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Lessons for lawyers from the regulation of real estate agents

13 Jul 2023

| Author: Gary Judd KC

The Real Estate Agents Act 2008 (the Act) created the Real Estate Agents Authority (REAA) as a Crown entity for the purposes of s 7 of the Crown Entities Act 2004 (CEA) which applies to the REAA except to the extent that the REAA provides otherwise.

There is a variety of Crown entities. The REAA is a Crown agent (Part 1 of Schedule 1). The minister responsible for the Act appoints the REAA Board.

The REAA requires a licensed real estate professional to undergo continuing professional development (CPD), something lawyers are familiar with.

The REAA’s CPD requirements for 2023 include two mandatory topics. The first is the Code of Conduct. These are practice rules setting out the standard of conduct and client care that agents, branch managers and salespeople are required to meet when carrying out real estate agency work and dealing with clients, contained in the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012.

These rules, required by s 14 of the Act, are a non-exhaustive statement of the conduct expected of licensees. It seems not unreasonable that a licensee should be required to know about them as a condition of being licensed.

The second mandatory topic is different. Part of the diversity and inclusion series, it is Te Kkano (the Seed). The only approved training provider is Te Whare Wānanga o Awanuiārangi.

 

Nau mai haere mai ki Te Whare Wānanga o Awanuiārangi

Te Whare Wānanga o Awanuiārangi are proud to partner with the Real Estate Authority to co-develop and deliver the first topic in the Diversity and Inclusion Series….

Overview of Te Kākano

Te Kākano consists of three modules:

  • Module 1: Te Reo me ōnā tikanga – Māori language and customs
  • Module 2: Te Tiriti o Waitangi – The Treaty of Waitangi
  • Module 3: Whenua Māori – Māori land

Course completion cost: $29 + GST

The Act prohibits a person from carrying out any real estate agency work unless the person is licensed under the Act or falls within one of the narrow exemptions (eg, is a lawyer or an auctioneer).

When a licensed real estate professional (an agent, branch manager or salesperson who holds a licence under the Act) wishes to renew the licence (which has a 12-month term), the licensee must satisfy the registrar that he or she has completed any continuing education required by practice rules made by the REAA (s 52).

Section 54 compels the registrar to cancel a person’s licence if the person has failed to complete any continuing education required by practice rules made by the REAA (under s 15 which permits the REAA to make practice rules requiring that particular continuing education be undertaken).

 

No choice

So, any licensed real estate professional who fails to complete Te Kākano (the Seed) with Te Whare Wananga o Awanuiarangi as the only approved provider must be refused licence renewal if a licence has not previously been cancelled for the failure.

As Māori customary land cannot be alienated at all, and Māori freehold land cannot be alienated otherwise than in accordance with Te Ture Whenua Māori Act 1993 Māori Land Act 1993 (ss 145 and 146), it is difficult to see how even Module 3 might be relevant to the professional life of a licensed real estate professional.

The point not that a real estate professional should not take Te Kākano (the Seed) if she wants to. The point is that the REAA demands that the real estate professional do so, or she will not be permitted to work in her chosen field.

If a particular real estate professional had or wanted to seek business in the Māori land area (I should think it would be a tiny number, if any at all), he or she might find it advantageous to take such a course, but REAA makes them all do it.

There is a difference in kind between the Code of Conduct and the Te Kākano (the Seed) topics.

The first concerns the way professionals should conduct themselves in their dealings with and for members of the community engaged in selling and buying property and the like, as outlined in the “scope and objectives” part of the rules.

They concern professional competence, fiduciary obligations, confidentiality, and other objective requirements relevant to the way the job should be done.

The brief description of the second, Te Kākano (the Seed), does not contain even a hint that it relates to real estate professionals’ conduct. Rather it suggests a REAA desire that attendees learn about Māori language and culture, the treaty and Māori land. What’s wrong with that? you may well ask. Nothing at all, the answer is, except: “REAA, it is none of your business; mind your own, not the licensees’”.

What an adult human real estate professional decides to learn in matters unconnected with their professional conduct is for them, not REAA, to decide.

