Real estate agent’s appeal upheld because of new Act

A Wellington real estate agent, who was successfully prosecuted under section 14 of the Fair Trading Act for misleading use of a Buyer Enquiry Over price, has been discharged without conviction by the High Court following an appeal.

Tim Whitehead was convicted in November 2007 in the Hastings District Court on three charges of breaching the Fair Trading Act. He had advertised a Wellington house as “buyer enquiry over $380,000” when the vendor was not willing to accept less than $400,000 ‘in her hand’ for the property. He was subsequently fined $7,500.

In November 2009 Mr Whitehead appealed against that sentence because of the impact of the Real Estate Agents Act 2008, which prohibits a real estate agent with a conviction under section 14 of the Fair Trading Act from holding a licence to sell real estate for five years. The Real Estate Agents Act (REAA) was enacted after Mr Whitehead had been sentenced and was therefore not taken into account by the Court when it imposed the original sentence.

In allowing the appeal, Justice Harrison noted that the impact of the Real Estate Agents Act meant that the consequences of the convictions would be out of all proportion to the gravity of the offending. Mr Whitehead was accordingly discharged without conviction on all three offences.

However, the judgment concludes with a stern warning from Justice Harrison to the real estate industry that contraventions of the Fair Trading Act now carry a serious consequence.

“The purpose and policy of the REAA is unequivocal. It is a legislative response to public concern about the unacceptable practices of a small but damaging minority in the real estate profession. It is designed to have a remedial effect by proscribing certain conduct and, in particular, to exclude from the profession’s ranks those who are convicted on contravening the FTA. The message is now unmistakeable.” – Harrison J

The judgment was issued following a hearing in the High Court in Napier on 9 March 2010.

“The Commerce Commission took the position of neither supporting nor opposing the appeal against sentence, accepting that the appeal was finely balanced and a decision to discharge without conviction ultimately involved the exercise of the Court’s discretion,” said Greg Allan, Commerce Commission Fair Trading Manager, Wellington . “Mr Whitehead faced significant financial consequences arising from conduct which occurred well before the Real Estate Agents Act was envisaged or enacted.”