Conduct and decision making, and we believe that, with the appropriate additional training, they will be well equipped to also make compensation orders of up to $30,000. Panel members comprise lawyers, dispute tribunal referees and licensed real estate agents.

We think it is important for the overall efficiency of the complaints process that the compensation-making power does not sit solely with the Tribunal, and this is what we will be submitting to the Select Committee. We welcome your views on this, so please send your feedback to info@reaa.govt.nz​.