Regrettably, as John Stuart Mill wrote in 1859, in his famous essay On Liberty:

The disposition of mankind, whether as rulers or as fellow-citizens to impose their own opinions and inclinations as a rule of conduct on others, is so energetically supported by some of the best and by some of the worst feelings incident to human nature, that it is hardly ever kept under restraint by anything but want of power….

Kindle Edition, p 19.

The Act gives the REAA power; the REAA says, we think you should do this; do it or you lose your licence.

The motivation cannot be to fulfil the purpose of the Act, of promoting and protecting the interests of consumers in respect of real estate transactions. Obviously, it has nothing to do with that. It is to promote an REAA agenda.

 

Tikanga

We can tease this out a bit further before turning to its implications for lawyers, by looking at tikanga, which is the subject of much discussion at present.

The statement scheduled to the Ellis continuance decision ([2022] NZSC 114), under the heading “The nature of tikanga,” contains this:

  1. The term ‘tika’ means ‘to be right’. Tikanga Māori therefore means the right Māori way of doing things. It is what Māori consider is just and correct.
  1. Tikanga Māori includes all of the values, standards, principles or norms that the Māori community subscribe to, to determine the appropriate conduct.

According to the learned writers of the statement, these are for the Māori of whom the writers are speaking, “their own opinions and inclinations”, to use Mill’s words. The Māori of whom the writers are speaking are entitled to follow these values, standards, principles or norms without interference except to prevent harm to others, but there ought to be no attempt to impose them on others.

To put this in ways which have been developed over centuries and are now embodied in international conventions and domestic legislation, “the right Māori way of doing things,” “what Māori consider is just and correct,” “the values, standards, principles or norms that the Māori community subscribe to,” are matters of thought, conscience, religion, and/or belief for those who subscribe to them.

Those within the community who subscribe to them, be they Māori or non-Māori, are absolutely entitled to do so without interference (Bill of Rights, s 13). By the same token, those who do not subscribe to them are equally entitled to go about their lives without being subjected to attempts to make them do so.

 

Relevance for lawyers

The NZLS’s independent review has recommended the establishment of a so-called independent regulator for the legal profession, “independent” yet having a board appointed by the Minister of Justice and required “to give effect” to the Treaty of Waitangi.

Te Kākano (the Seed) is a mandatory requirement for real estate people even though the treaty is not mentioned in either the Act or the CEA.

A regulator of lawyers required “to give effect” to the principles of the treaty would surely be required by legal obligation to demand from lawyers at least what is demanded of real estate professionals.

The reality is that because we are lawyers with far wider responsibilities, much more will be demanded, especially in relation to tikanga. And, what about Te reo Māori? Will those of us who do not speak it be compelled to learn?

Former US President, the late Ronald Reagan warned of the perils of government involvement. Some of we older ones may remember: “The nine most terrifying words in the English language are: ‘I’m from the government, and I’m here to help’.”

The way the government has “helped” licensed real estate professionals exemplifies the accuracy of Reagan’s words. It is a warning to lawyers inclined to support the recommendation for a government-appointed regulator.

 

Overreach

In 2008, the legislators may not have realised that the REAA they created would in 2023 use its powers the way it has. These so-called independent bodies the government creates enable surreptitious incursions on individual liberty immune from both democratic accountability and the parliamentary and public scrutiny attendant on legislative action.

I doubt many lawyers would have expected the NZLS the government created in the 2006 Lawyers and Conveyancers Act would in 2023 be contemplating getting government “help” to create a regulator like the REAA to take over the regulation and disciplining of the profession.

As a postscript, I note a fallacy contained in the Statement of Tikanga is the claim that tikanga is “first law”. The short point can be expressed in a sentence: tikanga is not “first law” because it is not “law,” as ought to be readily apparent from the paragraphs quoted earlier.

Nevertheless, as the Supreme Court has stated “[22] The majority judges accept that tikanga was the first law of Aotearoa/New Zealand,” the matter ought to be dealt with thoroughly.

