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REIQ Journal : September 2008
30 Legal Issues Agent cl ared breaches of the Code of Conduct By Michael Gapes, Partner, Carter Newell Lawyers Agent cleare of IN THE RECENT decision of The Chief Executive, Office of Fair Trading Department of Justice and Attorney-General v Leggatt  CCT PD009-08, the Commercial and Consumer Tribunal dismissed disciplinary proceedings against a real estate agent for alleged breaches of the Property Agents and Motor Dealers (Real Estate Agency Code of Conduct) Regulation 2001. The Chief Executive, Office of Fair Trading, Department of Justice and Attorney-General, brought the proceedings against the agent, alleging that he had breached the Code of Conduct by engaging in misleading conduct and failing to act fairly. The allegations arose in relation to the sale of a property which had previously been damaged by termites. Prior to the sale of the property, the sellers engaged both a pest control company to conduct a termite treatment and prevention program, and a tradesperson to repair the termite damage. The sellers were provided with two reports confirming that, firstly, the treatment had been completed and, secondly, no termites had subsequently been discovered and that control measures were now in place. In this case, the agent was aware of the previous termite problem, but did not disclose this to the buyers prior to them entering into a contract to purchase the property. The agent did, however, suggest that the buyers include a clause in the contract allowing them to obtain a building and pest inspection report. The buyers agreed to this and executed the contract. They subsequently obtained a pest inspection report and discovered the previous termite damage and repairs. They elected to rescind the contract and the property was sold to another buyer. The Chief Executive claimed that in failing to disclose the information about the termites to the buyers, the agent had breached section 7 of the Code of Conduct: “(1) A real estate agent must act honestly, fairly and professionally in the conduct of a real estate agency practice. (2) without limiting subsection (1), a real estate agent must treat a customer honestly and fairly.” The Chief Executive also asserted that the agent had breached section 14 of the Code of Conduct: “14. A real estate agent must not engage in conduct that is fraudulent or misleading in the conduct of a real estate agency practice.” The Tribunal said that the questions that should be considered in these circumstances were: REIQ Journal September 2008