I am preparing a thorough treatment which may be too lengthy for publication in LawNews. Following the example of retired DCJ, David Harvey’s A Halfling’s View djhdcj@substack.com, which I would commend, I will be putting my analysis on a Substack, garyjuddkc.substack.com. This already contains a convenient collection of my articles, most of which have been published in LawNews, and I intend to dig out and post others.

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2 Comments

  1. A Sharko

    We need to take this further. All governmental departments, quasi governmental departments and regulated industries should also be forced to pass tikanga. This must include the Police, Accountants, Doctors, Pharmacists, Nurses, Dentists, Psychologists, Lawyers, Conveyancers, Judges, Local Government employees (especially parking wardens), Bankers, Air Traffic Controllers, Pilots, Engineers, Architects, Pilots, and especially University Language Departments that teach French, German, Spanish, Italian, Russian, Mandarin, Japanese, Tagalog, Indonesian, Arabic, Farsi.

    There are two categories that should be excluded. The first is politicians – they will not pass laws that include them. The second is every industry in which there is no official sanction – there is no point in trying to encourage a protocol that nobody wants to comply with. Or rather, not that they do not want to comply, they couldn’t care less.

    Reply
  2. Michael Hofmann-Body

    Section 15 (1) (a) of the Real Estate Agents Act 2008 requires the Authority to make practice rules that “provide for the times or frequencies at which continuing education must be undertaken and the topics to be addressed”. There is no further prescription in the legislation. The Authority has ultimate discretion as to the topics.

    I have no knowledge of Mr Judd KC ever commenting on the Authority’s historical choice of topics. I am therefore surprised by his objection to the Authority, acting within its statutory authority, requiring real estate agents to have a better understanding of Māori culture, language and relationship to land.

    Surely every agent would benefit from better understanding the first culture of these islands. Māori represent 17.4% of the New Zealand Population. Māori inhabited this country for many centuries before pakeha arrived. Understanding the history of New Zealand is fundamental to being a good citizen.

    I recently attended the full day NZLS CLE course Kua Ao te Ra: Introduction to te ao Maori and te reo Māori for the Legal Profession. That experience was insightful and I will be slightly better equipped to relate to and advise Māori having attended the course. I am less likely to make mistakes and I believe I am wiser for attending the course. One of the primary outcomes of attending the course was that I better understood the relationship that Māori have to land.

    The Authority has been setting training topics for more than ten years. To my knowledge this is the first instance that the Authority has chose to focus on cultural matters as a topic. Mr Judd KC’s objection is not that the topic is offered but rather that it is a mandatory topic. The inference is that we shouldn’t have to pay attention to Māori culture if we don’t want to and the suggestion that agents might be required to learn about Maori culture is a breach of their rights. There is a disturbing undertone to that position.

    Mr Judd KC also seems to be making an assumption that an understanding of Māori issues was an irrelevance, particularly for real estate agents because ‘Maori land’ was inalienable and irrelevant. That shows an lack of understanding of the place of Māori in the NZ economy and legal issues affecting Māori. Māori are not locked in a 19th century world pre treaty, they own private homes and commercial properties,. I understand that Ngāi Tahu is the largest land owner (excluding the Crown) in the South Island.

    The headline of his article suggests that Mr Judd KC’s primary concern is that if the Agents are made to learn about Māori culture lawyers might be next. “First they came for the real estate agents and I did not speak up, next they came for the lawyers…”. Having attended the CLE course I would respond that there is nothing to fear from learning about other cultures and in particular the Māori culture which is unique to this country.

    A review of Mr Judd KC’s substack articles suggests that there is an insidious design at all levels of government to create inequality based on ethnicity in New Zealand. Curiously Mr Judd KC quotes John Locke, Antiphon and Aristotle in his articles. Clearly he believes it is important to learn from the past and other cultures. If the Authority had required real estate agents to study Aristotle and Plato would Mr Judd KC have been equally as concerned? The first step to the equality that Mr Judd KC seeks is knowing each other better. If real estate agents collectively had a better understanding of Māori culture that is likely 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 of real estate agency work” which is the purpose set out in section 3 of the Act.

    I commend the Authority for their decision to make this a mandatory topic for 2023.

    Reply

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